While there are numerous ways to measure employee performance from a human resources standpoint, there is one metric that is most valued by company executives, particularly CFOs. This metric provides data that generally translates into dollars. It is simple to calculate and can allows comparison to other publicly listed firms in the same industry. It is one of the most effective way to measure both innovation and productivity in employees.
What is it?
This highly valued metric is revenue per employee (RPE). To calculate your company’s RPE, simply divide the total revenue of the company by the total number of employees. This calculation focuses on the value of the output of the workforce. Its relevancy is due to one of the largest expenses for most companies; salary and benefits of their employees.
Why is it so effective?
It is an effective tool for measuring a workforce because companies are looking for the highest revenue per employee that they can get. Higher RPE translates to higher productivity levels and more effective use of the company’s available resources. By comparing RPE numbers over the years, businesses can also effectively evaluate their human resources team. Additionally, it can be a tool to assess how your company is doing compared to other similar companies. The top companies in any industry generally produce a higher revenue per employee number.
How can you increase your RPE?
Industry leaders tend to have the best RPEs. How do they do it? A lot depends on the industry, considering there is no one-size-fits-all solution to increasing RPE in the workforce. However, one rising trend throughout different industries is employee engagement. Employees that are engaged in their work are 38% more likely to have above average workplace productivity, per Workplace Research Foundation. This typically translates into higher service and customer satisfaction, increased sales and profit, and higher shareholder returns.
Another way to increase RPE is continued effort to hire highly skilled and qualified candidates. It has always been a challenge for HR departments to sort through piles of resumes and applications in search of the right candidate. However, many have found hiring solutions by utilizing a professional recruitment partner. Recruitment partners provide resources and training to help companies identify and hire highly skilled executives and employees that will help, not hinder, the company’s RPE.
Although there are numerous metrics that provide human resources departments with valuable information about workforce productivity, the one that could be considered most valued outside the HR department is revenue per employee. When it comes to workforce productivity, how well does your company measure up?