HR Ratios Increase In 2003

The median ratio of HR staff to the overall employee head count stands at 1 HR Staff for every 100 employees, up slightly from a 0.9 ratio in the previous year. With the increase, median HR staff ration per 100 employees returns to the same level it saw in both 2000 and 2001, according to the HR Department Benchmarks and Analysis 2003 report published by Washington-based legal publisher BNA in conjunction with the Society for Human Resource Management (SHRM).

With the increase in staff levels went a mirror image increase in the percent of an organizations’ total projected expenditures for the year. In 2003, HR departmental budgets represented 0.9% of the overall budget, up a tick from 0.8% in 2002. However, even with the increase, the HR department’s take of the pie is still less than a consistent 1.1% recorded from 1994-1996.

Looking at those firms with separate HR department budgets, human resource outlays in 2003 comprised 0.1% to 6.9% of the employers’ total projected operating expenditures for the year. Most HR departments though fall with a range of 0.6% to 1.8%. HR departments have taken the budgets to heart too, as 66% reported either staying on budget or coming in lower in 2002. Overall, only 17% had expenses that outgrew their budgets, a marked improvement from the 25% that went over in 2001.

Dark Clouds

The increases in staff ratios and budget percentages are not necessarily good news, as it is likely due to HR staff staying on to deal with issues surrounding job eliminations . As evidence of this, the study points to variations in staff ratios across industry classifications, particularly in the nonbusiness sectors not affected by layoffs and the like, such as health care, government and education. Otherwise, the ratios trend downward as the total employment of a company increases; this is due to the reaction nature of HR to economies of scale, the study found.

To handle the apparent increase in workload HR staff are facing, companies are turning to outsourcing. In the current environment of reduced workforces, it is not surprising that employee assistance/counseling was the most outsourced function, farmed out by 44% of HR departments. Also on the list was:

• 36% – pension/retirement plan
• 26% – benefits (other than pension/retirement)
• 23% – training
• 21% – payroll.

Staff Makeup

Examining the typical HR staff, the study found managerial, professional and technical employees make up the lion’s share, with clerical workers making up a much smaller portion. In fact, 25% of those polled have no office or clerical employees on the HR department staff, particularly among smaller organizations that are more inclined to eschew any regular secretarial or clerical staff.

HR specialists who work in only one or two functional areas of expertise are on staff at just over half of the responding establishments. Benefits and employment remain the predominant areas of specialization.

The study was conducted from March to July 2003 and is based on questionnaires mailed to 1,757 members of BNA’s survey panel, HR executives representing a cross section of US employers, both public and private and to a random sample of 3,000 members of SHRM. The report can be purchased at either www.shrm.org/shrmstore or by calling (800) 444-5006.