How To Calculate An Employee’s Value?

Can we quantify the real contribution of an employee? If so, how? Introducing the theories of John Sullivan and concrete explanations of a local expert.

A company with talented employees is lucrative. They develop innovative ideas, improve the performance of their colleagues, and all while being more productive than the last. In short, their presence is synonymous with profits.

Despite this, the real value of talent is rarely measured, supports international Human Resources expert John Sullivan. According to him, properly quantifying the performance gap between the exceptional employees and those in the middle helps to better attract and retain talent. “Unfortunately, HR rarely uses such a method,” he laments.

This is why Sullivan provides a simple way of calculating this performance gap. Together with management, he suggests first determining the average value of production of an employee. To do this, divide the company's total revenues by the number of employees working there.

Then, Sullivan recommends establishing the performance of talented employees and comparing them to the average worker. The difference is the performance factor (or percentage) of exceptional workers.

Finally, the Human Resources expert advises multiplying that factor by the average value of production of an employee. The result corresponds to the value of production of the best employees. According to him, the real contribution of a talented employee is anywhere between 3 to 1,000 times higher than that of an average employee.

Somewhat simplistic

Maxime Dubois, senior partner with the Human Resources firm DHR en direct, cannot help but find this oversimplified. “It misses many things,” he states.

Starting precisely by the lack of analysis of subjective data. “An important part of performance evaluation is devoted to the behaviour and attitude of an employee,” he says. “Is this a person with whom we communicate well? Are they pleasant to be around? Do they listen well?”

Then, there are some statistical realities that are completely omitted in Sullivan’s method. “No matter the yields, there are always people below the average. Should we get rid of them then? If so, where does one draw the line?” he asks himself.

Not to mention the intangible contribution of several categories of employees, including those in human resources. “Companies in advisory sectors are often seen as unprofitable. Yet, it is they who allow other employees to be just that,” he argues.

Good, despite everything

Dubois, however, recognizes the good in Sullivan’s theories. “They let you draw very financial perspective, which is sometimes sorely lacking in more comprehensive employee performance analysis,” he says.

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