Labor Expense as a Percentage of Total Revenue
This PDF report includes benchmarking data (in a visual, chart-based format), an comprehensive KPI definition, characteristics of high performers and technical details on measuring Labor Expense as a Percentage of Total Revenue. Purchase and download this easy-to-understand, presentation-ready report immediately to compare performance levels, set attainable performance targets, and push towards best-in-class performance for this KPI.
What is Labor Expense as a Percentage of Total Revenue?
The employee compensation-related expense incurred divided by the total dollar amount of revenue generated by the company over the same period of time, as a percentage.
Why should Labor Expense as a Percentage of Total Revenue be measured?
Labor Expense as a Percentage of Total Revenue measures the employee compensation-related expense incurred in relation to the total dollar amount of revenue generated by the company over the same period of time. Relatively high values for this metric can be related to a number of factors, including overstaffing of one or multiple departments, poor recruiting practices (i.e., poor screening policies, interview processes, etc.), inefficient benefits and compensation packages, and sub-par employee training and performance. While companies typically seek to streamline company operations and reduce employee positions and compensation to decrease labor costs, great care should be taken when doing so as too many layoffs and cuts to compensation can have a negative impact on company morale and potentially cause high turnover rates.
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