Metrics Help Link HR Strategies to Productivity Gains

As reported by HRI, financial measures such as operations revenue per FTE and income per FTE can help HR better understand how HR initiatives can affect employee productivity, according to HR Magazine. Revenue per full-time employee (FTE) is calculated by dividing revenue by the number of FTEs and can be a useful measure of how effectively employees generate sales. Income per FTE is calculated by dividing sales (after expenses) by the number of FTEs and can be a useful measure of how well employees generate sales and manage expenses. Both measures are particularly useful when analyzed over a period of time or when compared with like firms in the industry, especially for organizations with service and knowledge workers.

These measures can be used to identify trends linked to specific HR programs, such as training, compensation or staffing. For example, while some firms may cut support staff to reduce costs, these kinds of measures may actually provide justification for adding support staff to increase productivity. (HR Magazine [Kroll], July 2006, pp. 65-69)