How Does Your HR Budget and Staffing Compare?

How big should your HR staff and budget be?

While this is a question best answered in the context of your unique talent strategy — what it will take to execute that strategy to drive organization success and what role HR plays in making that happen — benchmarks can sometimes provide a helpful reference point.

Bloomberg BNA’s 2017 HR Department Benchmarks and Analysis Report (its 40th annual HR benchmarking study), based on the responses of 681 U.S. HR executives and professionals, supplies some data points for consideration.

A few summary outtakes:

HR staffing

  • HR staffing ratios, at median across those reporting, have increased 40% over the last 10 years, from 1.0 HR employees for every 100 workers served in 2007 to 1.4 HR employees in 2017.
  • Smaller employers tend to report higher HR staff ratios while larger organizations – who have the advantage of economies of scale – maintain a lower ratio of HR staff.

HR budgets

  • Budgeted HR spending dipped to a 10-year low in 2017, with a median of $1,087 per employee, down from $1,440 in 2016. This seems incongruent with the trend in HR staffing noted above. Bloomberg BNA hypothesizes that perhaps programs and activities have seen modest growth in line with HR staffing increases, but an expansion of the employee population drove down per capita costs.
  • As with HR staffing, employer size and ability to leverage scale appear to impact HR budgets. The median per capita HR budget ranges from $594 per employee for employers with 2,500 or more workers to $2,966 per employee among those with less than 250 workers.

The full report is $1,295. You can download a summary here.

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Ann Bares

Ann Bares is the Managing Partner of Altura Consulting Group. She has over 20 years of experience consulting in compensation and performance management and has worked with a variety of organizations in auditing, designing and implementing executive compensation plans, base salary structures, variable and incentive compensation programs, sales compensation programs, and performance management systems.

Her clients have included public and privately held businesses, both for-profit and not-for-profit organizations, early stage entrepreneurial organizations and larger established companies. Ann also teaches at the University of Minnesota and Concordia University.

Contact her at abares@alturaconsultinggroup.com.