What is the ‘right’ number of HR employees?

With labour costs making up a large part of the HR budget, the ability to serve more employees with a small HR staff represents significant potential cost savings. For that reason, it is common for leaders to question how many HR employees the organisation has and how many it needs. Benchmarking HR staff productivity enables leaders to talk about headcount in a data-driven way that connects to business goals and outcomes.

In this article, we highlight cross-industry data related to HR staff productivity, provide guidance for how to benchmark productivity and discuss five areas where you can invest resources to enhance the productivity of your HR employees.

At the median, HR functions can serve around 105 employees per HR full-time equivalent (FTE). Organisations at the 25th percentile serve the fewest employees per HR FTE (68.5 or fewer), while those at the 75th percentile serve the most (190.1 or more).

This measure is an effective way to track employee productivity because it shows how many employees each HR FTE serves. Tracking this measure over time can help HR build a business case to add HR staff or make the case that HR headcount is in line with peer organisations and that cuts would be counterproductive.

How to find the story behind the numbers

All else being equal, a higher number for the employee-per-HR-FTE measure is better because it means that HR staff can handle a greater volume of work and support a larger workforce. Serving a low number of employees per HR FTE can be a sign of redundancies, process bottlenecks, excessive manual intervention or other challenges related to productivity.

When evaluating HR staff productivity, it is important to dig deeply into your specific context and account for any factors that might shape your benchmarking results. For example, HR functions in highly regulated industries may require that HR serve fewer employees per HR FTE. Factors like revenue, overall headcount and your country or region will also be relevant factors that shape your benchmarking results. Find benchmarking peers from organisations that most closely match yours to develop an accurate sense of where you stand on this measure.

You should also track this measure alongside HR quality measures such as HR staff retention and HR customer satisfaction. These measures will help you assess the current level of service you are providing as you consider whether your headcount needs to change. The last thing you want is a scenario where HR is serving more employees than ever while the quality of HR’s services and the employee experience (both for HR employees and your workforce more broadly) rapidly decline.

Invest in these five areas for HR staff productivity gains

If your HR staff productivity is not where you want it to be—or headcount reductions require you to do more with fewer FTEs—there are at least five areas where you can make investments for a productivity boost.

1. Improve and standardise your processes

Improving and standardising HR processes is one of the most important things you can do to boost your productivity. For example, if your HR team is spread across multiple offices, are they using the same definitions and processes? It is natural to have some process variation due to local regulations or constraints, but you should strive for as much standardisation as possible.

Designing a global HR process is an opportunity to gather best practices from across the enterprise while working to eliminate process bottlenecks and inefficiencies. Organisations often find that the work of process standardisation and improvement drives significant productivity gains even before technologies like automation are applied.

2. Adopt automation and AI for high-volume processes

Process optimisation and standardisation help set the stage for tools like process automation. Especially when applied to high-volume, repeatable processes like payroll, automation reduces the risk of error, lowers costs and cycle times, and frees HR labour hours for more strategic and higher-value work.

You should also look for opportunities to harness AI for more common HR questions and requests. For example, some organisations are now using tools like chatbots and generative AI to help employees find answers to their questions without having to talk to a human representative. These tools can help your HR team reserve more expensive or labour-intensive options (like phone calls) for cases that require an elevated level of expertise.

3. Set up and optimise HR shared services

Global organisations often leverage HR shared services centres to carry out high-volume processes like payroll, data entry, travel and expense reimbursement, and other aspects of HR administration. Having a centralised team perform this work on behalf of the enterprise means that organisations can ensure greater consistency, develop staff with specialised expertise (as opposed to an army of generalists) and work at higher levels of scale.

If your organisation already uses shared services for HR, work to make sure that questions and requests are going to the appropriate staff. For example, many organisations use a tiered system in which tiers 0 and 1 are reserved for basic HR questions, while tiers 2 and 3 are reserved for cases that require specialised expertise or more intensive intervention. Using chatbots and self-service options at tiers 0 and 1 frees up staff to upskill and train for more complex customer service tasks.

4. Make information easier to find

Productivity decreases when employees cannot easily find the information they need. We have found that knowledge employees (e.g. HR practitioners, programmers, designers and other employees who use judgement and critical thinking skills in their work) spend an average of 2.8 hours a week looking for or requesting information needed to complete work. These employees also spend 1.7 hours a week seeking out the right person to answer questions or provide expertise. In other words, these employees spend more than 10% of a 40-hour workweek seeking or requesting information—time that could be spent on more valuable activities if information was more readily accessible.

Content management initiatives that can make key information easier to find and access—whether by implementing a content management system, optimising search tools or something else—will reduce the time that HR employees spend looking for information, enabling them to serve customers more efficiently.

5. Cross-skill and upskill your HR staff

Practices like cross-skilling and upskilling keep employees engaged while helping them to develop skills that enhance productivity. After identifying HR employees’ areas of interest, coach them to translate those interests into a complimentary skill set that can add value to your HR function and the enterprise more broadly. Tie their desired skill set to their current role (or the role they eventually hope to step into) and provide development opportunities to help them build those skills.

Best-in-class HR functions are significantly more likely to provide these opportunities through practices like job rotations (both within HR and across the business), early-career development programmes and leadership development for HR leaders. Organisations that help their HR employees gain both technical and “soft” skills equip them for a wide range of consultative and tactical work that both adds value to the business and increases productivity across HR.

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Key takeaways for HR staff productivity

Investments in each of these five areas will help HR leaders increase the function’s productivity without sacrificing quality or working staff to exhaustion. These areas are also mutually reinforcing. For example, activities like process improvement and standardisation set the stage for tools and technologies that enable HR staff to work at greater levels of scale and perform more strategic, value-added work. Making information easier to fund not only helps employees work more productively but also supports a development ecosystem that helps them gain new skills, which further enhances productivity.

Even if you cannot make substantive investments in all of these areas, picking one or two (for example, process improvement and making information easier to find) will still drive productivity gains that benefit HR staff and the employees they serve.

Data in this content was accurate at the time of publication.

About the author: Elissa Tucker is Principal Research Lead, Human Capital Management, at APQC. This article was first published on Human Resource Executive.