What is the right ‘HR-to-employee’ ratio? Are there any benchmarks to refer to and is it the same in all industries?
HR-to-employee ratio is a somewhat controversial metric that can help establish HR staffing levels. There is nothing called a right employee ratio. To determine the right ratio, you may consider various factors illustrated below:
1. Benchmark companies of similar size and in similar business to figure out what may be right for your company.
2. Ratio will also be determined by the life stage of your company. Are you in a major growth mode, stable or on downturn? The extent of HR involvement will be determined by what is happening in the company today.
3. Are your employees concentrated in few major pockets or are they widely distributed.
4. Quality of workforce you deploy will also be a factor that will determine the appropriateness of the ratio.
5. Size of your workforce will also be one of the determinants. If you are a small company employing say 300 people, the right ratio may be as high as 1:75.
6. What are the expected deliverables from HR function will be another factor that will determine the right ratio.
7. Level of automation, what is done in-house, what is outsourced, etc., will be another factor that will determine the number of HR people that you will employ.
The right ratio in normal course on an overall basis can be anywhere between 1:75 to 1:150, depending on various factors illustrated above.
Vivek is a Senior HR professional with over 35 years of experience, ranging several leadership positions, in India and abroad. He leads his consulting practice since 2003 and presently works as a Strategic HR Advisor to Reliance Industries, and is also an independent Director on the Board of Motilal Oswal Financial Services Ltd. Prior to this, he was based at Singapore for several years where he was Director HR - Operations at Hewlett Packard for the Asia Pacific Region. Allow Vivek to clear your career and professional dilemmas by writing to us at firstname.lastname@example.org