What Is Profit Per Employee And How Can It Help My Business?

If you wish to calculate it for different periods (e.g., quarterly, bi-annual), then you would have to use the appropriate time period when extracting the information. Operating in the healthcare industry, the company has an annual revenue of $32.6 billion and 30,000 employees. The top competitors of AbbVie are Amgen, which has 9,000 fewer employees, Novo Nordisk, generating $17.6 billion less in revenue, and GSK, which earns 120% more than Abbvie. According to the latest research, Points has an annual revenue of $365.9 million and 212 employees. The biggest rivals for this company are LoyaltyOne, generating $265.9 million less in revenue, Payback, generating 0.80% of Points’s revenue, and Aimia with 1,288 more employees. Revenue per employee might be affected by the age of a company. New companies usually have small revenues and these are usually in the process of hiring more employees to fill positions.

Those that fall into the bottom half on this metric may need to take a hard look at overhead and resource allocation, ensuring the balance of administrative and revenue-generating positions is appropriate. In addition, they need to check that all employees have the tools to maximize productivity. When organizations make hiring decisions, they’re counting on the people they bring onboard to be well worth the investment. In 2019, Netflix was the most effective company, generating over 2.34 million U.S. dollars of revenue per employee. Apple ranked in second place with an annual revenue of almost 1.9 million U.S. dollars per employee.

• Because the cost of such labor is high, we are careful to use those resources wisely to ensure the continuity of our organization.
• Therefore, their revenue per employee is lower than the of well-established companies.
• Revenues are an easily understood term and often used in financial ratio calculations, which helps explain its relevance in calculating this ratio.
• Usually, companies in their early days tend to have lower revenue per employee ratio than most of the established companies, who successfully leverage their human capital.

Typically tend to have lower ratios as compared to those who require a lesser amount of labor. This is why, generally, this ratio is employed to compare the performance of companies within an industry.

This Infographic Shows The Revenue Per Employee Ratio

Analyst generally compares revenue per employee with the median of companies into the same industry. In less labor-intensive industry, Company MNO operates at the highest revenue per employee because its operations are more efficient than its peers.

However, there are a few limitations that need to be addressed in order to draw the full benefits of the ratio. The age of the company can also influence profit per employee. Younger companies tend to have lower revenues and profit margins, particularly in the very early stages, which means that their net income per employee ratio is likely to be smaller than that of an older company.

How To Calculate Revenue Per Employee

Is derived from dividing the revenue for a period by the average number of workers for the same period. Companies always prefer a higher value of the RPE ratio because it indicates that the subject company exhibits greater productivity. The average number of employees is the average number of employees at the start and at the end of the period. GoCardless is authorised by the Financial Conduct Authority under the Payment Services Regulations 2017, registration number , for the provision of payment services. Below is the list of top manufacturing companies with their Sales per employees. All of this list above makes more than half a million sales per employee.

When it comes to other firms in the oil and natural gas industry, Chevron is one of Exxon’s biggest rivals, with 108.8% more in revenue per worker. Shell is the second competitor with 13,000 more employees, while Total also ranks highly with 55.2% of Exxon’s per-employee revenue. As we have discussed earlier, we can see a company’s classification as per the industry. The less labour-intensive company generates more revenue per employee.

Highest Average Revenue Per Employee Companies: Construction, Food And Beverage, Tech, And Other Industries

Such companies tend to have relatively better sales per employee ratios within their specific industry. Generally, the number of employees keeps changing over period of time. Therefore, it is good practice to use an average number of employees during a particular period.

You can see which is the best remuneration structure to motivate employees, and thus result in a greater revenue per employee. Age of the organization – If an organization has recently started up, there will likely be more costs than the revenue generated in the first few years. This will affect the revenue per employee output, and therefore should be interpreted within context.

Revenue Per Employee Of Selected Tech Companies In 2019

Learn how to calculate profit per employee, as well as the uses of the profit per employee ratio, right here. As a result, you can implement various HR initiatives to optimize employee productivity, such as managing burnout and monitoring stress levels and workloads. Comparing revenue per employee to equivalent competitors in the same industry. Although Company C generates revenue in excess of $3 million, it employs a significantly higher number of employees to generate said revenue. Doing so shows us which companies are truly getting the best returns and which sectors have the most efficient employees. ExxonMobil is a US-based multinational oil and gas enterprise, headquartered in Irving, Texas. Analyst always looks to analyze company financially as well as operationally.

John reports to his manager that Facebook’s revenue per employee is $1.5691 million per employee. Perry D. Wiggins, CPA, is CFO, secretary, and treasurer for APQC, a nonprofit benchmarking and best practices research organization based in Houston. Please authenticate by going to “My account” → “Administration”. Then you will be able to mark statistics as favourites and use personal statistics alerts. Per employee wouldn’t be complete without Bechtel, the 12th largest construction contractor worldwide. The company works on projects that range from civil infrastructure, power, telecommunications, and government services. The Japanese multinational corporation is a big player in this industry.

A firm’s stage of development can also be a major influence on its revenue per employee ratio. For example, new and young companies typically exhibit smaller revenue per employee ratios than better-established companies.

• For example, your organization may not generate anywhere close to the revenue as per the above.
• It can be said that each employee in the MNO company is more efficient than the peer set.
• However, as it doesn’t factor labor costs into the formula, it’s important to remember that the revenue per employee ratio doesn’t give you the whole picture.
• Calculate the revenue per employee ratio for Apple Inc. during 2018.
• In 2019, Netflix was the most effective company, generating over 2.34 million U.S. dollars of revenue per employee.
• In addition, they need to check that all employees have the tools to maximize productivity.

What we can learn from this list is that companies which rely on natural resources and physical capital tend to do much better than those relying on human capital and resources. As a result, they are able to generate revenue with less reliance on employees than other companies. VeriSign’s top competitors are GoDaddy, with 5,802 more employees, Comodo, generating $0.7 billion less in revenue, and DigiCert, which generates around 45% of the revenue of VeriSign.

Profit Per Employee Calculation Example

This is one of the important measures of performance of employees of the company. It is an easy indicator of productivity & efficiency of an organization’s personnel. It also indicates how effectively an organization is utilizing its human resources. Because labor requirements vary drastically from industry to industry, profit per employee formulas are usually used to compare businesses within the same industry.

For example, the fast-food industry is much different from banking, and therefore doing a cross-comparison of revenue per employee ratios would not make sense. Revenue per employee is a ratio that measures the total revenue of an organization divided by its current number of employees. It provides a rough estimate of how much money is generated per employee at an organization.

It must also be remembered that the employee turnover rate impacts this financial ratio as well. Employee turnover rate is the percentage of the total workforce that voluntarily leaves a company for a year and needs to be replaced. This should not be confused with employee attrition, which refers to employees who have either retired or were terminated by the company. In general, the top tech company’s revenue per employee is more than the manufacturing companies revenue per employee. Let’s have a look at some well-known tech companies in terms of their revenue per employee. Revenue per employee metric can be tricky, as you have to work through variables and ensure you calculate accurately.

The second rival is Bunge, which generates 67% of ADM’s revenue, while Ingredion generates $59.1 less in revenue than ADM. Lukoil has 103,600 employees and a revenue of $115.8 billion. Its main competitors are other Russian companies, namely Rosneft, with 102% of Lukoil’s revenue, Gazprom Neft with 103,590 fewer employees, and Surgutneftegas, generating $95.9 billion less in revenue. In June 2019, the company, which has 48,600 employees, reported a financial year an annual revenue of $160.4.

Let’s also take the example of Apple Inc. in order to illustrate the computation of the RPE Ratio. During 2018, Apple Inc. registered net sales of $265.60 million with approximately 132,000 full-time equivalent employees. Calculate the revenue per employee ratio for Apple Inc. during 2018. Let’s take the example of a small IT firm in the US to illustrate the RPE Ratio’s computation. The firm started the year with 5,000 employees; it hired 1,000 while 200 left during the course of the year to end the year with a total number of employees of 5,800. The term “Revenue per Employee Ratio” refers to the financial metric that measures the dollar amount generated by each employee of a company. In other words, this metric assesses how well a company is able to leverage its manpower in order to make more revenue.

The 20,905 responses were pulled from a variety of surveys across multiple organizational functions. The calculation used for this metric is the total annual business entity revenue for the period when the survey was completed, divided by total business entity employees. Data – sadly unavailable – we found that Ferrari increased their profits by 46% in 2018. Ferrari’s top competitors are McLaren, which generates $3.1 billion less in revenue, Automobili Lamborghini, generating $3.5 billion less in revenue, and Lotus, generating 4.14% the revenue of Ferrari. With offices nationwide, the firm has 3,976 employees and an estimated annual revenue of $8.7 billion. According to the latest research, Bechtel is one of Whiting-Turner‘s top competitors with 51,024 more employees. The second biggest rival is Fluor with $9.1 billion more in revenue, while coming in third place is McDermott, generating 95% of Whiting-Turner‘s revenue.

The revenue per employee ratio is particularly useful for analyzing companies that operate in service industries. The company with the highest revenue per employee was NGL Energy Partners, with annual revenue of over $24 billion and just 1,300 employees, which works out a revenue of $18.5 million for each employee. Organizations should examine their industry-specific view of revenue per employee.

Revenue Per Employee Ratio

Another metric that you may be interested in is the revenue per employee ratio. Unlike the profit per employee formula, revenue per employee doesn’t consider income and costs. This means that it may provide you with a more accurate understanding of your core operational efficiency.

• A Paris-based company, it is one of the largest companies worldwide based on revenue.
• Analyst always looks to analyze company financially as well as operationally.
• Indeed, the mix of different types of employees at various levels and skillsets is what results in the output of revenue and thus deserves to be measured more precisely.
• ; it generates an estimated annual revenue of $93.8 billion, with 65,266 employees.
• Shell is another major rival, with $236.2 more in revenue, while ConocoPhillips has 35,300 fewer employees.
• Then again, the ratios should be compared with other industry peers and how they have performed over the past years.

In other words, young companies typically have lower revenue per employee than established companies. For many companies, their largest expenses are salaries and benefits for employees. Therefore, companies typically want a high RPE to offset the expenses paid to employees. Generally, a higher RPE typically indicates a more productive and efficient company.

John’s manager asks him to analyze the productivity of an average employee at Facebook and instructs him to determine the revenue per employee for Facebook as of December 31, 2018. To optimize productivity and increase revenue, an organization first has to start measuring and tracking the key performance indicators of employee productivity. Selecting the right KPIs can help an organization prioritize work, align work with overall organizational strategy, and measure progress toward established targets. Of course, salary ranges and revenue can vary wildly depending on industry and business model. According a report from Casaleggio Associati, the energy sector had the highest average revenue per employee in the United States in 2018.