Glossary
Revenue per employee
Revenue per employee divides annual revenue by full-time equivalent headcount and gives one crude read on how much a company produces per person. It is useful for watching your own trend as you grow and close to useless across industries, since a software company and a staffing agency are not on the same scale. Gross profit per employee is the fairer comparison.
01
A blunt productivity number and how to use it
Quarterly at most, since revenue and headcount both move slowly. The weekly rows underneath it are utilization, hours worked and jobs completed, which are the things a leadership team can change this month. Watch the ratio across a rollout year: teams that get the meeting rhythm working often add revenue before they add people.
The value is in the direction rather than the level. A company whose revenue per head falls for three quarters while revenue climbs is hiring faster than it is selling, which is a decision worth making deliberately instead of by accident. Gross profit per employee is the better version, because it gives no credit for passing subcontractor costs through.
Worked example: A twelve-person engineering firm ran at two hundred and forty thousand dollars per head. Two years later, at nineteen people, it was a hundred and ninety and profit was flat. Most of the new hires had gone into project support rather than delivery. Nobody had decided that. It had happened one reasonable hire at a time.
Sources: kpi.org/kpi-basics; klipfolio.com/resources/kpi-examples
Utilization rate
Utilization rate is the share of available hours that are billable or productive: forty hours paid, thirty billed, seventy-five percent utilization.
02Gross margin
Gross margin is revenue minus the direct cost of delivering it, as a percentage: a ten thousand dollar job costing six thousand runs at forty percent.
03Employee turnover
Employee turnover is the share of staff who left in a period, usually a year: leavers divided by average headcount, split into voluntary and involuntary.
04KPI examples by department: sales, ops, finance, HR
Concrete KPI examples for each department in a small company, tagged leading or lagging and weekly or monthly, to help you build a Scorecard that works.
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