# Expenses per Employee

Date created: Oct 12, 2022  •   Last updated: Oct 12, 2022

## What is Expenses per Employee?

Expenses per Employee is a measure of the Operating Expenses for the last twelve months (LTM) divided by the current number of Full-Time Equivalent employees. Just like Revenue per Employee, this ratio is often used to compare companies within the same industry.

### Expenses per Employee Formula

ƒ Sum(Operational Expenses LTM) / Count(Full-Time Equivalents)

### How to calculate Expenses per Employee

If a company employs 50 people and has operating expenses of \$5M annually, their Expense per Employee ratio is \$100,000 on an annual basis. If the company, in an effort to lower this value, moves their offices from downtown to the suburbs and saves \$500,000 annually, their Expense per Employee ratio will be \$90,000 annually.

### Start tracking your Expenses per Employee data

Use Klipfolio PowerMetrics, our free analytics tool, to monitor your data. Choose one of the following available services to start tracking your Expenses per Employee instantly.

### How to visualize Expenses per Employee?

Compare your Expenses per Employee year-over-year to refine your hiring and staffing plan to reach the optimal ratio. Take a look at the chart for an idea of what tracking your data could look like:

### Expenses per Employee visualization example

Expenses per Employee

#### Bar Chart

Here's an example of how to visualize your Expenses per Employee data in a bar chart and compare your performance to previous periods.

Expenses per Employee

#### Chart

Measuring Expenses per Employee

## More about Expenses per Employee

Given the nature of ratios, you can improve your Expenses per Employee by either lowering operational expenses (for example, facilities, salaries, marketing, and travel costs) or you can increase the number of employees (at a rate that’s less than the current Expense per Employee).

Long term, and generally in line with inflation and labour availability, the natural movement of this ratio will be up.

As much as Expenses per Employee is an efficiency metric, it is also a valuable planning tool, and should be tracked over time and alongside Revenue per Employee and Profit per Employee.