Holistic Performance Evaluation using Income per Employee and Salary Metrics

Abstract

Background: Business performance analysis is a growing field in which traditional metrics, such as total income and profit margins, are increasingly complemented by insights into the impact of employee investments on company success. Objectives: This paper introduces a different approach to corporate evaluation that combines traditional metrics with the proposed Income per Employee Index (IPEI) and Income per Salary Index (IPSI), highlighting the strategic value of human capital. The proposed measures build on existing measures and offer a simple way to assess employee output as an indicator of operational efficiency. Methods/Approach: We hypothesize that integrating IPEI and IPSI with traditional financial metrics provides a more detailed understanding of human capital utilization in relation to a company's operational effectiveness. To achieve this, a combination of methods is used: from exploratory data analysis for initial insights to clustering and classification to identify patterns and assess the role of the proposed metrics in predicting gross profit. Results: The derived metrics' discriminative and evaluative properties yielded several clusters of observed companies. Additionally, these metrics demonstrated reasonable accuracy in predicting gross profit categories. Based on these results and IPEI and IPSI characteristics, we propose ways to interpret them. Conclusions: The research contributes to understanding operational efficiency and human resource strategies, broadening the scope of interdisciplinary research and practical business applications.