HR staffing ratio is still increasing by more than 11% since 2018, but a reduction would be accompanied by high Employee Turnover!
Nicolas BEHBAHANI
Global People Analytics & HR Data Leader - People & Culture | Strategical People Analytics Design
??The relationship between HR staffing and turnover is causal !
Finding the right number of HR staff in each company is not an easy task. Whether your HR population is too high or on the contrary too low is crucial for executives for a question of cost but also for the continuity of the business.
?? HR staffing is up more than 11% since 2018. HR staffing ratios have grown the fastest in industries with a large, low-wage frontline workforce
?? As Dave Ulrich brilliantly pointed out, when the HR staffing ratio gets too high, it means fewer HR professionals per employee, there is a downside. It may signal that a company is not as committed to managing people as it should be. And, without HR professional support, HR work may be done by "shadow staff" who lack the knowledge to do good HR work.
?? HR ratio depends on company size as many employers need some HR staff to handle basic functions such as payroll. When small employers have even a few HR staff, their ratio is high.
?? In another recent post, we already highlighted that since 2018, the share of HR job holders who are recruiters has risen by 26.3%. So far in 2023, recruiters make up the largest share of HR personnel. But year-over-year growth slowed by 6 percent between 2022 and 2023 as US hiring fell.
?? Reduced HR staffing is accompanied by?high employee turnover. That return on increased HR staffing diminishes after a point, however, according to a new interesting research published by ADP Research using data ?? from internal ADP Payroll up to end of April 2023.
?What is the HR staffing ratio measurement?
Researchers defined that HR Staffing Ratio as the number of HR personnel for every 100 employees.
?What is the minimum level of HR staffing?
Researchers believed that the “right” level of HR staffing can vary by :
??Industry
??Company size
??Boom-and-bust labor market cycles.
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. As US demand for workers rises, so does demand for recruiters.
?HR staffing is up more than 11 percent since 2018.
Researchers found that HR staffing ratio grew faster and more steadily for larger companies between 2018 and 2023, HR staffing ratios at the smallest employers are up 4.7 percent since 2018.
Companies with fewer than 50 workers can average more than two HR staff members.
?Evolution of HR staffing and Turnover
Researchers found that monthly turnover drops for HR staffing ratios above 0.5, that is, when there is at least one HR staff member for every 200 employees.
??This trend reverses, however, when the HR staffing ratio exceeds 4.5, or nine HR office personnel for every 200 employees.
?Causal relationship between HR Staffing and Turnover
Researchers found that at large employers, turnover declines rapidly as HR staffing starts to increase. This may prove that at large companies, they require specialized HR employees.
??Researchers conclude that when HR offices grow even bigger, the low-turnover advantage fades dramatically. but researchers agreed that they need to determine whether low HR staffing levels directly cause turnover or merely are associated with other factors that influence employee departures, such as a competitive job market.
?? ???? ???????????????? ????????: This outstanding research demonstrates that finding the right number of HR staff depends on several variables, namely the Industry, the size of the Company but also Boom-and-bust labor market cycles. This research once again demonstrates that the presence of qualified HR staff is a considerable asset for companies and if their number is not sufficient then business can suffer, particularly in large companies.
Thank you ?? ADP Research researchers team for these insightful findings: Jeff Nezaj Nela Richardson Marie Antonello
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Business Intelligence Head | Data driven insights into decisions
1 年Great research Nicolas BEHBAHANI, and a great conclusion that one size doesn't fit all. The list of dependable variables may be continued. The very turnover (attrition) rate is the parameter that needs more investigation. I believe one cannot say high or low attrition. Instead we can/should talk about on-target or below/above the target one. Also, what is a good attrition for one organization might be totally unacceptable for the other. Zero attrition task (I heard about such a couple of times during my career) is not only a total nightmare to HR, but also a shot in the leg as new skills adoption is at danger. That would mean business slowdown or even cease to exist. So, the business processes should be designed for a tact time (Lean), average productivity (at 65-75-80%), and a target turnover rate. Trying to bring things to their limits would benefit companies in the short term, but become a real problem in the long run. Knowing the target turnover rate in current business setup (like swot) is a challenge for HR.
Passionate about, people, talent, diversity, health, safety & wellbeing as key enablers of organisational growth and success.
1 年My view goes beyond just the 3 variables adding HR Visibility as the 4th though not the least. By visibility, l refer to how the strained HR function can use its survival mechanisms to be more available and useful to employees and the business at large. For example, HR staffing ratios can be improved by increasing the mobility of the HR function to its hard-to-get customers both physically and technologically. The first stage though is to destigmatise the HR office from being known as a policing function by slowly moving away from process HR to people HR to expand its audience.From my previous experience as an HR practitioner, more employees begin to benefit from HR using limited HR employees because of a visibility that allows HR issues to be solved before they become complex and overwhelming to the department - " KEEPING THE GRASS SHORT". As a result, the limited HR resources can be used for more strategic purposes.
Head of Administration Dal Food, PhD in Economics in National Strategic Planning Heavy Industry Companies, SP-Assoc. CIPD. Talks about #Leadership, #Strategicworkforceplanning, #ChangeManagement, #TalentDevelopment.
1 年Finding the optimal number of HR staff is a crucial task for executives, it is important to strike a balance between the cost of HR staff and the continuity of the business, HR leaders can identify key HR metrics to track and report on to measure the effectiveness of their HR function. These metrics can influence hiring decisions and budgets, reveal skill needs, and shape organization-wide strategy. HR leaders can demonstrate their team’s impact by tracking HR metrics that align with corporate strategy and inform business decisions.?Using the correct metrics, HR can identify opportunities to improve workforce performance and productivity, and identify cost reduction opportunities. The HR to employee ratio is a useful tool for assessing the optimum capacity of HR in an organization, the HR to employee ratio is influenced by several factors such as the size of the organization, the industry, and the complexity of HR processes. The optimal HR to employee ratio varies depending on the organization’s needs and goals.
People Experience Leader | HR Strategy, John Maxwell Certified
1 年This is really interesting data and helpful to consider as the new year approaches and we look for the best ways to contribute and measure our contribution to business success. While the balance needs to reflect an individual business it’s great to have a broad benchmark to compare to. Thanks for sharing