Three answers, and this one is pretty simple. Key employees, or any employee for that matter, can be valued as follows, and thus are worth:
2. As much as you are willing to pay them.
3. The sliding scale between #1 and #2 (what you pay them vs. what they can command) determines your retention risk.
In other words – it's a market economy, baby. Nothing more, nothing less. You can pay X. They can get Y elsewhere. Questions?
Oops – forgot two very important factors, that are definitely part of the market economy in this discussion, listed below:
4. The employee's willingness to execute the gap, and leave your company for another opportunity.
5. Your willingness to allow the gap outlined in #3 to exist, and to allow your talent to walk away if they have the motivation in #4.
What's the gap? Are you willing to live with that? Are you sure?
What got me thinking about defining the worth of employees? An article in Forbes that tries to make hiring more scientific than it is at times. From Forbes:
"With the economy tanking and unemployment nearing 7%, it's a buyer's market for firms lucky enough to be hiring. The challenge: landing loyal talent without going broke in the process–either by losing valuable hours rooting through piles of résumés or dangling profit-sapping salaries.
"A buyers' market doesn't mean that it's any easier," says John Younger, chief executive of Accolo, a Larkspur, Calif., staffing company for the software industry. "Hiring tends to consume more resources than it did before. You place an ad on Craigslist and get people bugging you for weeks."So what are key decision-makers really worth? Unfortunately, there is no one formula that transcends industries and business cycles. Tackle the problem in logical steps, though, and you can increase your odds of earning a solid return on that important player. Potential applicants can learn a thing or two from this process, too."
Kris Dunn is a Partner and CHRO at Kinetix, a national RPO firm for growth companies headquartered in Atlanta. He’s also the founder Fistful of Talent (founded in 2008) and The HR Capitalist (2007) – and has written over 70 feature columns at Workforce Management magazine. Prior to his investment at Kinetix, Kris served in HR leadership roles at DAXKO, Charter and Cingular. In his spare time, KD hits the road as a speaker and gives the world what it needs – pop culture references linked to Human Capital street smarts.