Written by
Hayden Franklin
2 min read
Section
The LTGPE Formula: Why You’re Failing to Find A-Players (and How to Fix It)
Most business owners treat hiring as an annoying administrative expense. They want the best people, but they want to find them for the price of a basic job board ad. If you have ever said, "good people don't exist anymore," you are looking at the problem from the wrong angle.
As entrepreneur Alex Hormozi recently noted, hiring talented people is one of the easiest 10x to 100x ROI opportunities in business. There is always underpriced talent available if you know how to look for it.
The reality is simple: You do not have a talent problem. You have an acquisition problem.
The Maths of a Bad Trade
Think about your marketing strategy. If you knew that spending $10,000 on ads would return $30,000 in profit a 3x return you would do it all day.
Yet, when it comes to hiring a key staff member who could generate $150,000 in annual profit, those same owners hesitate to spend $5,000 on a recruiter or a high-end campaign. They are happy to spend big to get customers, but they refuse to spend to get the people who service those customers and grow the bottom line.
The problem is that most people have no idea what an employee is actually worth to them. To fix this, you need to stop looking at "salary" and start looking at LTGPE:CAT.
What is LTGPE:CAT?
This framework, popularised by Hormozi, allows you to treat recruitment like a data-driven investment.
LTGPE: Lifetime Gross Profit Per Employee.
CAT: Cost to Acquire Talent.
When you understand how much an employee is actually worth to your business, your perspective on hiring costs changes instantly. Instead of trying to "save money" on a job post, you start trying to "buy profit."
How to Calculate Your ROI
To find your numbers, follow this simple process:
Calculate Annual Gross Profit: How much revenue does this role bring in (or save) minus the direct costs?
Subtract the Salary: What are you paying them?
The Remainder is your Profit: This is the value that person adds to your business every year.
Once you know that number, you can decide how much you are willing to spend, your Cost to Acquire Talent (CAT) to get that profit.
The $50,000 Question: A Case Study
Consider a dental practice looking for a new doctor.
This doctor can perform $500,000 worth of work every year.
You pay the doctor $100,000 annually.
Every year, this one employee makes you $400,000 in gross profit.
If someone said, "Give me $50,000 today and I'll give you back $400,000 in twelve months," you would find the money immediately. That is an 8:1 return in the first year alone.
Despite this, most dental practices are only willing to spend $5,000 to hire a doctor. This is why they cannot find talent. They are trying to buy a high-yield asset at a clearance-bin price.
Why You Must Outspend the Competition
Good people exist, but they cost money to find. You cannot expect a 10x return if you spend like everyone else. Most businesses are struggling because they use the same tired, low-cost methods as their competitors.
When you increase your budget for acquiring talent (your CAT), you gain three distinct advantages:
1. Access to "Passive" Talent
A-players are rarely scrolling through job boards on a Tuesday morning. They are already employed and being treated well. To reach them, you need high-end recruiters or targeted ad campaigns that "interrupt" them where they are.
2. Better Incentives and Referrals
Hormozi shares the story of an insurance agency owner who struggled to hire sales reps while offering a $500 referral bonus. Once the owner realised each rep was worth $150,000 in profit, he increased the referral bonus to $25,000.
The result? He no longer had a hiring problem. He outspent the market to secure the best people.
3. Reduced "Time to Hire"
Every day a key role remains vacant is a day of lost profit. If a role is worth $400,000 a year in profit, every month it sits empty costs you over $33,000. Spending $10,000 to fill that role one month faster isn't an expense, it’s a gain of $23,000.
3 Signs You are Under-Investing in Recruitment
If you are experiencing any of the following, your CAT is likely too low:
The "Post and Pray" Result: You post on Seek or Indeed and get 100 applications, but none of them have the skills you need.
High Turnover: You are hiring the "best of a bad bunch" because you need a body in the chair, only for them to leave or fail within six months.
Stagnant Growth: You have the leads and the demand, but you cannot scale because you "can't find the staff."
The Bottom Line
Stop doing what everyone else is doing. Everyone else is struggling to find talent because they are treat recruitment as an annoying cost to be minimised.
If you want a 10x-100x ROI opportunity, treat recruitment like your most important marketing channel. Calculate your LTGPE, determine your CAT, and start buying the best talent on the market.
Frequently Asked Questions
What is a "good" Cost to Acquire Talent (CAT)?
There is no single number, but a helpful rule of thumb is to look at the first-year profit the employee brings in. If a hire brings in $100,000 in profit, spending $10,000 to $20,000 (a 10-20% acquisition cost) is highly profitable.
Does this apply to non-revenue generating roles?
Yes. For administrative or operations roles, calculate the "saved" time or the revenue they enable the rest of the team to generate. If an admin assistant saves a founder 20 hours a week, and that founder’s time is worth $300/hour, the assistant is worth $6,000 a week to the business.
Why can't I just post a job on LinkedIn or Seek?
LinkedIn is just a tool, not a strategy. Posting a job and "praying" for a result only reaches the small percentage of people who are currently unemployed or unhappy. High-performing A-players are usually busy working and aren't checking job boards. To reach them, you need a proactive acquisition system that identifies, attracts, and vets talent before your competitors even know they are available.
Is this only for high-salary executive roles?
Not at all. The LTGPE:CAT formula applies to any role that impacts your bottom line. Whether it is a salesperson, a technician, or an operations manager, you need to understand the profit that role generates so you can invest the right amount to fill it with a top-tier performer.
What if I don't have a large budget to "outspend" everyone?
"Spending more" isn't just about the size of your ad budget; it is about the value of your offer and the efficiency of your system. By using the LTGPE:CAT math, you can often justify a higher referral bonus or a more targeted ad campaign that actually costs you less in the long run by reducing turnover and "empty chair" time.
Take the Next Step
Ready to build a team of A-players without the headache? We help business owners implement the high-performance recruitment systems used by the world’s fastest-growing companies. We focus on the maths, so you can focus on the growth.
Book a call here to discuss your hiring strategy