Revenue per employee

How to read the number

Only within context. Software companies run revenue per employee several times higher than retailers or care providers, because the metric mostly reflects business model and capital intensity, not effort. The two legitimate uses are trend against yourself (is each added person adding value, or is headcount growing faster than output?) and comparison against direct competitors with the same model.

FTE, contractors and the honesty problem

Headcount-based versions flatter organisations that push work to contractors and agencies, whose output appears in revenue while they vanish from the denominator. Use FTE including long-term contingent labour for the honest version, and be consistent, because the easiest way to "improve" this metric is to move workers off the denominator without changing anything real.

What actually moves it

Over time: pricing and mix, automation of low-value work, time to productivity for new hires, engagement (disengaged employees produce measurably less), and the quality of hiring decisions. A falling trend during deliberate investment in future capacity is fine; a falling trend from creeping coordination overhead is the classic symptom of structure outgrowing its design, and it pairs well with a span-of-control review.