Organizations rely on metrics to make informed decisions and optimize their performance in today's data-driven world. This is particularly relevant with the rise of Artificial Intelligence (AI), which is reshaping the world of work and is widely expected to boost employee productivity.
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In this blog, we will walk through the following topics that Human Resources (HR) professionals should be aware of this year:
Understanding these ratios can help businesses enhance their strategic decision-making, resource allocation, and overall performance.
Employee ratios are quantitative measures that assess the relationship between the number of employees and various aspects of a company's operations, such as revenue, costs, and productivity.
These ratios help business leaders gain a deeper understanding of their organizational effectiveness and how it impacts the company's financial and operational performance. In fact, many of these leaders leverage our database to make key business decisions (and you can too - search our benchmark database).
Here are the top three metrics that you should know:
Revenue per Employee measures the efficiency of an organization by comparing annual revenue to the workforce size. It's a quick metric to calculate and particularly relevant when assessing overall productivity. A higher revenue per employee generally indicates greater efficiency, though results can vary significantly by industry and business model. It's highly relevant in 2025 because many workforce experts expect this figure to rise with the increasing use of AI in the workplace.
This ratio applies the same concept as revenue per employee, but is typically used to analyze headcount efficiency in commercial functions, such as Sales, Marketing and even Customer Support. Any department within a business where revenue is viewed as the key driver of headcount should use this metric to assess its efficiency. If you are trying to assess the impact of AI for any type of commercial function, this is the metric that you want to use.
The ratio of all employees to one function employee can be used to assess the efficiency of any function, but is most commonly applied to support functions, such as HR departments, finance or legal functions. It's particularly relevant to determine the size of a HR team, as people are the main activity driver for HR services in many organizations.
Compare your employee ratios to industry benchmarks
Employee ratios are valuable tools for businesses of all sizes and across various industries. They are commonly used by highly skilled professionals including consultants, investors, executives, and HR personnel.
These stakeholders leverage employee ratios to gain insights into the company's organizational effectiveness, identify areas for improvement, and make informed decisions regarding workforce management and resource allocation.
There are many reasons why employee ratios are useful. Understanding and analyzing them can provide several significant benefits for organizations, including:
Employee ratios help businesses determine the optimal number of employees required for each function, allowing for efficient resource allocation and reducing unnecessary costs.
These ratios enable organizations to assess the productivity and effectiveness of their workforce within different departments, leading to improved performance evaluation and targeted training programs.
Employee ratios, particularly cost related ratios, highlight areas of high expenditure in relation to the workforce. Identifying and addressing these cost drivers can lead to better cost control and increased profitability.
By considering employee ratios, businesses can develop more accurate strategic plans and forecasts, aligning their human resources with their growth objectives.
Comparing internal employee ratios with trusted industry benchmarks (e.g. CompanySights) allows you to identify the optimal number of employees by function, specifically for your business.
As a management consultant, I would often get asked what the average ratio of HR employees to total employees was for any given business. The high level answer is roughly 1 HR employee to 100 employees, however the real answer is that it depends on the key factors outlined below:
Different industries usually require different HR staffing levels based on their nature of operations, regulatory requirements, and workforce dynamics.
Smaller organizations typically have a higher average HR staff to employee ratio due to limited resources, while larger corporations might achieve economies of scale with a lower ratio.
The adoption of technology and automation can impact the HR to employee ratio, as certain tasks may be streamlined with automated HR services, reducing the need for HR staff.
Companies with decentralized structures may have different HR staff to employee ratios across various business units or geographical locations.
Business strategies and growth plans can also influence the number of HR employees needed, especially in cases of mergers and acquisitions.
By considering these factors you will be able to make more accurate interpretations and informed decisions regarding human resource management.
Access employee benchmarks tailored to your business
This is a common ratio used to determine how many HR employees are required in the HR department for any business. So how do you calculate the ratio?
HR to Employee Ratio: Number of HR employees / Total number of employees
For instance, if a company has four HR employees and a total of 200 employees, the HR to Employee Ratio would be: 4 / 200 = 1 HR employee to 50 employees.
This means that 2% of the company's total workforce is related to the HR department. Now let's take a look at two examples to understand how the requirement for HR support can vary based on company size.
Yalmart, a small retail shop has a total workforce of 30 employees. Of these, three employees are dedicated to HR activities, including recruitment, employee relations, and payroll management.
Therefore, the HR to employee ratio for Yalmart is:
3 / 30 = 1 HR employee to 10 employees (or 10% of the workforce)
Yalmart has a high HR to employee ratio, mainly because it is a small company operating in a labor intensive industry.
Now, let's explore the HR ratio for a larger organization called Halo, a multinational technology company with 10,000 employees. The company has 150 employees dedicated to HR processes, including talent acquisition, performance management, and employee development.
The HR to employee ratio for Halo is:
150 / 10,000 = 1 HR employee to 67 employees (or 1.5% of the workforce)
As you can see Halo has a lower HR to Employee Ratio compared to Yalmart, indicating a more efficient HR team. This is predominantly due to the scale benefits that come with a larger workforce, and also differences in HR requirements that can vary by industry and business model.
Ready to benchmark your workforce? Search our database
Employee ratios are indispensable tools that offer valuable insights into an organization's operational efficiency, resource allocation, and overall financial health. These are the top three metrics that you should know:
Equipped with these three ratios, any HR professional can quickly assess the efficiency of employees in the human resources department (plus all other departments).
The number of HR staff required in any given business is dependent on multiple factors. Keep in mind that for benchmarks to be effective they need to be relevant. This means that they are ideally tailored to the industry, geography, revenue, and total number of employees.
HR professionals (amongst others) typically get these ratios from a trusted platform like CompanySights, which provide tailored employee metrics for your HR team size and organizational needs. Search here to access 1M+ employee data points.
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