HR to Employee Ratio

HR to Employee Ratio-more than just a number

Sometimes you have to stop and wonder where common sense has gone. Companies are expecting more from their HR team than ever before, but according to data gathered by XpertHR, companies are increasing the number of employees relative to the number of HR professionals. This leads to a number of trickle-down effects, but the major one is forcing those human resources employees into a more administrative function. There’s no hands-on, friendly interaction. There’s no face-to-face discussion of what the company has to offer to you as an individual.

No, it’s just an ever-increasing spiral in an attempt to decrease costs and increase efficiency. While you’ll never meet someone who’s for increasing costs and lowering efficiency, that does come with its own baggage. Recent information from Gallup puts employee disengagement higher than 25%. I know that figure is determined by a number of factors, but if there’s one thing we can push for as HR professionals, it’s the desire for companies to treat their staff like people. They aren’t machines that run endlessly. They will lose motivation over time. They will resent being treated like just another number.

So do something about it.

If you work for a company with a ratio that stifles your ability to impact the organization, try to find out what it would take to get that lower. It may not be possible overnight, but maybe there are some more administrative tasks that can be handed off to an admin so you can focus on more strategic, high-impact HR practices.

I can still remember talking with a local HR pro at a SHRM chapter meeting about how they embed HR generalists into business units to keep the HR team close to the action. For more on this topic, check out Employee to HR Ratio (with a neat infographic!).

So, what’s the ratio in your organization? Is it too much, too little, or just right? 

15 thoughts on “HR to Employee Ratio”

  1. John Dooney

    Hi Ben,

    I am always glad to see the discussion around HR Staff Ratios. I manage the Strategic Research/ Benchmarking group at SHRM (Society for Human Resource Management), and would like to offer some insight based on our research, my 15 years as an HR practitioner, and the many conversations I have had with HR professionals over the years about this topic. Although exceptions may occur depending on the scope of work HR is responsible for, we generally find three factors drive HR to employee ratios: employee size, industry type, and profitability of the company

    Employee Size

    As organizations become large in total employee size, HR to employee ratios become smaller. Data from the SHRM Customized Benchmarking Service show this. The HR to employee ratios for organizations based on employee size are as follows:

    Employee Size HR to Employee Ratio
    • Under 250 1.89
    • 250- 1,000 .96
    • 1,001-10,000 .84
    • Above 10,000 .44

    HR to employee ratios in smaller organizations may be interpreted to mean that it takes a minimum baseline amount of HR FTEs to deliver the primary HR services of recruiting, benefits, employee relations, compensation, etc. But once this baseline is met, the incremental amount of HR staff that is required to support more employees in an organization does not increase at the same rate. This may occur because when there is more staff in HR, there is more flexibility to offset peak work demands in one HR area with staff from another. For example, during the labor-intensive process of performance reviews, if extra help is needed, it is easier to temporarily pull HR FTEs from other functional areas, such as recruiting or benefits for additional support.

    In addition, the roles for HR professionals in firms with large numbers of employees usually have a higher degree of specialization. For example, in large organizations, HR departments not only have many benefits professionals, but even within the benefits area there maybe one FTE solely dedicated to managing retirement planning. Such role specificity allows for greater efficiency and economies of scale. From a job analysis perspective, efficiencies are gained when like tasks are grouped together. But when job responsibilities require many different types of tasks to be performed, efficiencies are lost. This is because it takes more effort and more time to switch between tasks that are different from each other. The statement “I\’m wearing too many hats” is often heard from HR professionals in smaller departments where they juggle the diverse tasks of recruiting, benefits, and employee relations simultaneously.

    Industry

    Every industry has unique competitive and operational constraints that drive business processes and strategies for a particular industry. Knowledge-based industries such as management consulting, high technology, etc, usually have higher HR to employee ratios than lower skilled industries because they need larger recruiting departments in order to find candidates with specialized skills. For example, when we controlled for staff size, high technology firms had an HR to employee ratio of 1.33; whereas the lower skilled service accommodation industry had a smaller ratio of 1.00.

    Profitability

    Organizations that are more profitable tend to have larger HR to employee ratios also. For example, Manufacturing firms (durable and nondurable combined) had an overall HR to employee ratio of 1.18. But manufacturing firms that were at the 60 percentile or higher in profitability had a much higher ratio of 2.38. While research indicates that HR practices often leads to improved firm performance, as organizations become more profitable they continue to invest in HR staff to enact people retention and acquisition initiatives that support their organization\’s business strategy.

    Please contact me and weigh-in with your thoughts on this topic at 703-535-6349, or jdooney@shrm.org.

    Best,
    John Dooney
    Manager,
    Strategic Research
    SHRM

  2. Michael Brisciana

    Ben – – –

    Nicely said, as usual. I agree with everything you’ve said (particularly regarding off-loading administrative tasks). There is another approach I’d like to put on the table, as well. That is, helping the line managers become better “HR” managers.

    In the end, it’s not about “HR” the department — it’s about effective HR practices. Thus, if we can help line managers improve their employee relations/management practices, then we’re fulfilling everyone’s objectives … and we don’t need to focus as much on how many people are in the HR department, per se.

    Just food for thought. Thanks again.

    Michael Brisciana

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