Revenue, Costs and Profit per FTE are fundamentally inter-related and should always be analysed together. Benchmark comparisons should focus primarily on industry sectors and close competitors because labour productivity and commercial pricing differs greatly between sectors.
• If revenue performance is disappointing, investigations must begin to understand the effect of the two constituent parts of the metric, revenues in absolute terms and the number of employees. It may reflect to some degree a higher comparative workforce establishment or issues with the commercial proposition, client relations and marketing & sales efforts.
• Similarly, where Revenue per FTE appears strong in comparative terms, it is not necessarily safe to assume that underlying revenues themselves are competitively high. Such a benchmark position may be achieved by simply generating revenues similar to your competitors but with fewer FTEs employed.
• Where Revenue per FTE is increasing or decreasing rapidly for your organisation, it is important to understand how human capital interventions have influenced the situation.Where your benchmark positioning remains relatively constant, you should investigate the impact and effectiveness of recent customer and product initiatives as well as your focus on productivity, performance management and rewards programmes.