How Do You Calculate Individual Employee ROI Against Revenue and Costs Company-wide?

Hi All, I need suggestions on how to compute ROI per employee across the company (not division-specific). This is not to calculate ROI on training or engagement, but ROI per person against Revenue vs. Cost. Costs considered would include recruitment cost, salary, office rent, hardware and software costs, etc. While we can obtain the overall ROI by dividing total revenue by total cost, how do we calculate ROI for each individual?

Concept of Employee Contribution

The concept is that an employee should generate a contribution twice the individual cost, which should be linked with rewards. For example, if the cost of an employee is INR 100,000, their contribution to revenue must be INR 200,000. I need input on how to quantify the contribution of an individual employee in INR for support/operations teams.

To calculate the ROI per employee based on revenue versus cost, you can follow these steps:

1. Identify Individual Costs: Begin by listing out all costs associated with each employee, including recruitment expenses, salary, office rent, and any hardware/software costs directly attributed to the employee.

2. Determine Revenue Contribution: Analyze the revenue generated by each employee. This can be a bit challenging for support or operations teams where direct revenue attribution is not straightforward. In such cases, consider indirect contributions like cost savings, efficiency improvements, or client retention due to the team's efforts.

3. Calculate ROI per Employee: Once you have the individual costs and revenue contributions, divide the revenue generated by each employee by their total costs. This will give you the ROI per employee.

4. Set Performance Metrics: To ensure employees meet the expected ROI targets, establish clear performance metrics aligned with revenue goals. Regularly track and evaluate employee contributions to maintain a balance between costs and revenue.

5. Adjust Compensation and Rewards: Based on the calculated ROI per employee, adjust compensation and rewards accordingly. Employees exceeding the expected ROI should be recognized and incentivized appropriately.

6. Continuous Monitoring and Improvement: Regularly review and refine your ROI calculations to reflect changing business dynamics. Use this data to make informed decisions on resource allocation, staffing levels, and overall business strategy.

By implementing these steps, you can effectively measure and manage the ROI per employee across your organization, fostering a culture of accountability and performance-driven results.