Tapping Into the Business Value of Employee Talent

It’s hard to quantify all of the talents, strengths, and flair that your employees possess. In fact, calculating the dollar amount that an individual is worth can feel a little distasteful. 

Skipping this critical process in the valuation of your company, though, leaves money on the table. Whether it’s their ability to stay calm in a worst case scenario or their diplomacy when it comes to delegating tasks, the workforce you leave behind when you transition out of your business can be a major boost in the perceived business value. 

After you leave your business, all of the people who remain have a role and, hopefully, a talent that makes them the right fit for that role. Leaving out the valuation of those positions is a disservice to yourself, your buyer, and the staff you’re leaving behind. 

Neglecting to tout employee talent as a selling point can also make for a rough transition and unhappy workers. Often, new owners come in and want to “shake things up” without spending the time talking with and observing the people who work there. They put them in roles and give them responsibilities that they aren’t ready for or don’t enjoy doing, creating tension that can lead to a resignation.

Strategy+Business sums it up well: “Business organizations are like theater troupes: Their success depends on timing and on every person executing his or her role, whatever it may be.”

So, how can you measure the worth of an individual and its contribution to the continued longevity of a company?

Take Time and Employee Talent into Consideration

When someone does a job, especially one that is highly specialized or unique, they are worth far more than the sum of their parts. You have to pay and value them for the time and resources that they poured into being able to do the job. 

For example, if you run a small graphics shop with only one graphic designer, getting rid of that one person would cause your business to completely collapse. Without them, your business cannot complete critical functions and replacing them would require either a) an extensive search for a person with equal or greater skill or b) training someone with less skill to do the job to your satisfaction. 

Both of those situations would cost far more than it would to value your employee appropriately. In fact, statistics say it costs about $4,425 to hire someone new, with that number increasing as the level of specialization increases.

When you start calculating employee talent into your business value, spend some time looking into the current cost of training for that particular position, the number of people in your area who are able to do the same job, and specific facets of an individual that make them ideal for the role. The more difficult it would be to get someone who could fill their shoes, the more worth that particular person has in your business. 

Don’t Base It on Position, but Performance

While true that more specialized employee talent is often valued for more, that does not mean that other roles aren’t just as critical to the function of your business. In fact, sometimes the only difference in value is how easily you can get ahold of someone new to take the position. 

When trying to complete objective valuations of your workforce, it’s okay to be comparative. Let’s say that you’re the owner of a small restaurant with four full-time servers, one of whom seems to be a born waiter. He’s charismatic, patient, and loves his job. You also have a manager with a bachelor’s who shows up late everyday looking disheveled. At that point, your server is going to be a lot harder to replace than your manager, despite the skill being less specialized. 

Valuation has to come from more than the person’s place in the workplace hierarchy, lest someone “lower” on the totem pole is pushed out in favor of an executive with very little investment in your business. Instead, take into account what you would lose in terms of time, customer experience, and enthusiasm for the job. 

Organize Your Staff Before You Leave

Every once in a while, you need to step back and take a good, hard look at the roles everyone plays in your business. Sometimes, life changes and a person who was once perfect for weekend shifts is calling in more and more. Or, through working in your company, someone who once had little talent value has grown significantly and is ready to play a more vital role. 

Rearranging staff, if necessary, is particularly important before you sell your business. Making sure that everyone has the chance to play a part that they can be successful in is going to contribute much more value into your business than cutting ties as soon as the business listing goes up. Have candid conversations, evaluations, and discussions about where everyone thinks their talent lies, then act accordingly. 

Before you sell your business, you must be able to say to the buyer “These are my people, they are good at what they do, and I hope you’re willing to pay to keep them.” Any buyer is going to much rather fork out a little extra to avoid the hassles of job postings, interviews, and callbacks.

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