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Compensation  >>   HR Staff to Employee Ratio Search Discussion Posts
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HR Staff to Employee Ratio  
Posted: 07/08/2008 07:35am   1092 Views

I've been requested to provide good benchmarking data on HR departments: number of HR employees per size of company, etc.

Does anyone have a reliable ratio or know of a recent survey or article in which this topic is discussed?




HR Staff to Employee Ratio  
Posted: 07/08/2008 10:54am  

There are a number of HR Metrics and Workforce Effectiveness surveys out there that you provide a reference for an employees-to-HR employee ratio.  At minimum, I'd advise that you be very careful in making apples-to-apples comparisons from this type of metric...for example, it may be appropriate for a manufacturing organization/department to have a higher employees-to-HR employee ratiothan a sales organization/department.  Also note that these numbers may vary widely based on the HR operating model (if you use outsourcing heavily, for example, this will inflate the ratio).

Ultimately, does the organization care how many HR employees there are?  I think, no...rather, the organization is interested in the value HR is generating for the organization for the investment cost.  To me, this means you have to be able to demonstrate how HR is doing in both value creation and in cost management.

Cost: I find that internal comparisons are the most effectuve.  One metric I like is "total HR spend as a % of revenue." Compare last year to this year.  What does the trend look like over time?  Does the data suggest that HR being responsible with its spending and is increasing its productivity into the organization?

Value: I find that a combination of program effectiveness measures serves pretty well as a starting point.  For example, what is your organization's effectiveness in terms of attracting, developing, and retatining talent?  Are employees and managers satisfied with their jobs, their development opportunities, and their HR generalists?  How is compensation and benefits spend relating to revenue generation over time?  To what extent is compensation cited as a reason for turnover?  If you know how well you're performing as an HR organization, you can then use that information to compare where your performance is versus where you want to be, and what what needs to be done to bridge that gap. 


HR Staff to Employee Ratio  
Posted: 07/08/2008 11:04am  
In support of the apples-to-oranges caution, some organizations might have a high degree of compensation work done by vendors/contractors compared to others; some might have their HR activities performed by operational employees in smaller units; some might have functional management doing external recruiting while others just have HR doing it; etc.  A benchmark of HR staff to Employee Ratio without getting into the nitty gritty behind the numbers seems a risky way for making staffing decisions.


HR Staff to Employee Ratio  
Posted: 07/13/2009 02:45am  

I hear what you are saying but that still does not give us a good base line of what is reasonable.  As for me, I manage C&B for a 1000 EE manufacturing facility.  I have total control of these functions.  So, what is reasonable for me to say is needed personel wise in the C&B function?


HR Staff to Employee Ratio  
Posted: 07/13/2009 04:56am  

I don't think that you need metrics in this situation to determine your staffing level, because you are so small. You should be able to reach a number based on workload and overtime worked.

Some people may be able to give you an idea with more information. What is the breakdown between salary/hourly? Are you unionized? Do you use point factor or other internal job valuing system? What do you manufacture? Are you part of a larger company? How long have you been in business? Are your HR systems established or under development? Are there local companies in the same line that you can call?


HR Staff to Employee Ratio  
Posted: 07/13/2009 09:58am  

You may want to try Watson Wyatt's Workforce Efficiency survey.


HR Staff to Employee Ratio  
Posted: 07/13/2009 10:34am   Revised: 07/13/2009 10:36am  
   (1 rating)

What is reasonable is only a matter of fact in US Federal Tax Court; in all other venues, it is a matter of subjective opinion.

BNA used to publish an occasional series on HR functional comparitive metrics, as do the various enterprises started by Dr. Jac Fitz-Enz over the years like the Saratoga Institute and his more recent successor ventures.  I'd steer clear of the re-engineering firms like McKinsey (analysts) and maybe even Alexander Proudfoot (outsourcing), because although they may have semi-relevant studies available, they are likely to lunge for your throat seeking to re-design you (the former's specialty) or replace you (the latter's). 

Can't see how you can make use of any "benchmark" metrics without contextual details like

  • corporate, group, division, branch, unit
  • centralized or decentrallized
  • locations covered
  • industry
  • growth phase
  • organizational maturity level
  • types and nature of HR/comp programs and services
  • nature of workforce (academic, professional, technical, union, clerical, etc.)
  • (and more.....)



HR Staff to Employee Ratio  
Posted: 07/16/2009 04:57pm  

I have one published survey and the overall HR Headcount Ratio was 1 for 82 employees.  Most industries were in the 80s; except for Health & Education and Non-profit.


HR Staff to Employee Ratio  
Posted: 05/27/2010 08:31am  
   (1 rating)

Here's a brand-new report on HR staffing norms from our good friend and affiliated blogger Ann Bares:  http://compforce.typepad.com/compensation_force/2010/05/how-big-is-your-hr-staff-how-big-should-it-be.html.

She also supplies a link to an interactive calculator.

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