CHARTS: We analyzed revenue per employee to show why Amazon, Meta, and others are axing workers with brutality and speed
This is a get-back-to-basics measure of efficiency and productivity, assigning a hard dollar value to individual workers. It's calculated by dividing a company's annual revenue by the number of its employees. A company might appear financially healthy if it's doing massive revenue — but if it has masses of workers and poor or waning profitability, low revenue per employee might signal inefficiency and bloat.
The chart shows Amazon, Meta, and Twitter in particular hired heavily from 2018, but also experienced declining revenue per employee. It probably isn't a coincidence that all three companiesAmazon's workforce grew from 647,000 five years ago to 1.5 million last year, a period of time in which its revenue per employee declined 6.9% to $333,550. Meta's revenue per employee fell 14% in that time as the firm more than doubled its workforce.
Pursuing a bigger workforce may have stunted productivity, according to John Van Reenen, professor of economics at LSE."It's possible because often CEOs think 'bigger is better' and it's nice to build an empire to look important," he said.produced the least revenue per employee by the end of last year — $317,333 — though this isn't necessarily a surprise, given it only employed 7,500 staff. By comparison, Alphabet generated $1.
In Google's case, increases in employee numbers each year did coincide with small increases in the revenue generated by each person — until theApple, Microsoft, and Salesforce were the only other companies that managed to increase productivity in that time by improving revenue per employee while also increasing the size of their workforce.
For Van Reenen, what this highlights is that rather than there was an expansion drive to meet the demand for tech from
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