Revenue per Employee

Revenue generated per employee, indicating efficiency.

Revenue per Employee

Revenue generated per employee, indicating efficiency.

Revenue per Employee

Revenue generated per employee, indicating efficiency.

Formula

Revenue per Employee = Total Revenue / Average Number of Employees

Know your metric

Importance of

Revenue per Employee

  1. Productivity Measure

Revenue per employee is a key indicator of organizational productivity and efficiency, showing how effectively human resources are utilized.


  1. Comparative Benchmark

This metric can serve as a benchmark for comparing performance across firms in the same industry, indicating which companies are more efficient in utilizing their workforce.


  1. Strategic Insights

It provides strategic insights into whether a company might be overstaffed or understaffed, guiding hiring and workforce optimization decisions.

Drawbacks of

Revenue per Employee

  1. Does Not Reflect Profitability

High revenue per employee does not necessarily mean high profitability, as it does not account for the costs associated with generating that revenue.


  1. Varying by Industry

Different industries have varying norms for revenue per employee, making cross-industry comparisons less meaningful.


  1. Potential for Misinterpretation

Companies might appear to have high revenue per employee due to temporary factors like layoffs, which do not actually indicate long-term efficiency or effectiveness.

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