Which Companies Generate the Highest Revenue Per Employee?

Submitted by Priceonomics

The Standard & Poor's 500 Index includes the 500 largest American companies listed on the NYSE or NASDAQ. In 2017, the S&P 500 index increased by 22% from 2016-2017. S&P 500 companies generated $11 trillion in combined revenue and employed more than 25 million people worldwide.

In this report, we rank the companies by Revenue Per Employee (RPE) to explore how efficiently the companies utilize human capital. We will examine how the ranking of these companies changed from last year (S&P - Revenue Per Employee Perspective 2016). Energy and Healthcare companies remained high on the list, while Industrials and Consumer Discretionaries continue to perform the worst.

The table below shows the top 50 companies by Revenue Per Employee in 2017 in S&P 500, along with how they have moved in the rankings relative to last year’s analysis.

Data source: Craft

Twenty-four Energy companies and ten Healthcare companies made the list. Energy company Valero Energy Corporation passed AmerisourceBergen and topped the list. Newcomers to the S&P 500 (compared to 2016), Everst Re Group, and Andeavor made the made the list, replacing Murphy Oil Corporation, whose RPE fell by 15% in 2017 and has been removed from the S&P 500. 

We specifically omitted the Real Estate sector, particularly real estate investment trusts (REIT). REIT make revenue from pooling investor money to purchase, rent, or sell real estate. At least 90% of taxable income must be distributed to shareholders. The companies that we excluded from the list include Host Hotels & Resorts, which owns and operates mainly luxury hotels, and Welltower and HCP, which invest primarily in real estate serving the healthcare industry, including senior housing, assisted living, and medical office. 

By grouping the companies into different sectors, we computed the average RPE for each sector to examine the relative labor-intensity of different industries.

Data source: Craft

For Energy companies, the business is dependent more on natural resource and physical capital rather than human capital. As a result, they are able to generate revenue with less reliance on employees than other more labor-intensive sectors. 

The table below shows the lowest 10 companies in the index ranked by PRE: 

Data source: Craft

HanesbrandsAccentureStarbucksChipotleCognizant, and Darden Restaurants remained on the list of 10 lowest companies by RPE from last year. 

We took a deeper look at why consulting companies such as Cognizant and Accenture have among the lowest revenue per employee. Accenture and Cognizant are IT consulting with 425,000 employees and 260,000 employees respectively. As both companies are IT providers and provide consulting services, they depend on large teams to deliver services. The two firms performance are strongly linked to how many consultants they have and how many engagements they book. At Accenture, the employee headcount grew by 12% from 2014-2017, while revenue increased 5%. A larger increase in hiring than revenue led to a decrease in RPE.

For Tech companies’, we looked at RPE and Compound Annual Growth Rate of Revenue and Employees between 2014-2017:

Data source: Craft

There is generally a growth in Revenue per Employee for Tech companies. Most companies on this list grew their revenue faster than employee headcount. 

Key takeaways: 

  • The Energy sector continues to be the highest performer on RPE, representing almost 50% of the Top 50 list. Since 2016, the average RPE in the Energy sector has increased from $1.79M to $2.27M. 
  • The Industrials sector remains the lowest performer on RPE, even with an increase from $321,000 in average RPE to $332,000 in average RPE from 2016-2017.
  • Tech companies are becoming increasingly more productive by growing their RPE.

Comments

Endgame Napoleon Hudis Muffakah Wed, 07/11/2018 - 10:49 Permalink

Geezus Christ—a supplemental insurance company??????????????? 

My background is custom-luxury sales. That is where I spent the most time. I truly never failed to meet a quota. Several employers said I raised sales by 30% in every store they put me in.

After closing my own shop after a divorce, I worked in a government job, briefly, and then, stupidly, supplemented my useless bachelor’s degree with four insurance licenses, thinking, well, I met quotas in other sales areas.

Why not? Insurance sounds like the proverbial “real job,” right? It sounds more————SO much more————professional than retail sales. NOT. 

I had one insurance job that was more clogged with customers than a California highway, with every non-absentee employee working his or her can off to get it all done. It had to be efficient, and it was.

On top of a low (but not too low) base salary, the commission was paid in a non-sporadic manner. This was a rough, rough job in many ways, but I found out that jobs of that caliber in insurance are few and far between.

The sales end of insurance is mostly a [pyramid scheme], with no benefits and with commission-only that is “charged back” when policies cancel. 

I do not just think this. I KNOW it is from working a back-office temp job, where we processed the agents’ paperwork. Ten guys that the agent has never met take a cut out of every straight-commission sale, with agents at the top of the pyramid taking more of a cut than agents down the list in the pyramid. 

Supplemental insurance is the most pyramidal.

Not the company on that list, but some in that category are so shady that they require agents to buy leads upfront, giving the company hundreds before agents are even licensed.

Those companies have complaint after complaint on the internet, with bigly government doing nothing (nada, nein) about it. Government employees need their babyvacations; they cannot be bothered with it. 

These companies are in fine buildings in posh areas of cities! It is pretty deceptive, particularly when the few substantial jobs are in yucky-cubed settings. The pyramiders have the money to set up shop in Posh Town due to 1) low payroll costs and 2) low operating expenses, which they shift onto the little agents, struggling to make it on straight commission.

One of the first interviews (if it can be called that) that I had was with a supplemental insurance company of that ilk. My oh my, was it ever in a fancy building, located in the poshest possible zip code.

The sales pitch—I mean interview—was conducted by a well-dressed woman who majored in theater, a good major for what she was doing: ACTING like a sales pitch was an interview.

The interviewees in that group had already paid hundreds for the licensing classes and the state testing. At this point on the insurance churn-train journey, most of us did not understand all of the other expenses that this “job” involved.

NEVER, EVER have you heard so much hype and BS. Some of supplemental insurance companies take you out to eat. With a lot of preliminary buildup and fanfare, some usher you into a room, where you hear promotional films. 

Calling all rock stars, athletes and new college grads who want to make six figures————SIX FIGURES. We do not want anyone who wants a job. We want people who want a CAREER!!!!!!!

The sleazier companies often set up the interviews in hotel lobbies, and they get right down to business, asking you if you go to church, which church, and how many of your church friends & family members do you think you can sign up in the first six weeks of employment. A handful of them pay a very small salary during that period. Most want all of this for straight-commission only, and the commission is not paid in a regular manner.

The churn rates are HUGELY, like 95%, but those policies from “friends and family” stay on the company’s books in many cases, with the guys all up and down the pyramid getting their bigly & biglier cuts and the company reaping the long-term benefits. 

Churn and burn: That is what they call it.

Efficient: Besides a few pyramidal hiring managers and the recruiters, like the woman who majored in theater, these companies mostly have near-zero employees on the sales side. They shift their expenses onto the little agents. I guess that is what qualifies them as “efficient.”

The agents also have to chase their pay—post-sale—making sure that the unlicensed back-office mommas, making between $9 and $11 per hour, get the sales that agents chase on a straight-commission basis through the underwriting process.

This can take a lot of time, especially when the consolation for low pay is libertine absenteeism privileges for moms who can afford to work for beans due to 1) spousal income, 2) child support that covers their rent or 3) monthly welfare that covers their rent and groceries and refundable child tax credits up to $6,431.

You do not want to be the agent, living on straight commission, who paid for leads, doggedly calling and calling them and then driving to the customers to close them, whose hard-won sale is placed in the “hard-problem basket.”

This is the work basket that frequently absentee mom-gang workers, occupying the only non-high-turnover, salaried jobs with benefits in insurance, avoid between their baby-mommy-look-alike-bulletin-board-decorating contests, their Halloween dress-up days, their mornings off for baby, their afternoons off for baby, their days off for baby and their weeks off for baby.

Between their PTO and their pregnancy leave, the commission from your sale also must skip through the many other land mines of crony absenteeism that the 98% mom workers in the “voted best for moms” jobs are granted beyond their official time off. 

Good luck.

 

In reply to by Hudis Muffakah

SergeA.Storms VWAndy Wed, 07/11/2018 - 01:23 Permalink

Should healthcare even be on this list?  There is a reason costs are through the roof and it is obviously not just the ACA.  One would think healthcare services would be a non-profit entity.  I’m not saying don’t pay doctors, nurses, providers their value, but should Wall St., CEO’s, and so forth be getting bleeding rich off people’s health needs?  It seems like a moral issue.  And Andy you’re right monopolies.  We used to have people challenge them instead of just being paid off by them.

In reply to by VWAndy

Blue Steel 309 Tue, 07/10/2018 - 23:59 Permalink

I put myself through highschool in retail and worked a couple years beyond that. I know people who were upper management in retail during the period. They confirm my own observations. The MBA's financialized the whole sector and doomed themselves. Walmart and then Amazon were waiting in the wings. All abetted by Wall Street and jew banking. Somewhere in the 90s there became such a saturation of MBAs (jew creation) that making and selling products was no longer a focus. Customers no longer mattered. Only quarterly earnings and offshoring and importing the 3rd world.

roddy6667 Wed, 07/11/2018 - 00:27 Permalink

None of this means anything. A "healthcare company does not provide health care. It stands between you and your doctor, hospital, or pharmacist and takes a cut of the money.

Also, a hedge fund run by one guy could provide "revenue" while doing nothing useful, just shuffling money and taking a slice.

OverTheHedge roddy6667 Wed, 07/11/2018 - 00:44 Permalink

My takeaway from this is that making stuff is a pointless endeavour. Energy is obviously far too expensive, and healthcare in the US is just an insane cartel wealth-extraction system.

It comes to something when the people who actually do something real, in the real world, at the lowest paid, and least profitable. It would be interesting to see where agriculture comes on this list: without food, people die, and yet food is priced at or below the cost of production, mostly. Very weird system we have these days.

In reply to by roddy6667

luckylogger Wed, 07/11/2018 - 00:39 Permalink

Question for the 0-hedge bunch....

If a company pays a high wage, and more than a working wage, but a comfortable wage...

Are they good or bad, does this mean they are a good company or a bad company?

I say good, but however if they are an oil company they are bad?

Please help me in understanding the Bernie sanders bunch??!!!

I have a hard time understanding the reasoning....

I hear Solarcity pays about 20% of an oil workers pay and they are a politically correct company?

Just How come why.????????????

OverTheHedge luckylogger Wed, 07/11/2018 - 00:53 Permalink

Ideally the pay should not be about the touchy-feely nonsense of "living wage", or "a fair day's pay for a fair day's work" etc: pay should be commensurate with the difficulty of the work, and the skill level required by the employee. Oil rig workers in the North Sea have crap conditions, are away from home for two (or now three) weeks at a time, and have some pretty heavy,dangerous jobs to do on 12 hour shifts. I have no problem paying them high wages, in order to attract people who actually want to do the work. Paper-pushers in air-conditioned offices don't have the same level of crap conditions, but I guarantee that they demand higher wages than the grunts they oversee, because they spent 4 years at college ramping up their debt.

Pay no longer has anything to do work done, but only to do with how close to government protection from competition you are. I didn't look too hard, but is the banking sector in this study? And what about Amazon?

In reply to by luckylogger

SergeA.Storms luckylogger Wed, 07/11/2018 - 01:31 Permalink

You can’t make sense of the Bernie Bunch, government intervention would just make it worse.  That’s the difficulty in trying to figure it out.  The whole thing is based on feelings and segregation.  Socialism will cater to the lowest levels of acceptance by the masses and the haves will have more.  Economic freedom is the solution along with principled leadership, but when psychopathy is most rewarded in business this is what we get.  Greed is not good, ethics though is and ethics was thrown out a long time ago, as we see, well, everywhere.

In reply to by luckylogger

Yen Cross Wed, 07/11/2018 - 01:15 Permalink

 I'm just wondering if anyone was smart enough to see how many of those brands are owned by a couple of companies?

  The joke's on us?  ZIRP~ in all it's glory.

  The bigger they come, the harder they fall...

   All those little shell companies are toast!

  Then,,,reel lock Yen is going to really start fishing----------zing ?

effendi Wed, 07/11/2018 - 06:31 Permalink

The revenue per employee metric is really just GIGO. It doesn't take profitability into account or any other factor. EXAMPLE: A shoe company can make a billion dollars profit on 5 billion sales and employ 50000 workers (revenue per employee of 100,000). Their competitor might make only 100 million on the same level of sales and employ just 1000 workers (by outsourcing all the manufacturing to Chinese suppliers), so their revenue per employee is 5 million and their profit per employee is 5 times greater than the other company, yet still the other company is 10 times more profitable and they don't have to worry about their suppliers stealing their know-how.

Goodsport 1945 Wed, 07/11/2018 - 07:25 Permalink

Productivity improvements are one thing, but how many companies beat the hell out of their people, knowing those employees have fewer options to find a job elsewhere in a weak economy?