An important metric to look at as your company scales, is revenue per employee (how much money you make per employee). This is a great indicator to show how efficiently your company is growing.

Total Revenue / # of Employees = Revenue per Employee

A good employee should be an asset to your company. Just like any asset, they should be making you money (or saving you time, which is also money). If your team is growing, and your revenue per employee is also growing, that means your company is scaling efficiently and utilizing resources optimally.

Of course, as with any investment, it could take a while to see any return. Don’t expect to hire a new team member and see revenue per employee increase right away. Ideally, you should see slow and steady increases in revenue per employee.

It’s important to keep in mind that revenue per employee is a broad benchmark for general growth efficiency, and is not really something you can optimize for, as it’s a lagging indicator. It takes a while to see reward from new hires (assets), as growing companies are constantly hiring, downsizing, and reshuffling their workforce.

However, if your team is growing, and your revenue per employee is decreasing, that usually means there’s a problem somewhere and you should reconsider how you’re deploying your resources. If you’re noticing a downward trend in revenue per employee, it might be a good time to audit your operations and see how you can improve certain processes and make things more efficient.