Measuring Productivity with Revenue Per Employee

Inside many tech companies last year, widespread layoffs had the desired effect of improving, at least on the surface, what some investors and industry observers consider a key organizational metric: revenue per employee. 

This metric is calculated simply by dividing total revenue generated within a specific business unit or entity by the number of employees in that unit or entity. Calculating and tracking revenue per employee helps organizations (and their investors) assess staff efficiency and gauge the return on labor investment.

Those in management consulting and other professional service industries frequently use this metric to compare prosperity and productivity among peer organizations.