← Business Metric: Operational (all topics)
Revenue per employee
What it is
Total revenue divided by headcount - the standard productivity measure in people-intensive businesses such as IT services, consulting, staffing and banking
It becomes the central metric wherever people rather than plant are the capacity constraint
Impact on industries
- The clearest measure of whether a services business is moving up the value chain or simply adding headcount
- Automation and AI show up here first, since they break the historic link between revenue growth and hiring
- It ignores the cost of that employee, so offshoring can raise it while margins fall, or vice versa
- Only comparable within a sector, since a trading company and a consultancy have entirely different natural levels