How big does an HR team need to be?

September 1st 2022 | Posted by Phil Scott

Knowing whether its HR provision is sufficient enables an organisation to optimise performance in areas such as recruitment, retention, and learning & development.

Having a figure in place also allows the organisation to make informed decisions concerning the hiring or reallocation of HR team members.

Given the importance of the HR function to the overall business making the right decisions about the size of the team is essential. This is where the HR to employee ratio is a useful tool to be utilised.

Understanding what an HR-to-employee ratio is

The HR to employee ratio measures the number of HR representatives in place in an organisation in comparison to the total number of employees. The figure can also be used to compare the HR function across different organisations.

Normally, the ratio decreases as the size of the organisation increases. This is due to there always being a requirement for a minimum number of people to conduct roles such recruitment and employee relations even when an organisation has relatively few employees.

As an example of this, the average HR to employee ratio for all organisations is 2.57, for smaller organisations the average is 3.40, for medium organisations the average is 1.22, and for large organisations the average is 1.03.

Why knowing the HR-to-employee ratio of an organisation matters

Once management has the HR-to-employee ratio for the company, they can make decisions as to whether the HR function is performing as it should. They can also decide if the function is under or over resourced. This is often done by comparing the ratio with that of other organisations of a similar size operating in the same sector.

Having the right HR-to-employee ratio enables organisations to ensure that expected performance levels are met in vital areas such as training and development. Other areas where the ratio can be used to ensure performance levels are maintained include, recruitment, benefits, and employee relations.

How to measure the HR-to-employee ratio

Measuring the HR-to-employee ratio is a fairly simple process. The calculation works like this:

HR to employee ratio = (number of HR employees / total number of employees) x 100

The figure that is achieved by completing this calculation can then be used to establish if there are too many or too few professionals within the HR team relative to the total number of people employed by the organisation.

Of course, there may be internal considerations that also need to be taken into account. But the HR-to-employee ratio is a good basis on which to make the necessary decisions to make sure that the HR function within the organisation operates as efficiently as it should.

This efficiency makes it possible for the business to recruit effectively, retain top professionals, and ensure employee relations and benefits are managed according to processes and procedures. These factors in turn help the organisation to perform well as a whole.

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