The economy appears to be getting better .. albeit in fits & starts … and corporations are reporting strong results on a year over year basis. Yet, there is still a high unemployment rate in many countries. Some argue that real job growth will be the result of small business hiring and that may be true as it does not look like big business is adding quickly.
Large companies are also reporting increases in productivity– the net effect of this is job growth that is behind the pace of revenue growth. It is easy to see these trends from the data below.
We took a sample of Global 5000 companies that have reported 2010 results AND we have the data for each of them for 2007 – 2008 & 2009 as well. There were 383 companies we looked at including Apple, BHP Billiton, Bridgestone, IKEA, HP, Novartis, Porsche, Procter & Gamble and Siemens. In total, this group represented 10.5 million employees and $3.3 trillion dollars of revenue.
Revenue in 2010 grew 8.4% and employees growth was at 2.7%. If we look at the past 4 years, the growth rate for revenue was 2.7% and less than 1% of employees. So, the revenue is growing faster than employees with the revenue per employee growing from $295,000 in 2007 to $315,000 last year. And the US numbers are even more pronounced.
The learning here appears to be 2 things:
- If you want to look at these sweeping trends in revenue, employees, productivity, etc. examining the data from the large companies can tell the story
- It is likely that the Global 5000 companies will continue to try and improve their productivity and boost revenue per employees. To do that they will need technology and external services and that equals opportunity.