Employee lifetime value, or ELTV, estimates the total net value an employee generates over their entire tenure, their cumulative contribution minus the cumulative cost of employing them. Unlike most metrics on this glossary, there’s no single standardized formula for it across the industry.

A common approach, not the formula

The most widely used simplified version runs: average annual value generated per employee, multiplied by average tenure in years, minus total cost of employment over that same tenure. A worked example: an employee generating ₹15,00,000 a year in attributable value while costing the company ₹9,00,000 a year fully loaded, over an average three-year tenure, works out to (15,00,000 − 9,00,000) × 3 = ₹18,00,000 in net value over their time at the company. Because onboarding and ramp-up costs are largely fixed, a longer-tenured employee spreads that fixed cost over more productive years, raising net ELTV, which is exactly why frequent turnover compresses ELTV per employee, it keeps resetting the clock on that fixed cost.

Frequently asked questions

Why doesn’t ELTV have one agreed formula?

Because “value generated” per employee is inherently hard to isolate cleanly, different organizations reasonably define and estimate it differently depending on the business.

How does ELTV relate to cost of turnover?

They’re two sides of the same coin, ELTV estimates what you gain from keeping someone; cost of turnover estimates what you lose when they leave.

Is ELTV used for individual employees or averages?

Most commonly as a company or role-level average, calculating it precisely for one individual is rarely practical given how hard the “value generated” input is to pin down.

See how this connects to average tenure and cost of turnover.