HR to Employee Ratio: How Many HR People do you Need?

8 of August, 2022

Human resources is quite a unique department. While smaller businesses survive without an HR team, bigger companies quickly find the need to develop this type of organizational group in order to stay on top of the employee management and to maintain, or even spur, their growth. Which is when the question arises: what is a good hr to employee ratio? And how do you calculate it anyway? To help you achieve the ideal HR to employee ratio for your business, you will find in this article the formula to use in order to get your HR staff to employee ratio.

How to calculate the HR to employee ratio?

It is quite easy to measure the HR to employee ratio. A simple calculation will give you the ratio for your business and allow you to determine if you are within the average range or if you should consider remodeling your HR team.

To get your business’s HR to employee ratio, you will need the following data:

• The number of HR positions in your company. Include only the full-time equivalent (FTE) positions;
• The total number of your employees. Here as well, only the FTE positions count.

You then only have to follow this simple formula to obtain the proportion of HR staff compared to the total number of employees:

HR to Employee Ratio = ( Number of HR Full-Time Employees / Total Number of Employees ) x 100

What is a good HR to employee ratio?

That really depends on you company’s size. The average HR to employee ratio is indeed inversely proportional to the extent of the business. Here’s how the ratio decreases as the company grows, on average:

• Fewer than 100 employees: 2.70
• 100 to 249 employees: 1.26
• 250 to 499 employees: 1.07
• 500 to 999 employees: 0.82
• 1,000 to 2,499 employees: 0.79
• 2,500 to 7,499 employees: 0.53
• 7,500 or more employees: 0.42

If your business’s HR to employee ratio doesn’t fall into these categories, you should review how your HR department functions. An HR to employee ratio that is higher or lower than average isn’t necessarily a bad thing, provided that your company’s management needs are being met and that its growth isn’t impeded by a lack or an excess of HR workers.

You should assess how much value your HR team adds to the company, and in which areas exactly. You can then consider outsourcing some of the HR functions if your goal is to reduce the HR to employee ratio. You can also simplify your HR team’s work by using an app like Sesame HR that will centralize all the information regarding your company’s human resources.

How many employees do you need to have HR?

Human resources are an important part of a business, no matter its size. But in small businesses, the owner usually takes on the tasks that would be handled by the HR team in a bigger company. Or they will outsource different HR functions in order to have more time to dedicate to the core of their business. The fees that this practice entail are often far smaller than the cost of hiring a new employee.

However, as the company grows, so does the need for a team dedicated to the management of human resources. The general advice is to hire a full-time human resource generalist when the company’s staff reaches about 40 employees. In order to save time and money, you might want to transition a current employee into an HR position by offering them a human resource course.