Revenue per Full Time Employee: How Does Your Business Compare?

Recent economic data indicates that corporate profits are slowly returning to the private sector while jobless claims continue to hover around 10 percent; further confirmation that we are in the midst of a “jobless recovery.”   Jobless claims will likely continue to lag in this recovery, potentially good news for operations-focused business owners (more on this later).

Rather than sit here and lament over the 14.8 million Americans that are without jobs, I want to focus on the 150+ million Americans that still have jobs.  More specifically, I want to direct due attention to the productivity of these working Americans.   Amongst the myriad of productivity measures, shines one of the most quantifiable measures of productivity: revenue per full-time employee (FTE).

As I mentioned earlier, operations-focused business owners are keenly aware of the need to do more with less (employees).  In fact, U.S. business owners are currently being forced to do more with about 14.8 million less.  The question I pose to business owners is simple: are you positioned to excel in a jobless recovery?

Phrased differently: how does your revenue per FTE stack up?

The following Society for Human Resource Management (SHRM) human capital benchmarking study provides median and 75th percentile benchmark revenue per FTE figures by industry.

In light of significantly depressed employment numbers and a tepid economic recovery, the benchmark for performance in today’s lean operating environment should be the 75th percentile.  In many industries, companies performing at 2008’s median levels may very well be unprofitable or merely breakeven.

Put in perspective, the difference in top and bottom-line performance for a Distributor at the median level of $116,046 of revenue per FTE and a Distributor at the 75th percentile level of $266,950 per FTE is considerable.  Imagine for a moment two equally staffed distributors (i.e. 50 FTEs) and the difference in profitability for the Distributor earning $13,400,000 in revenue compared with the equally staffed Distributor earning $5,800,000.  Somewhere in that $7,600,000 of productivity is the difference between an average performing Distributor and an over-achieving Distributor.

For companies looking to squeeze the most out of the bottom line, perhaps it’s time to focus on what drives the top line.  How productive are your employees?  Have you installed systems and processes to make their jobs easier?  How well does your company stack up to your peers?