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Discover the significance of average revenue per employee, a key metric for evaluating a company’s efficiency in recruitment and operations. This article elucidates the concept and provides practical examples for better comprehension.

What is Revenue Per Employee?

Revenue per employee serves as a crucial metric for assessing a company’s operational efficiency. The higher the value, the more each employee contributes to the company’s revenue, indicating their significant value. Conversely, a lower figure may suggest a surplus of easily replaceable roles. Notably, Netflix leads with $2.34 million per employee, followed by Apple at $1.9 million.

How to Calculate Revenue Per Employee

Example: Company Alpha

  1. Determine Company Revenue: Calculate the company’s total revenue; for Company Alpha, it’s $2,000,000.
  2. Identify Employee Count: Know the number of employees; for Company Alpha, it’s 10,000.
  3. Calculate Revenue Per Employee: Utilize the formula: Revenue per employee = Revenue / Number of employees. In this case, it’s $2,000,000 / 10,000 = $200.

Interpreting Revenue Per Employee Benchmark

While a higher revenue per employee is generally favorable, comparing across industries requires caution due to different dynamics. Establishing industry-specific benchmarks is essential for meaningful comparisons. Below is a glimpse:

Industry Benchmark Table:

  • Energy: $1.79 million
  • Healthcare: $0.89 million
  • Utilities: $0.81 million
  • Consumer staples: $0.69 million
  • Financial: $0.65 million
  • Telecom: $0.61 million
  • Materials: $0.60 million
  • Technology: $0.48 million
  • Consumer discretionary: $0.42 million
  • Industrial: $0.32 million

Frequently Asked Questions (FAQ)

  1. How to Calculate Revenue Per Employee?
    • Determine company revenue.
    • Identify the number of employees.
    • Use the formula: Revenue per employee = Revenue / Number of employees.
  2. Can Revenue Per Employee Be Negative?
    • No, mathematically, revenue per employee cannot be negative.
  3. What is Revenue?
    • Revenue is the total earnings of a business before deducting costs, often referred to as the top line.
  4. Which Company Has the Highest Revenue Per Employee?
    • In 2019, Netflix led with more than $2.34 million revenue per employee.