MERRY CHRISTMAS! Now Here’s Why You Shouldn’t Sweat Your Company’s Revenue Per Employee

 
 
 

Tom Tunguz of Redpoint Ventures writes that measuring a company’s revenue per employee may provide helpful benchmarks, but should not be a prime factor when optimizing a business.

Amongst Software-as-a-Service (Saas) companies, smaller and less-known companies tend to have the highest revenue-per-employee percents, with Financial Engines (FNGN) and LifeLock (LOCK) taking the top spots. LinkedIn (LNKD), meanwhile, holds steady at around $200,000/per employee, despite having the second-highest total revenue of all listed firms.

As Tunguz explains, revenue per employee is frequently affected by hiring decisions, sales calendars and other ancillary factors — thus, there is very little correlation between total revenue and revenue/employee.