By Roy Maurer
Employers require a certain level of HR staffing to operate effectively, but what is that number?
The ADP Research Institute analyzed payroll and econometrics data on more than 25 million employees and turned up some interesting findings about HR staffing levels, including:
- The “sweet spot” for most employers is between 1.5 and 4.5 HR staff per 100 employees. “That’s accurate, but a wide gap,” said Nicole Belyna, SHRM-SCP, director of talent management and inclusion at SHRM. According to SHRM’s 2022 Human Capital Benchmark Report, the average HR staff to employee ratio is 1.7 per 100.
- HR headcount is up more than 11 percent since 2018.
- Too few—or too many—HR staff members results in higher turnover.
“The ‘right’ level can vary by industry, company size and boom-and-bust labor market cycles,” said Jeff Nezaj, principal data scientist at the ADP Research Institute in Roseland, N.J. “In tight labor markets, organizations will bulk up their HR offices with recruiters and other specialists to gain an advantage in the pursuit of talent. HR divisions might shrink when labor demand cools.” Nezaj found that HR staffing has grown the fastest in industries with large, low-wage, front-line workforces that tend to have lower HR staffing ratios than white-collar organizations.
“Job roles in large, low-wage, front-line industries tend to be more uniform and standardized and usually require lower HR staffing levels,” Nezaj said. “It is interesting to note that while these industries have the lowest staffing levels overall, they have experienced the most growth in HR staffing. When the pandemic hit, we know that low-wage workers were disproportionately laid off compared to high-wage earners. The increase in HR staffing could be a response to the demand in hiring that was required during the recovery.”
HR staffing ratios grew faster and more steadily for larger companies than smaller ones between 2018 and 2023, Nezaj added, and ratios at the smallest employers are up 4.7 percent since 2018.
Labor market fluctuations affect some industries and their HR staffing ratios more than others. For example, employers in the leisure and hospitality, manufacturing, and construction industries tend to have lower HR staffing levels than those in finance or professional and business services. Having more high-wage workers is seen as necessitating more HR involvement. HR staffing in education and health services lies in the middle, perhaps due to a more even mix between low-wage and high-wage workers.
Notably, recruiters make up the largest share of HR staff, but growth of recruiter roles has fallen since hiring began to cool in 2023. It’s become common to see reactive hiring and reductions in force for talent acquisition professionals, Belyna said.
Impact on Turnover
ADP researchers also analyzed the correlation between HR staffing levels and employee turnover and found, perhaps unsurprisingly, that reduced HR staffing is accompanied by more employees leaving the organization. Turnover begins to fall when there is at least one HR staff member for every 200 employees, according to ADP.
“An understaffed and overburdened HR department could lead to frustration and overall job dissatisfaction within an organization based on the critical functions HR performs,” Nezaj said.
“One could argue that an organization that does not properly staff its HR department has other organizational issues,” Belyna said. “Perhaps the lack of HR staffing is a result of a lack of interest in people or workplace culture.”
Researchers found that expanded HR headcount will reduce employee turnover, up to a point. As HR offices grow bigger—specifically, when HR staffing exceeds nine members for every 200 employees—turnover starts to rise again.
There is no definitive reason for why that is, but surveys reveal that employees rate HR higher when they have a single point of contact, even if that contact directs them to subject-matter experts on topics such as benefits or employee relations. When HR staffing ratios rise beyond a certain point, HR may be seen as too specialized, and employees might not know whom to reach out to for help.
Outside Assist
Beefed-up HR administration can support a lean HR team by allowing them more free time to spend with employees, said Kristen Appleman, senior vice president and general manager of ADP TotalSource, the company’s professional employer organization (PEO) for outsourced HR management.
PEOs can help with routine administrative HR tasks and compliance requirements, leaving HR to focus on more strategic aspects of people management. “All the while, the PEO is working hard in the background to onboard new talent, provide competitive benefit programs, and stay compliant with employment rules,” Appleman said.
