Employee effect on the world’s biggest companies

I was wondering on Saturday how you could reasonably compare a large company with a loose band of freelancers, where the word “employee” doesn’t operate. I dug out of Wikipedia some statistics on the world’s biggest companies, figuring that a reasonable comparison would be the amount of money made per employee.

The data is likely to be a bit rough and I used data from different years indifferently, but I was only aiming for a rough idea so I think the conclusions are valid.

Here are the headlines, the data is in a Google Spreadsheet you can play with here.

Employees of the world’s wealthiest companies pull in an incredible amount of cash

The world’s most financially successful companies boast a significant amount of revenue per employee – an average of $1.17m, with Fannie Mae and Freddie Mac (US mortgage megaliths) standing out at front with an amazing $8.7m per employee between them (this dates from 2007, pre-global financial meltdown and government takeover, but still…). Even the lowest earnings per employee I looked at was around $114k, significantly above the US average salary of $32k.

This has made clear to me how much of an economic heavyweight successful companies can be. It is pretty amazing to see that for every single person Fannie Mae, Exxon Mobil, Legal & General or Goldman Sachs employs, millions of dollars are being pumped into the US economy.

Big doesn’t mean rich

Interestingly, the world’s most people-heavy companies were not showing such impressive financial results – whilst the average revenue per employee was up near $200k, the highest didn’t even break $1m and the lowest was just under $12k (although this is Indian Railways who employ 1.6m people – I couldn’t find the average Indian salary but it is likely that $12k is several times bigger).

The big difference between the earning potential of the world’s wealthiest and biggest companies could come down to the difference in industry – those with the most staff tended to be in manufacturing, infrastructure and retail, with the richest companies circulating around the world’s oil and gas, healthcare and finance.

Most companies don’t grow past 500k heads

I wondered whether there was any pattern of companies increasing their revenue per employee up to a certain size, and then becoming more inefficient per head as they continued to grow, so I made a graph for the world’s 38 largest companies:

Graph showing revenue per head as you add more heads

What this shows must be taken with a pinch of salt given that country of origin is not shown. However, we can see that passing half a million employees is very hard; it is also very hard to do that whilst maintaining a high revenue per head.

There appears to be a weak correlation between increasing a company size between 250k and 500k employees and decreasing revenue per head. It would be interesting to expand the data set to include smaller companies.

Graph showing revenue per head up to 500k heads



  1. Posted July 11, 2010 at 2:09 pm | Permalink

    Presumably most of those enormous revenue per employee companies contract out all the actual work.

    • Posted July 12, 2010 at 1:26 pm | Permalink

      I think there’s two ways of looking at this – firstly, if all that money is being poured into other companies, that still makes it clear how much of an economic heavyweight these companies are, powering however many supplier jobs; secondly, whatever money is not making it into suppliers is by definition profit, to be taxed appropriately, which is also an economic booster.

      Of course, I take your point – it would be interesting to re-do this study counting all the suppliers of a company.

  2. Posted July 14, 2010 at 1:20 am | Permalink

    Revenue per employee is only a useful comparison between companies in the same industry. Different industries have different labor intensity, capital intensity, and resource costs.

    I don’t think these statistics reflect any comparison the value of a company relative to a band of freelancers.

    • Posted July 16, 2010 at 10:49 am | Permalink

      You’re right that these stats don’t say anything about the value of a company, and that is because looking at revenue says nothing that useful.

      However, I’m not looking at the value of the companies, I was interested in a measure that allowed me to get some idea of the scale these companies have attained. To say that an average employee is causing several million dollars to slush around the economy means that, as a group, you are having a noticeable effect on that economy.

  3. Posted July 29, 2010 at 5:54 pm | Permalink

    Interesting Jonny. If you felt like doing all the 186 firms on the Wikipedia site that would be fun. For me. The basic question is fascinating – revenue/profit per employee for firms (legally established companies?) versus freelance groups – but difficult to know how to attack.

    • Posted July 29, 2010 at 5:58 pm | Permalink

      Sorry didn’t realise you had all 186 co’s in google – but there are so many less data points in the charts…