Net income per employee
What is net income per employee?
A company’s net income divided by the number of employees. High values indicate an efficient use of the company’s resources, but valid comparisons can only be made between similar companies.
Where have you heard about net income per employee?
Net income per employee (NIPE) is referred to in discussions around the efficiency and productivity of businesses, particularly tech companies. You may also hear ‘revenue per employee’ mentioned, but this is calculated slightly differently.
What you need to know about net income per employee.
NIPE is a measure of productivity. The higher the NIPE, the more efficiently a company uses its employees to generate profit.
NIPE can be used to benchmark a company’s performance and growth potential against others, but it’s only a fair comparison if they’re similar companies. For example, a retail company that operates a large number of physical stores is naturally more labour intensive than a tech company that provides an online service using automated processes.
For business owners, benchmarking their NIPE against similar companies can give an indication of how competitive their company is in the current market.
Find out more about net income per employee.
Revenue per employee is often used as an alternative measure of productivity. Find out how this differs from NIPE in our definition.