What does Monthly Net Profit Per Employee mean?

This metric can help you estimate how much profit your company is making per employee.

How it's calculated

This metric takes the average monthly net profit and divides it by the average head count (that is, the number of full-time-equivalent employees and contract workers) for the selected period.

What's better?

Higher

What it means

This metric can help you estimate how much profit your company is making per employee. When used with net profit margin, this metric can give you some insight into a your company’s profitability and employee productivity. For example, if your company has a high net profit but low net profit per employee, you may be underpaying your employees and using more employees to generate that profit.

While profitability is a sign of successful performance, it’s not always a reliable one. Net profit per employee might not always give you an accurate picture of the strategic decisions a company is making. For example, you may decide to invest your company’s profit into growth, making it appear to run less profitably for a time. In that situation, a low net profit per employee is part of a strategic decision and doesn’t equate with lack of success.

 

(Source: LivePlan.com)