What should be the size of my HR Department?

HR Department is a very important function in an organization. The HR professionals are involved in critical jobs such as hiring, employee data management and query handling, employee engagement and development, exits, reporting and compliance. CXOs often wonder if they have too few or too many employees in the HR department and often question what should be the ideal size of my HR Department?

Business management published an article on this What is the Correct HR-to-Employee Ratio?. The article mentions that HR-to-employee ratios are a somewhat controversial metric that can help establish HR staffing and determine how well HR delivers services. A high ratio is not typically bad and can be useful if your HR Department plays a strategic business role. A low ratio is not bad either if the primary goal of the organization is asset preservation or the organization uses HR outsourcing. This article uses SHRM data from 2007.

Statistics on Size of HR Department

We analyzed data for about 175 companies with a total of 100K+ employees to identify what are the current number of HR professionals in each one of them. In companies with less than 10 employees, we found that the HR function is typically a shared role with no dedicated HR executive and we excluded data for these companies.

The below chart indicates the maximum, minimum and average number of HR professionals in organizations used in the study. We have excluded payroll administrators and professionals responsible for managing expenses and travel requests – which we consider as finance and business functions.

Maximum, minimum and average number of HR professionals in companies

The key findings that came out from this study were that the number of HR professionals has grown in comparison to the study mentioned above. This may be because of overall growth being seen in the economy in the past 2 years or so, renewed focus on recruitment, greater compliance needs and more focus on employee engagement and development. The average number of HR professionals for every 100 employees is a little above 1 for organizations having less than 350 employees, falls a little and then again maps to 1 per 100 employees for companies with more than 2000 employees.

The above data, when represented as a graph indicates the following trends.

Since we have used the data from empxtrack to identify the count of HR professionals, the minimum and maximum values is based on the functionality procured, consequently impacting the count of HR employees in the organization. Since many HR professionals are generalists and involved in multiple roles, it was not possible to refine this data further based on the number of modules procured.

How to use the data above for determining HR department size for your company

You can use the statistics above to identify the number of HR professionals you need to have based on a number of characteristics such as

• Number of employees in your organization
• The current growth stage of your company. If you are hiring aggressively or expanding across multiple geographies, you may need a larger HR workforce or better platforms to manage this.
• The maturity of HR processes. The more mature your processes are, the lesser the number of HR professionals will be required.
• The structure of your organization. We found that companies with a shared HR services model required a lower number of HR professionals in comparison to a distributed SBU model.
• Availability of HR technology platforms. We have found that companies without technology platforms focus on Query handling and employee data management. As they introduce integrated HR tech platforms the focus of the organization shifts to people engagement and development, workforce planning, strategic planning. We found similar size of HR workforce across both types of companies.

Read other analytics such as Employee exit reasons, Employee leave trends and Competencies to use across performance appraisals.