The HR Ratio Or "How Many Employees Does It Take to Screw Up an HR Department?"

Ok, ok, I know this title made some of you bristle with outrage. But calm down, it was more to get your attention. What is the proper HR-to-Employee Ratio is a question frequently asked by people new to HR. Sometimes it is even asked by people not so new to HR. And if you ever get it asked by your CEO you had better know the answer.

This is the calculation. Though it is seldom expressed in terms of this calculation. It is generally experessed in terms of 1:100 or 1:250 or 1:400..... you  get the idea.

But knowing that calculation is not the answer to the question. Because the answer is "It depends." But if the CEO is asking you the question that is not what you say. Because you should know what the "DEPENDS" factors are for your company, your company size, your leadership, your industry and your sophistication. For example in The HR Scorecard: Linking People, Strategy, and Performance authors Becker, Huselid and Ulrich talk about research that shows that companies that had low quality of HR leadership had a ratio of 1:253.88. Companies that had high quality HR leadership had a ratio of 1:139.51. Research as also shown that the ratio also depends on these following factors:

• Company size. Smaller companies may actually have a smaller ratio because much of the process are not automated and therefore require more people to get them done. (Either that or the person works themselves to death. A situation often expressed to me.)
• Sophistication. Companies that are technologically adept may have smaller ratios due to automation, such as self-enrollment or online performance evaluation.
• Level of Outsourcing. Obviously the more funtions of HR you have outsourced the fewer HR people you need on staff.
• Service model. Your model for delivering HR services to your "customer" base will require different levels of staffing and hence a different ratio. A company I once worked for had 30 HR members for 1000 employees. A ratio of 3:100. That was because we had a "high touch" service model. The more complex or sophisticated your employee perhaps the higher the ratio.
• Dispersion of the employees. If you have a decentralized structure and want to have a decentralized HR department you will probably have a larger ratio than will a centralized structure.

You do have to be careful, regardless of the reason, to not have HR people for the sake of having HR people. You must remember that there needs to be an appropriate Return-on-Investment (ROI) for the number of HR people you have on staff. So that requires you to be able to determine what that ROI is and if it is desirable in your organization.

So gather your information. One source of information, and the inspiration for this post, was SHRM's benchmarking reports . They are available to both members and nonmembers. (I get no compensation for suggesting them.)

If you want to read another blog post that does an excellent job of talking about this subject click on HR Ratio versus HR Contribution. This is a well written post by Magdelena Meller of breakpoint HR from about a year ago.

By the way, the answer to the question of "How many employees does it take to screw up an HR department?" is "IT DEPENDS." It is your call.

Some Interesting Read: Pointing You To Some Other Blogs

There are some very interesting writers and blog topics that have been posted in the last couple of days. I thought I would point you to some of them (that way I don't have to get creative myself.)

1. First is "Who Wants to See a 56-year-old stripper?" written by the Ohio Employers Law Blog. The question is asked if attractiveness should be a BFOQ. Well it is for clothing models.... sooo.....


2. We Need a Way To Measure "People." FAST! Jason Seiden at Fistful of Talent talks about the challenges of measuring the impact of culture and people.


3. Driving by HR offers up Social Media Policy advice. For those of you struggling with this you may want to read up.


4. The HR Capitalist, Kris Dunn, writes Want to Keep the Job and Maybe Get Promoted? Don't Be A Victim... Kris is always a good read.


5. Lastly, for those of you still struggling with salary budgets Ann Bares at Compensation Force offers great information in 2009 Salary Budget Increases: The Latest.

Within an hour or less you will be educated in 5 different areas and have usable knowledge in HR. Check them out.