HR Department Staffing

hr sup

Is the ratio of 1 HR employee per 100 employees still the standard? Does that include both exempt and non-exempt HR employees? Thank you for your response.

San Francisco

I did not know that was the standard. I will be interested in others responses to your question. We have 4 exempt employees to handle employee relation issues for 22,000 employees. We have separate departments for health benefits, worker's comp, payroll and compensation etc. plus one person to handle all the UI and one person to handle all the LOA.

Elizabeth

Steve McElfresh

HR Sup:

Having looked at this issue closely, I can tell you that the 1/100 ratio is simultaneously right and wrong. It is "right" in the sense that when you average across a great many industries, the ratio often is in that range (generally a little higher). Nonetheless, there does not appear to be any research, theory or fact that actually supports the oft-cited 1/100 as a general principle.

More fundamentally, using 1/100 as a target is "wrong" in that the actual ratio ranges a very great deal depending on industry (e.g., in retail and durable manufacturing it is much lower, that is, fewer HR people/total, while it is higher in technology companies and some of the public sector). It also varies by size (larger organizations tending to have fewer HR people), and by country. The differences between industries can be huge, 3x or more in some comparisons.

Even more fundamentally, the ratio is "wrong" in that focusing on it can be destructive if done without initially thinking through what is important, what strategies are essential, in your environment. So . . .

If all this appears to be important to you, you can/should:

1. find a group of good, comparable companies against whom you want to benchmark and work with them to get meaningful data, and/or use data from SHRM, Saratoga or the like,

2. pay attention to how the numbers are constructed to ensure comparability(e.g., much confusion occurs with how Training, Safety and divisional HR folks ae classified), AND MOST IMPORTANT:

2. think about what is the real issue. Efforts to benchmark ratios (often with CFOs at the lead) sometimes take the place of careful thought about your business-people strategies, and their implications for HR staff levels. It may be that your strategies should call for a degree of efficiency and focus that mean your infrastructure must be leaner than the competition -- or, alternatively, your strategies may call for an environment where HR is a significant driver of value creation, and extraordinary resources are required to make this happen. Either way, simple benchmarking will not give you much clarity on where you should be.

Your strategy, and close evaluation of the effectiveness of the effort to make that strategy real, should be your keynotes; ratios should be background.

Regards,

Steve Mac

Steve McElfresh, PhD
Principal
HR Futures

408.605.1870

San Francisco

Steve, can you tell me why retail and larger companies have fewer HR people?

Thank you!

Elizabeth

keithlf

I agree with Steve, it depends on what your business is and what is the requirements of the HR department. In our business (steel fabricator) the HR department is responsible for HR, Safety and Environment. We have 180 employees in two locations. I have a Benefits Administrator, who also does HR administrative work and a Receptionist, who also assist in such projects as writing the monthly newsletter, inputs data for HR, Safety, and Environmental reports.

Hope this helps.

Lori B

I agree with all the above. Very slippery concept since every "HR" dept is different.

My company has 500 ees in US. Our HR dept handles all HR, benefits including retirement plan administration and insurance renewals, legal, work comp, risk management, safety, multi-state payroll, etc. We have 4.2 people as follows: Director/Legal Counsel, HR/Benefits Administrator, Payroll Administrator, Dept asst, and part-time accountant who works one day a week to reconcile bank accts and assist with retirement plan admin. I suspect we do a lot more than the typical HR dept but our ratio is less than 1 per 100. We're busy...

Hope it helps.

Lori

Gillian

As noted, the 1 to 100 ratio is an average of all industries and there is a lot of variance. The actual data comes from the annual Bulletin to Management, Human Resource Activities, Budgets and Staffs, which is a joint survey conducted by SHRM and BNA, Inc. They have done this survey for many years. The near 1 to 100 has remained almost constant throughout the entire time period of the survey.