Revenue & Profit Per Employee – Are You Getting Your ROI?
Your business exists to be successful—to provide you with the financial freedom and lifestyle you want. But how do you measure success beyond just turnover and profit, especially if you’re a smaller business without a specialist finance team?
These metrics are easy to calculate & can be very powerful, just choose the number you want & divide by the number of employees.
These are good numbers to keep an eye on as your business grows. You can use these as a measure of efficiency; if they’re increasing, you’re doing well, if not make sure performance is at least maintained & any decline addressed or explained – like a new employee has only just started.
SALES / NUMBER OF EMPLOYEES OR WORKERS NET PROFIT / NUMBER OF EMPLOYEES OR WORKERS
You could Benchmark these numbers against companies in the same or similar sectors, to measure your work force performance against other businesses. Also, in your own business; you could look at the trends, month on month, year on year, by division, site, or department.
Revenue Per Employee shows a holistic view of your business & and how efficient your team is. It’s a great number, because it doesn’t just look at the one fraction of the business.
You can use it to track performance measures in other areas of the business, for example;
Employee capacity & productivity
- As a check that employees using the systems correctly
- Assess if your team have enough training
- Assess if your team is using the right tools
What’s the productivity gap?
To work out the productivity gap take potential revenue from a percentage of team capacity, (70% is a popular number as 100% isn’t feasible) then compare that number to actual revenue & team output to actual performance.
Why is it important?
Because employees are most productive when the majority of their time is spent working at a less intense pace, this has its roots in sports. When work demands increase temporarily, employees have the reserve strength to meet the demands.
Best practices keeping employees sharp: take holidays, leave some of the working day unscheduled, encouraging them to know their limits, helping them to find pockets of downtime & allowing flexitime work schedules.
Revenue Per Employee – Questions to ask yourself regularly to keep your business on track:
- Is this number trending up or down?
- Should you split the number between fee earners & admin?
Some ideas to improve this number;
- Give your team the right tools
- Delegate properly – so you don’t need to micromanage
- Monitor & improve SOP’S (Standard Operating Procedures) or your systems
- Optimise meetings – Agendas, clear actions points & progress on them
- Training and education
- Clear Products & service mix
- Good Culture
- Get Rid of Motivation Killers
- Mitigate Distractions
Conclusion
Tracking Revenue and Profit Per Employee is a powerful way to measure your company’s efficiency and workforce productivity. These metrics provide valuable insight into how well your business is utilising its team and resources. By regularly monitoring these numbers, you can spot trends, benchmark against competitors, and make informed decisions to drive growth.
Improving employee productivity isn’t just about working harder—it’s about working smarter. By optimising processes, providing the right tools, and fostering a positive work environment, you can maximise your team’s potential and, in turn, increase your return on investment. Keep asking the right questions, refining your strategies, and making data-driven adjustments to ensure your business remains on a path of sustainable success.
If this resonates with you or you find it interesting, why not book a meeting to see what else we can do to help you?
