Revenue per Headcount in Large Companies
As information technology pervades the operations of large companies I wondered if revenue per headcount numbers have crept up recently. So I examined Wikipedia's list of largest companies by revenue to see what we can learn. These companies range from Cisco ($40B) to Walmart ($426B).
The list had 215 organizations, of which 197 showed data for both employees and revenue. The outliers were interesting. On the high end, Fannie Mae and Freddie Mac are both over $20M/head, but one questions what counts as revenue for these entities given governmental accounting rules. Of the top 25 companies by this measure, 12 are oil companies and include such luminaries as ConocoPhillips, ExxonMobil, Chevron, BP, and the national oil companies of Saudi Arabia, Kuwait, and Norway. These companies have revenues above $3M per employee. On the other end of the spectrum was Hon Hai Precision Industries (aka Foxconn), known for manufacturing iPhones and being, well, the largest exporter in China. Their revenue per employee of $50,000 (with nearly 1M employees) likely reflects the low average wages in China. In the U.S., the US Postal Service, UPS, Sears, Target, and Walmart are among the big names with revenue per employee under $200,000.
But enough about anecdotes. The data overall (with arbitrary histogram bucketing) looks like this:
A few statistical points:
My takeaway is to expect Rev/HC in the $200-600K range. All too often I see plans where Rev/HC exceeds $1M. I continue to believe that unless you're in a very capital intensive business, it's hard to scale a business and achieve this kind of aggressive metric.
- HALF are below $600K.
- TWO THIRDS are below $1M.
- Of those companies over $1M, TWO THIRDS are in just four sectors (Oil &Gas, Financial Services/Banking, Insurance, and Healthcare, i.e. Pharma).
Now granted, these are for very large organizations. I think the next step in this analysis would be to look at the S&P 500 companies and see if the same distribution applies.