Net Income Per Employee Measure

A Net Income Per Employee Measure is an economic measure that divides an organization's Net Income by their employee count.

• AKA: Profit per Employee.
• Context:
  • It can be used as a Corporate Operational Performance Measure.
• Example(s):
  • Apple's Profit per Employee[1]
  • Microsoft's Profit per Employee[2]
• Counter-Example(s):
  • Revenue per Employee.
  • Return on Investment.
• See: Capital Investment.

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References

2014

• (Wikipedia, 2014) ⇒ http://en.wikipedia.org/wiki/Net_income_per_employee Retrieved:2014-7-17.
  • Net Income per Employee (NIPE) is a company's net income divided by the number of employees. In general, the higher the number, the more efficient the company uses its employees, however the numbers are only directly comparable when comparing companies of a very similar nature. There are no rules about what constitutes a good level of income per employee, or a bad level.

2013

• http://www.investopedia.com/university/ratios/operating-performance/ratio2.asp
  • As a gauge of personnel productivity, this indicator simply measures the amount of dollar sales, or revenue, generated per employee. The higher the dollar figure the better. Here again, labor-intensive businesses (ex. mass market retailers) will be less productive in this metric than a high-tech, high product-value manufacturer.

    Variations: An earnings per employee ratio could also be calculated using net income (as opposed to net sales) in the numerator.

2007

• (Bryan, 2007) ⇒ Lowell L. Bryan. (2007). “The New Metrics of Corporate Performance: Profit Per Employee.” In: McKinsey Quarterly, 1.
  • QUOTE: companies focus far too much on measuring returns on invested capital (ROIC) rather than on measuring the contributions made by their talented people. … Increasingly, companies create wealth by converting these "raw" intangibles into the institutional skills, patents, brands, software, customer bases, intellectual capital, and networks that raise profit per employee and ROIC.

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