Introduction

Human Resources (HR) is the function that manages all people within an organization. Today, HR is not just a support function, but a strategic partner contributing to the overall success of an organization.

As companies strive to optimize their employees (a.k.a.human resources), one crucial tool comes to the forefront – HR team size benchmarking. In this comprehensive guide, we will explore the intricacies of HR team size benchmarks, why they matter, and the key ratios to consider this year. The full breakdown of this blog includes:

1. What is the HR Function?
2. What do we mean by “Team Size”?
3. Two Ratios to Analyze the Size of the HR Function
4. Why Measuring Team Size is Important in 2024
5. Conclusion

What is the HR Function?

Before delving into the world of benchmarking, let's establish a clear understanding of the HR function. Human Resources is a multifaceted department responsible for managing an organization's most valuable asset – its people. This includes talent acquisition, employee engagement, performance management, training and development, and compliance with labor laws.

The HR function has transformed from a traditional administrative roleto a strategic business partner. It plays a pivotal role in aligning workforce strategies with organizational goals, fostering a positive workplace culture,and ensuring compliance with ever-evolving regulations.

In any given business these days the function may include support from outsourced service providers (e.g. recruitment is a classic activity that is often outsourced to agencies). Further to this there is increased use of technology as a resource, resulting in more efficient processes ultimately requiring less human capital.

What do we mean by "Team Size"?

Team size refers to the number of individuals within the HR department. It encompasses professionals responsible for various HR functions, such as HR managers, recruiters, trainers, and specialists in areas like compensation and benefits.

Getting the HR team size right is crucial for organizations to optimize performance. A team that is too small may struggle to meet the diverse demands of a growing workforce, while an excessively large team could lead to inefficiencies and increased costs. Striking the right balance is essential for a well-functioning HR department.

Two Ratios to Analyze the Size of the HR Function

1. Total Employees per HR Employee

One fundamental ratio in HR team size benchmarking is the total number of employees per HR employee. This ratio provides insights into the HR department's capacity to manage and support the workforce effectively.

The higher the number from the ratio indicates amore efficient HR team capable of doing more with less, while a lower number may suggest a potentially inefficient function relative to others.

This is the main “team size” ratio that is used by most HR professionals to assess team size, which is linked to people who are viewed as the key driver of the size for a HR function.

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2. Revenue per HR Employee

Another ratio that can be used (although it is less relevant for HR) is revenue per HR employee. This metric evaluates the financial efficiency of the HR function. By comparing the revenue generated by the organization to the number of HR professionals, companies can assess the efficiency of their HR operations.

A higher revenue per HR employee suggests that the HR team is contributing effectively to the organization's overall financial performance, while a lower figure is less efficient.

Some HR professionals like to compare this ratio to other comparators to get a full view for the function, however in our opinion it is not required for the HR function.

Why Measuring Team Size is Important in 2024

Evolving Workforce Dynamics

In 2024 the workforce is more diverse and dynamic than ever. With the rise of remote working, the gig economy, and a multi-generational workforce, HR faces new challenges in talent management and employee engagement. Measuring team size allows organizations to adapt their HR departments to effectively address these evolving dynamics.

Technology Integration

Advancements in technology continue to reshape the HR landscape. Automation, artificial intelligence, and data analytics are becoming integral to HR processes. Benchmarking team size enables organizations to align their HR technology adoption with industry standards, ensuring they are equipped to harness the benefits of cutting-edge HR solutions.

Cost Optimization

In an era where organizations are continually seeking ways to optimize costs, HR team size benchmarking provides valuable insights. By ensuring the right balance between team size and organizational needs, companies can achieve cost efficiencies without compromising the quality of HR services.

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Strategic Alignment

As HR transforms into a strategic partner, aligning HR strategies with overall business objectives becomes paramount. Measuring team size enables organizations to ensure that their HR department is appropriately sized to support strategic initiatives, contributing to the organization's long-term success.

Conclusion

HR team size benchmarking is a critical componentof strategic workforce management in 2024. By analyzing ratios such as total employees per HR employee and revenue per HR employee, organizations can optimize their HR departments for maximum efficiency and effectiveness.

As the HR function continues to evolve, staying informed about industry benchmarks ensures that companies remain agile, adaptive, and well-positioned to meet the challenges of the future. As you embark on your HR team size benchmarking journey, remember that finding the right balance is key to unlocking the full potential of your most valuable asset – your people.