The HR to employee ratio measures the number of HR professionals in an organization to the total number of employees. It helps businesses gauge whether they have enough employees to sufficiently manage HR related tasks like recruitment, employee relations, performance management, and HR operations.
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With recent changes to the way that we work the demand on HR teams is higher than ever (e.g. hybrid working). An optimal HR to employee ratio ensures that HR departments are neither overworked nor overstaffed, making it a critical measure for businesses to evaluate. In this guide, we’ll explore:
The HR to employee ratio measures the number of HR employees in an organization compared to the total number of employees. It’s typically expressed as a ratio or a percentage.
For instance, a ratio of 1:100 means that there is one HR professional for every 100 employees. This translates to 1% of the employee population being HR employees. Let’s look at the calculation from another example below to confirm our understanding.
In this example, let’s imagine that your company employs 20 HR professionals and has a total of 1,000 employees. The calculation would be:
HR to employee ratio = (HR FTE / Total Employees) × 100
(20 / 1000) × 100 = 2%
This 2% is the same as the ratio of two HR professionals for every 100 employees.
The HR to employee ratio is a critical metric that can influence the overall efficiency of your business. Here’s how:
An appropriate HR to employee ratio will ensure that your HR department can effectively manage all of its responsibilities. These include but are not limited to functions like recruitment, employee relations, and learning and development.
A low ratio may mean your HR staff are stretched too thin, leading to delayed responses, low employee satisfaction, and compliance risks. Meanwhile, a high ratio may indicate an inefficient HR department, resulting in wasted resources and unnecessary costs.
HR professionals are responsible for addressing employee concerns, developing workplace policies, and managing benefits and payroll. If the HR to employee ratio is too low, employees may not receive the timely support they need. This doesn’t just impact HR personnel, but can result in higher turnover, low morale, and a negative culture across the rest of the workforce.
An effective HR department should align with the overall strategy of the company. Typical strategies that we see include planning a major expansion, implementing new technology, or rolling out employee development programs. Having the right number of HR staff ensures that these initiatives will be supported and executed efficiently.
HR personnel and their associated costs are viewed by management as overheads. Most businesses try to limit their overheads as much as possible because they do not directly contribute to revenue. Benchmarking your HR to employee ratio helps ensure that you’re getting the right return on investment (ROI) from your HR team and avoid excessive people costs.
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An optimal HR to employee ratio is necessary for keeping your HR operations effective, supporting your workforce, and aligning your HR strategy with broader business goals.
Benchmarking your HR to employee ratio involves comparing your current staffing levels with industry standards to determine whether your HR team is properly sized. This is how you can do it:
To begin, use the formula provided earlier to calculate your current HR to employee ratio. You’ll need two key pieces of information; the number of full-time equivalent (FTE) HR professionals and the total number of employees in your organization. Once you have those numbers, divide the HR FTE by the total number of employees, then multiply by 100 to get a percentage.
Industry benchmarks vary by sector, company size, and region. The Society for Human Resource Management (SHRM) and other industry organizations provide data on average HR to employee ratios across different industries. For example:
Small businesses (fewer than 250 employees): Typically have a higher ratio, around 3.4%, as HR professionals in smaller companies wear many hats.
Mid-sized businesses (250–1,000 employees): Have ratios around 1.2%, as processes become more structured and efficient.
Large corporations (1,000+ employees): Often have ratios closer to 1%, as they benefit from economies of scale and advanced HR technology.
One key limitation with SHRM and similar institutions is the lack of filtering available, which means that the benchmarks won’t necessarily be relevant for your organization.
CompanySights is an alternative benchmarking provider with data available for the HR to employee ratio based on your industry, geography, revenue, total number of employees, and more. All that you need to do is enter a few details about your organization to access the relevant benchmarks - Start your search here.
While benchmarks are helpful, the best ratio for your organization may differ based on your unique needs. Factors like company growth, employee engagement, turnover rates, and the use of technology can affect the ideal ratio. Be aware of them when you perform your benchmarking exercise.
After calculating your ratio and comparing it with industry benchmarks, analyze the results. If your ratio is significantly higher than the benchmark, you may be overstaffed. If it’s lower, then your HR team may be efficient (e.g. using lots of technology) or under-resourced (e.g. stressed HR employees).
Note: Refer back to bullet point #3 to help you interpret the benchmarks and guide any staffing decisions.
Depending on your findings, you may need to adjust your HR staffing levels. Companies with ratios below the benchmark should consider hiring more HR professionals or outsourcing certain HR activities (e.g. recruitment). Those with ratios above the benchmark might explore streamlining processes, reducing headcount, or investing in technology to improve HR efficiency.
There are several factors that will influence the HR to employee ratio in your organization. This is why we recommend using benchmarks tailored to your organization, ideally filtered for the six elements below:
Larger organizations often have lower HR to employee ratios because they benefit from economies of scale and more established HR processes. Smaller companies tend to have higher ratios, as HR professionals in smaller firms typically handle multiple roles. For benchmarking purposes, company size can be filtered as a revenue range (e.g. $100M to $500M) or based on the total number of employees (e.g. 500 to 1,000).
If your company operates across multiple locations or countries, your HR team may need to manage various compliance requirements, employment laws, and cultural considerations. This could necessitate a higher HR to employee ratio, especially in organizations with global workforces.
Companies that leverage HR technology, such as human resource information systems (HRIS) and employee self-service platforms, can often manage more employees with fewer HR staff. Automation reduces the need for manual tasks and streamlines processes, enabling HR departments to operate more efficiently.
The level of support your HR team provides can affect the optimal ratio. For example, organizations with high levels of employee engagement, development programs, and personalized HR support may need a higher ratio to ensure that employees receive adequate attention.
Companies experiencing rapid growth often require more HR resources to manage recruitment, onboarding, and employee relations. In contrast, organizations that are stable or downsizing may be able to reduce HR staffing levels.
The composition of your workforce, whether it is mostly full-time, part-time, remote, or contract workers can influence your HR staffing needs. More diverse workforces often require additional HR support, while more homogenous workforces may be easier to manage with a leaner HR team.
It’s really important to drill down and filter for these requirements when benchmarking, as stakeholders are more likely to buy in to the outcome when they know the data is relevant. If you’re looking for HR to employee ratio benchmarks tailored to your organization, then check out CompanySights.
Let’s look at three companies who benchmarked their HR to employee ratios, and how they adjusted their staffing levels based on their findings.
HR to Employee Ratio: 3.33% (1 HR professional for 30 employees)
Industry Benchmark: 3.4% for small companies
This small startup was slightly below the industry average ratio , and upon further evaluation, realized that its HR staff were overwhelmed with recruitment and onboarding during an important period of growth. The company decided to hire a recruiter, increasing the HR to employee ratio to 6.67%, which is well above the benchmark but critical for future headcount growth.
HR to Employee Ratio: 0.8% (2 HR professionals for 250 employees)
Industry Benchmark: 1.2% for mid-sized companies
With a ratio below the industry standard, it was no surprise that SailPower was struggling with HR compliance and employee engagement. They ended up hiring one additional HR professional, bringing the ratio to 1.2%, closely aligning with industry benchmarks and improving their overall HR capability.
HR to Employee Ratio: 1.5% (15 HR professionals for 1,000 employees)
Industry Benchmark: 1% for large companies
DC Group realized that it was above the industry standard and decided to invest in HR technology to automate recruitment and payroll processes. As a result, they were able to reduce their HR team to 10 members, bringing the ratio to 1%, which aligns with the external benchmark.
Find relevant employee benchmarks here
The HR to employee ratio is an important metric for ensuring that your HR team is adequately staffed to meet the needs of your organization. By comparing your ratio with industry benchmarks, you can optimize your HR staffing levels and ultimately help to achieve the broader business goals.
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