Tuesday, May 24, 2011

Salary per Employee Compared to Revenue per Employee - a Performance Measurement

The graph below was created using Google’s graph tools.

The horizontal bar graph shows, for 11 business sectors, the average sales per employee and the average revenue per employee for 2007. The amounts were computed by dividing the total employees into the total salaries and then into the total revenues for each business sector.

The comparison of the two results for each business sector shows how much more revenue is generated per employee compared to the salary paid by the business sector. Businesses that have earned more revenues on a per employee basis compared to the salary per employee could be thought of as achieving a better return on an important asset – human capital.

A relative comparison between the business sectors might be the number obtained by dividing the revenues per employee by the salary per employee to give a multiplier number (a multiplier effect). This number represents how much a business sector is generating revenues per employee compared to other sectors.

The multiplier numbers are shown in the graph’s legend and range from 2.6 for the professional & technical services business sector to 19.9 for the wholesale trade sector. The average multiplier is 6.6, and four business sectors exceed the average: finance & insurance (7.4); manufacturing (8.5); retail trade (10.4); and wholesale trade (19.9).

Companies might compare their multiplier number to numbers shown on the graph to gauge how well the company is doing compared to other companies in their sector.

The graph is based on US Census Bureau data. This data can be seen by clicking here, and then the business sector links.

Salary per Employee Compared to Revenue per Employee for 11 Business Sectors


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