The McKinsey Quarterly: The new metrics of corporate performance: Profit per employee

The McKinsey Quarterly: The new metrics of corporate performance: Profit per employee

This is a very interesting attempt to connect two worlds: the financial measurement with the work of information/knowledge workers.

If we agree that in advanced economies the majority of the work is performed by workers who contribute with their intellectual capital, it makes sense to then measure their contribution to the P&L of the company.

There are some very clear illustrations in this article that show how different companies compete today. And some interesting questions that emerge. For example, two companies making $1b revenue/year, one with $100k profit/employee and another one $220k profit/employee for sure are having very different strategies. Can two companies in the same sector have so different strategies and both survive? Yes, because in one case they lead by productivity and in the other case they lead by the size of workforce.

I tend to think there is a direct correlation between profit per employee and the degree and intensity of knowledge work performed by the employees. In other words, companies with lower profit/employee will probably rely less on their employees knowledge and more on the company process and automation.

Again, the topic of productivity arises. How is Information Management affecting productivity of high and low profit per employee companies? I'll need to ask the folks from McKinsey one of these days...