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.
including an owner in the staffing and taking off admin time we have 3.1 employees and a sales revenue per empoyee of $232,000. About 86k gp per staffmember.
Bruce that’s a question for another time – admin cost / revenue. I suspect we will see a big difference across businesses.
Adding up all the hours paid in a week and dividing that by 38 we work out how many employees we have. Using only commission for lotto and phone cards and bus tickets it works out to be $235,051 per employee.
We track this every week. With LPO, Tatts & NA we have annualised overall $149076 per FTE. Factor out the LPO and it goes up to $193759 per FTE. If only Aussie Post realised how much they’re under-remunerating us compared to other departments. The problem with an LPO is that there are so many services (eg parcel collection) that we provide for next to no revenue at all.
$143,657 here. Mark I will be interested in your admin cost post as I suspect I am too high.
Too scared to do this and too complicated with three businesses in one.
Mark, its $245,079 here for regional strip newsagency assuming retail only.
Same here Jeff, two businesses in one makes it tricky as time spent on one business varies so much.
Jenny and Jeff it’s important to do though – to understand each of the businesses and their relative value – earnings per employee. It’s only by comparing ourselves against other similar businesses that we can assess our relative efficiency and through this create a more valuable business. That’s my goal for this blog post.
Based on 4 x 40 hour weeks $221297
If we only calculate the owners hours at 40 each rather than 60 as in the first calculation
then this becomes $295063. The first calculation while less flattering is more realistic as a gauge of business performance.
Ours based on 2emplyees/owners at counter and part timers on Saturdays is $233788 per employee
Hi Mark,
Thank you for sharing your ideas about using “Revenue per employee” for newsagencies.
I think what you mention makes sense for internal measurement. For external measurement it will be hard to find an adequate benchmark information.
For example, why not measure profit per employee? Because it is much easier to find revenue values for benchmarking than profit data.
Another thought is that any such KPI should be aligned with a strategic objective. For this purpose I suggest to use the Balanced Scorecard.
I share more thoughts about Revenue per Employee in an article: http://www.bscdesigner.com/revenue-per-employee-kpi.htm