With labor costs making up a large part of the HR budget, the ability to serve more employees with a smaller HR staff represents significant potential cost savings. For that reason, it’s common for leaders to question how many HR employees the organization 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). Organizations 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 staff 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 organizations 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’s 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 organizations 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’re 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 5 areas for HR staff productivity gains
If your HR staff productivity isn’t 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 standardize your processes
Improving and standardizing 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 all using the same definitions and processes? It’s natural to have some process variation due to local regulations or constraints, but you should strive for as much standardization 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. Organizations often find that the work of process standardization and improvement drives significant productivity gains even before technologies like automation are applied.
2. Adopt automation and AI for high-volume processes
Process optimization and standardization help to 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 labor hours for more strategic and higher-value work.
You should also look for opportunities to harness artificial intelligence for more common HR questions and requests. For example, some organizations 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 labor-intensive options (like phone calls) for cases that require an elevated level of expertise.
3. Set up and optimize HR shared services
Global organizations often leverage HR shared service centers to carry out high-volume processes like payroll, data entry, travel and expense reimbursement, and other aspects of HR administration. Having a centralized team perform this work on behalf of the enterprise means that organizations can ensure greater consistency, develop staff with specialized expertise (as opposed to an army of generalists) and work at higher levels of scale.
If your organization already uses shared services for HR, work to make sure that questions and requests are going to the appropriate staff. For example, many organizations 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 specialized 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 can’t easily find the information they need. We’ve found that knowledge workers (e.g., HR practitioners, programmers, designers and other workers who use judgment 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 work week 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, optimizing 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 programs and leadership development for HR leaders. Organizations 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.
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 standardization 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 find 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 can’t 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. For the most current data, visit apqc.org.
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