The HR to employee ratio measures whether an organization has enough employees to manage HR related tasks like recruitment, employee relations, performance management, and HR operations.
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Recent shifts in how we work, such as hybrid models and the rise of Artificial Intelligence, have placed more demands on HR teams than ever before. An optimal HR to employee ratio ensures that HR departments are neither overworked nor overstaffed, making it a critical metric for businesses to evaluate. In this guide, we’ll explore:
The HR to employee ratio compares the number of HR professionals in an organization to the total workforce. It’s typically expressed as a ratio, such as one HR professional for every 100 employees (1 : 100), or as a percentage of total headcount (in this example, 1%).
This ratio provides insight into how much HR capacity a company has relative to the size of its workforce. A lower ratio (such as 1 : 50) indicates a higher concentration of HR staff, which may reflect a focus on employee support, talent development, or complex compliance needs. A higher ratio (such as 1 : 200) suggests fewer HR professionals per employee, which is often seen in larger organizations that rely more heavily on standardized processes and HR technology.
Companies often use this ratio as a benchmarking tool to see how they stack up in their industry. It can help leadership understand whether their HR function is appropriately resourced, highlight opportunities to increase efficiency, or justify additional investment in people-related capabilities.
The calculation relies on two inputs: (a) the number of HR employees and (b) the total number of employees. When these inputs are put next to each other they form the HR to employee ratio.
Let’s now look at an example to confirm our understanding. We have a company called Squaris that employs 20 HR professionals and has a total of 1,000 employees.
What is their HR to employee ratio?
Formula: (HR Employees / Total Employees) × 100
Calculation for Squaris: (20 / 1,000) × 100 = 2%
This equates to a ratio of two HR professionals for every 100 employees (2 : 100).
The HR to employee ratio is a critical metric that can influence not just the HR function, but 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 employee morale, and a worsening 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 maintaining effective HR operations, supporting your workforce, and aligning the HR strategy with broader business goals.
Benchmarking your HR to employee ratio involves comparing 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 HR professionals and the total number of employees in your organization. Once you have those numbers, divide the number of HR employees by the total number of employees, then multiply by 100 to reach a percentage.
Industry benchmarks vary by sector, company size, and region. Indeed, SHRM, and other industry organizations provide data on the average HR to employee ratio. For example, Indeed states that many companies have too many people in their HR department, as the average HR to staff ratio is 2.57. Forbes also break this down by company size:
Smaller businesses typically have a higher ratio of around 3.4%, as they don't benefit from economies of scale and HR professionals often provide more personalized, hands-on HR support to build culture and engagement, rather than leveraging automated systems or outsourcing.
Medium-sized companies often have ratios around 1.2%. This is lower than smaller businesses, as processes typically become more structured and efficient as the organization grows. At this stage, HR functions may start to specialize, and businesses are more likely to adopt systems or tools that streamline HR processes like recruitment, payroll, and performance management.
Larger organizations often have ratios closer to 1%, as they benefit from economies of scale and advanced HR technology. HR functions are usually more specialized, and tools like HRIS platforms, automation, and outsourcing help manage large workforces efficiently with fewer HR staff relative to employees.
One key limitation with SHRM and similar institutions is the lack of data 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 - Start your search here.
While benchmarks are helpful, the optimal ratio for your organization may differ based on things like company growth, employee engagement, turnover rates, and the use of technology. All of these factors can affect the ideal ratio for your company, so it’s important to keep this in mind when benchmarking.
After calculating your ratio and comparing it with industry benchmarks, it's time to analyze the results. If your ratio is higher than the industry benchmark, this suggests that you may have an overstaffed HR function. If it’s lower, then your HR team may be efficient, such as through the use of technology, or the HR team may be under-resourced, usually identified by low morale.
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 business 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.
When benchmarking, it’s important to drill down and filter for these requirements, as stakeholders are more likely to agree with benchmarks 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 standard external benchmark.
Find HR to employee benchmarks for your organization
The HR to employee ratio is an important metric for ensuring that your HR team is adequately staffed to meet the needs of your workforce. 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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