I have been doing some work with newsagents recently on labour cost and comparing revenue per employee to gauge the roster efficiency, or otherwise, of a newsagency.
Revenue per employee is a good metric to compare as long as you agree on some common rules. For example, I don’t include hours or revenue for non directly retail related activity, I add up all hours worked for a year and divide by 38 to get to employee years and I include commission only on agency lines.
I have seen newsagencies with annual revenue per employee as low as $98,000 and others with annual revenue per employee as high as $304,000. In one of my newsagencies for which I have done the calculation the figure is $246,000 per employee per year. This is a retail only newsagency with what I’d consider to be a lean roster. However, we are into growth in gross profit.
Comparing newsagencies demands that the businesses are similar and this is becoming more of a challenge as our channel evolves and diversifies. For example, a newsagency with a higher than average GP could sustain a lower per employee revenue figure. This is why annual GP per employee is probably a better measure.
I’d love newsagents to share their annual revenue per employee figures here. Just calculating it is instructive and eye-opening. Working on it by trimming the roster and or driving sales is the essential challenge. I’d love people to share their number so we can get a feel for the range in the channel.
This is not a competition, not at all. It’s a KPI we need to each be aware of for our respective businesses and to drive – for our future. Sharing can be motivating.
Check out revenue per employee data from the US National Retail Federation from 2010.