What are your employees really worth?
For a lot of us, when we're happy with them they're priceless; when we're not, they're worthless.
Unfortunately, that kind of gut-level assessment isn't very objective.
That's why we analyzed performance data from over 1000 professional services companies (law firms, ad agencies, architects, engineers, accountants, etc.) to see if there was a better benchmark for productivity.
Our findings?
For most companies, a good target range is between $150k to $200k in revenue-per-employee.
That's not to say that there weren't industry differences — law firms, for example, average a bit more than accountants — or regional differences — coastal cities were higher than Midwestern suburbs — but most fell into that range.
Why?
Most professional services firms are structured the same way, with a handful of senior-level employees at the top and a larger number of junior-level employees and support staff at the bottom, all billing clients by the hour.
As much as we'd like to believe otherwise, there are only so many billable hours per employee per day, setting an upper limit.
The lower limit is absolute in one sense, but subjective in another — you can't keep your doors open for very long if you're not generating enough revenue to cover your expenses, but once you get past the break-even point, how little you expect from your employees is probably more a function of how much you like them, whether or not they're family, and how often you catch them wasting time watching videos or checking in with Facebook.
What's the take-away?
Our assessment is that if you're a professional services company and you're generating a lot less than $150K to $200K in revenue-per-employee, you may not be getting as much out of your people as you could be; on the other hand, if you're generating a lot more, you may be at risk for burning them out.
(In either case, the first thing to do is ask yourself "Why?")
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