I find this topic an endless source of fascination, as it is always a comparison of apples to oranges, and there is important information that is always excluded in such a high-abstract concept as revenue-per-employee, such as business location, employee wages, costs of materials, debt load, subcontracting costs, total overhead, etc., etc..
Some companies need to generate more revenue than others in order to have the same annual net-profit-per-employee, which might be the better question, if you are in it for the money.
Rather than engage in some sort of dollar-per-employee envy, owners might ask themselves if, after doing what is reasonable towards efficient production, they are content with the return on investment, and the lifestyle that their business affords them.
To Paul Downs:
I have not read your book, but I was a huge fan of the “You’re The Boss” blog at the New York Times. I learned a lot, from your posts and those of others, and of course the comments from readers were priceless. It’s too bad the Times chose to not keep it going after Loren Feldman left for Forbes.
First, congratulations on keeping a woodworking business viable for 30 years, and thank you for tracking your data and sharing it.
In your graph, is the fact that the revenue per employee crosses at 100k per employee indicative of any ratio of profit or ROI, or is it arbitrary? Based solely on the graph, one might easily jump to the conclusion that your business was unprofitable until the middle of 2004.
Was there an increase in expenditures that made it necessary to have more dollar output per employee, or is this totally a function of efficiency? How did all of this coincide with your departure from custom furniture and your current focus on conference tables?
TonyF