How Effectively Do Employees Generate Revenue?
Increasing employee headcount may be a sign of growth, but only if those employees are contributing to the company’s bottom line. Depending on the circumstances, a few highly-engaged employees can increase productivity, revenue, and profit margins more than hiring extra hands.
Revenue per employee is an analytical tool to determine the average amount employees earn for an organisation. It may help companies calculate the contribution of employees to their profitability. A higher ratio indicates a business is profitable and suggests that a company is using its resources effectively. For example, this may include annual bonuses and training investments in the development of employees to increase productivity.
Companies compare this average number with other firms in the industry to identify solutions to increase employee efficiency and generate more revenue. They often combine this ratio with other data, such as annual sales, loss and profit generated in the company to measure its overall performance.