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Discover the crucial stages of the employee life cycle and its impact on your business success. Learn why nurturing talent from recruitment to exit is essential.

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What Is the Employee Life Cycle & Why It Matters

01 May

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Chances are, the employee life cycle isn’t something you think about much in the course of day-to-day business. But it is important, and it impacts both your daily operations and your bottom line in multiple ways. 

Case in point: the average employee tenure is a mere 4.1 years, but studies show that the cost to replace every single employee is likely three to four times their salary.

That’s why the employee life cycle matters, and why proactive employee life cycle management is critical to the growth of your business.

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What is the Employee Life Cycle (ELC)?

The Employee Life Cycle (ELC) refers to the journey employees take within a company, viewed through the employer’s eyes.

Look at any employee life cycle graphic, and you’ll see that it begins when an applicant becomes a potential employee and continues until they depart. It consists of distinct, predictable stages, which, taken together, drive employee job satisfaction, performance and retention—all crucial to a business’s success.

The Seven Employee Life Cycle Stages

There are seven stages in the ELC. Each contributes to the employee experience, and each deserves your attention.

1. Pre-hire (Attraction & Employer Branding)

The pre-hire stage begins the moment a potential applicant becomes aware of your employer brand—your image to candidates and workers.

A robust employer brand attracts quality candidates by showcasing your company’s culture, values, and opportunities for growth. Strategies to enhance employer branding include crafting a compelling Employer Value Proposition (EVP), engaging effectively on social media platforms, and encouraging positive employee reviews.

2. Recruitment

Recruitment is an essential stage in your hiring process. In order to optimize hiring—to successfully attract, identify, and secure top talent—you need to employ effective recruitment strategies like crafting engaging job descriptions, tapping into diverse talent pools, utilizing high-performing recruitment channels, and making enticing offers.

3. Onboarding

An effective onboarding program introduces employees to the company culture, provides job-specific training, and sets clear expectations. Done right, it helps employees understand their role and quickly feel like they’re part of the team.

In short, it sets the tone of the entire employee experience.

It may be tempting to accelerate onboarding, but be warned: studies show that small businesses with structured onboarding processes experience higher employee engagement, morale, and productivity, as well as lower turnover.

4. Employee Development

Offering employees continuous learning and development opportunities not only helps workers develop professionally, but also upskills your entire workforce, leading to greater organizational success.

Employee development means giving workers training opportunities, mentoring options, and tuition reimbursement, among other things. It means creating paths to career advancement.

A robust employee development initiative not only improves retention but helps businesses keep their collective knowledge in-house—and that’s invaluable. 

5. Performance Management

Clear, consistent performance management practices are key to employee life cycle management. Effective talent management ensures that workers are not only performing at a high level, but are aligned with their teams and companies’ greater goals.

Performance management activities include offering regular feedback to employees, working with them to set SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Based goals), and conducting regular performance reviews, which keep employees and managers on the same page.

6. Retention

If you’re like most employers, you’re focusing on this particular employee lifestyle stage quite a bit these days, as turnover rates remain high. After all, good retention is essential to maintaining a stable, productive workforce.

Winning retention strategies include:

  • Offering competitive compensation and benefits
  • Creating a warm, positive company culture
  • Showing employees you care, by offering employee recognition programs, improving work-life balance, and investing in employee wellness. 

7. Offboarding

Inevitably, most employees leave—it’s part of the ELC, too. And when they do, their departures should be handled professionally and with care.

A smooth offboarding process should include an exit interview and an expression of gratitude. The goal is two-fold:

  • To glean insights about this worker’s employee experience (you may surface opportunities for improvement), and
  • To maintain the relationship, protecting your employer employer brand

And that brings us full circle! 

Why Is Employee Life Cycle Management Important?

Proactively managing each stage of the ELC is key. However, many smaller employers find  they don’t have the bandwidth to devote to such HR-related matters. Their time is better spent focusing on the business.

Many have found that partnering with a Professional Employer Organization (PEO)—an expert in HR and ELC management—is the right solution. 

Benefits of a Strong Employee Life Cycle for Businesses

The stronger your ELC, the stronger your business is likely to be, because companies that prioritize employee life cycle management enjoy:

  • Enhanced employer brand and candidate attraction
  • Superior company culture and innovation
  • Increased productivity and profitability
  • Improved employee engagement and morale
  • Reduced turnover and recruitment costs

In other words, an effective ELC sets both employers and employees up for success.

Employee Life Cycle Challenges

Some employers excel at certain stages of the employee life cycle, but not others. Common pitfalls in ELC management include a weak onboarding process and a lack of structured career development opportunities.

By focusing on each employee life cycle stage, businesses can shore up their weak areas, improving the employee experience and elevating their workforce.

Supercharge Your Business: The Rewards of a Strategic Employee Life Cycle

By optimizing the employee life cycle, you can unlock numerous benefits, from more successful recruiting to improved productivity and retention.

But if you’re not sure how to accomplish this, or simply don’t have the time to devote to it, it’s time to explore partnering with an expert—and we invite you to start with VensureHR.

For 20 years, we’ve helped thousands of businesses excel at all things HR—including the ELC—and we’d welcome the chance to see if we could help you, too. Let’s talk.

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