How Many Employees Do You Need? 

3-5 Minutes to Read

Employees are the backbone of all businesses, both large and small. Without them, you could never hope to complete as many tasks, make as many sales, or create as many products. Employees are indeed what makes or breaks your company.

However, too many employees can and will negatively impact your bottom line. One solution is to hire fewer employees to prevent you from paying the salaries. Although, with fewer employees, you risk missing deadlines, overworking employees, or losing customers.

As you can see, determining the number of employees you need is extremely important for your company's success. This article will give you a few tips when trying to figure out whether your business is ready to hire more employees or if downsizing is necessary.

Employee Business Meeting

Compute the Revenue to Employee Ratio

Revenue will be a massive indicator of how many employees your business will need to hire to continue running smoothly and to keep it growing. Revenue per employee is a ratio that tells you, on average, how much revenue you earn per employee. This is a straightforward ratio, as all you need is your revenue, which you will probably know by memory, and how many employees you have. Other metrics will give a more detailed look at how much each employee is earning for your company; however, revenue per employee will provide you with a good snapshot of whether you have too few or too many workers.

This ratio mustn't be too low, as this could mean that you are trying to operate with too many employees. On the other hand, if your ratio is too high, you might be working your employees too hard, leading to burnout. Unfortunately, there is not a specific ratio that all companies should aspire to maintain. This varies based on industry and sales volume. Doing your research on similar companies and your competitors can give you an idea of what your ratio should be.

Analyze Your Key Performance Indicators

Looking at your KPIs will help you find your "magic number" of employees. KPIs are Key Performance Indicators, and they will aid you in determining your employee's efficiency per customer. This data will give your company a more in-depth look at what each employee brings to the table than revenue per employee. KPIs are a great way to show you if your current employees are productive and your company is doing well or if there is room for improvement.

Analyze Your Employee Return on Investments

Analyzing your employee ROI is yet another way to make a concrete decision on your employee numbers. ROI (Return on Investment) is similar to revenue per employee, but it is broken down a little further. This will allow you to look at other metrics like income per hour and labor cost per hour. This will give you a good picture of your return on your investments – which are employees in this scenario.

Look at the Benefits You Offer Your Employees

Along with monthly revenue, you can look at benefits to help make your determination of how many employees you need. Insurance is a tricky and slightly confusing world. Some insurance companies offer plans that have a cap on employees enrolled. This means that you may have to hold off on hiring more employees to keep that ideal rate they are giving you. If you have too many employees, you may not be able to offer as much coverage as you would like or enough to stay competitive in your industry.


Some health insurance companies offer incentives for larger numbers of employees. This could mean a more comprehensive plan, including vision and dental insurance at lower rates. The more insurance coverage you offer will boost current employees' morale and help you attract high-profile talent to your company.

Here Are Some Other Things to Help Your Decision Making

Company culture is one aspect that could affect your decisions on the number of employees you have. If you want to maintain a workplace culture where your employees are like family and irreplaceable, hiring more employees might adversely affect your current culture. Also, adding new employees to the team might give your current employees the wrong idea about how you think they are performing.


Performing employee reviews will let you gain insight from them as to whether they feel like the size of their team is good or if they feel overworked and stressed. Employees who feel they are not adequately utilized could indicate that there is not enough work to do. This means downsizing might benefit your bottom line and boost employee satisfaction for those remaining.

Corporate business team and manager in a meeting

If your employees are telling you they feel overworked or "stretched thin," you might need to consider adding to the team. An overworked employee will often experience burnout, which could lead them to seek other employment. An employer should never underestimate the importance of feedback from their employees.

At the end of the day, this will have to be a personal decision within your company. This article is only a starting point. It is now up to you to research, analyze the numbers, and determine the number of employees you need to become the top dog in your industry.

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