What is the best HR-to-employee ratio, and why
To help businesses figure out best practices for HR-to-employee ratios, we asked business leaders and HR experts their thoughts on this question. From 2.5 per 100 employees to the best ratio varying, there are several HR-to-employee ratios that may help your business thrive.
Here are eight HR-to-employee ratios:
- 2.5 to 100
- There is no Perfect HR-to-employee Ratio
- 1 to 15
- 1 to 100
- 1 to 10
- The Right Ratio is What Delivers Results
- 1 to 25
- The Best Ratio Varies
2.5 to 100
Businesses should start by hiring two-and-a-half full-time HR professionals for every 100 employees. This ratio is a good starting point and ensures that the business’s HR needs are fulfilled.
Small to midsize businesses are in need of HR support for recruitment, training, salaries, and compliance, and the majority of owners do not feel confident about accomplishing these tasks. These problems need internal solutions.
Therefore, businesses should have an appropriately sized HR department that can handle the people side of the process. This involves talent development, culture building, performance management, and core values.
Antreas Koutis, Financer
There is no Perfect HR-to-employee Ratio
There is not a perfect HR-to-employee ratio, because there are many factors to consider, such as the number of locations, the effectiveness of the leaders, the degree of organizational change and restructuring, growth or shrinkage, and the amount of turnover.
A company with 500 employees, effective leadership, and employee retention of over 95% may need fewer HR positions than a company of 200 employees that is growing rapidly with multiple locations, and that has ineffective leadership.
In addition, the experience and capability of each person must be taken into account, in terms of the ideal total general and administrative HR labor costs.
Scott Baker, Stage 3 Leadership
1 to 15
The optimal HR-to-employee ratio depends on the specific needs of the organization. In general, a ratio of 1:15 is considered ideal, as it provides enough support for employees without creating an excessively bureaucratic structure. This ratio also allows HR professionals to effectively manage payroll, benefits, and other administrative tasks. Additionally, a 1:15 ratio ensures that there is sufficient coverage in the event of absences or turnover.
Of course, the ideal ratio may vary depending on the size and complexity of the organization, as well as the industry in which it operates. Ultimately, the best HR-to-employee ratio is one that meets the needs of the organization and its employees.
Jim Campbell, Wizve – Digital & Affiliate Marketing Agency
1 to 100
Calculating the HR-to-employee ratio is rather simple. Multiply the total number of full-time workers in your organization by the workforce of your HR department.
One in every 100 individuals in the workforce is employed by the human resources department, according to Bloomberg Law’s “HR Benchmarks Report” for 2018. There has been a long-term average of roughly 1 per 100 for some years at this point.
The figures from the Society for Human Resource Management and Bloomberg are almost identical. A company’s HR staffing ratio is largely influenced by the number of employees it employs. But there are additional elements, such as HR’s technology skills, its strategic nature, its budgeting, its control, and the presence of organized labor in the workplace. Your HR-to-employee ratio is a unique measure that takes all of these things into account.
Ammad Asif, Stream Digitally
1 to 10
The best ratio of HR to employees is an ideal 1:10 in a high-performing team, or it could be lower depending on the company’s ambitions and available resources.
However, a 1:10 ratio ensures that the HR manager can keep tabs on each employee and get one-on-one opportunities to chat about the employee’s career. This ratio also enables the HR manager to spot any problems in the workplace quickly, thus mitigating them in good time.
Gisera Matanda, WeLoans
The Right Ratio is What Delivers Results
Around 2010, we studied this question with the University of Saskatchewan. We found that too few HR people led to worse results like more turnover and more absence. We also found that too many HR people did not correlate to a higher level of improvement in turnover. We also found that knowledge-intensive organizations performed better on turnover and absence when they had higher levels of HR people than other organizations.
Our takeaway—the classic ratio of one HR person to every 100 employees is flawed. It does not account for differences in the types of people involved in the business, nor is it in any way connected to demonstrated outcomes that the business needs. In our study, the organizations that were doing well with regard to managing turnover and absence had ratios between 1:65 and 1:110.
Ian Cook, Visier
1 to 25
Having one HR manager to cater to every 25 employees is the best ratio for any business looking to give equal treatment to all its staff. This number allows the HR manager to hold face-to-face meetings with each employee within a month, a factor that goes a long way in motivating the employee and advancing their career.
This ratio also gives you room to experiment with different HR tools and how they can help your business grow while improving the employee experience.
Mehtab Ahmed, LoansJury
The Best Ratio Varies
An HR-to-employee ratio is the ratio of the number of HR staff to that of the entire team. However, the average HR-to-employee ratio is 2.57 for organizations. There is no one-size-fits-all when it comes to the best HR-to-employee ratio. This ratio varies depending on several factors, including the organization’s size, industry, and technology adoption.
Usually, a higher ratio depicts the lower efficiency of HR. But a rapidly expanding company may need more HR staff to keep up with new recruitments, resulting in a higher ratio. Similarly, if a company can use automated technology, the company will need fewer HR personnel, resulting in a lower ratio and higher efficiency.
The ratio helps determine whether a company needs to lay off or recruit HR staff.
Radhika Gupta, USCarJunker