When it comes to effectively managing HR, it can be difficult to know how many resources to allocate. How do you determine the right headcount for your organization given the variety of complex factors involved?
Getting the headcount wrong can have serious consequences, from budget overruns and delayed processes to dissatisfaction with HR services and a decrease in team productivity.
Investing in the right tools is key to maximizing HR performance while considering factors such as standardization & optimization of processes, technology & automation, organizational goals, total headcount, CBAs/CLAs & cross-border hiring. With these considerations in mind, you can make sure that your HR headcount is properly aligned with your company’s strategic objectives.
1. The level of HR processes standardization & Optimization
In today’s competitive business landscape, an effective HR team is critical in maintaining the success of an organization. To ensure optimal performance, it is important that HR processes are standardized and optimized.
Standardization helps to reduce errors and inconsistencies while optimization eliminates any redundancies or inefficiencies in the process. With standardized and optimized HR processes, organizations can maximize their productivity and efficiency while reducing costs. Optimized HR processes help to improve organizational profitability and growth, this fact is especially true for organizations that rely on global talent or have complex work requirements.
The more processes vary from situation to situation the more complexity is added and human interventions are required. Non-standardized processes require more work and more time, therefore a higher headcount.
2. TECHNOLOGY & the level of process automation
The level of HR digitalization and self-service functionalities are key aspects when deciding on the HR organization. When automating repetitive and manual tasks companies free up their HR team to focus on value-adding initiatives.
For example, digital HR platforms can provide employees with access to information and resources that would otherwise require time-consuming manual searches by an HR representative.
Technology development already reached the point where (depending on the country’s legislation and the needs of a company) 80% to 90% of HR tasks can be robotized. It is only a matter of time before all the tools will become more affordable and accessible to any business.
3. organizational goals
The headcount should align with the overall goals of the organization, such as growth, expansion, or cost reduction.
Establishing organizational goals is essential for an organization to be successful. As it is important to ensure that the headcount aligns with these goals, consequently HR headcount should be aligned with the business plans.
Furthermore, the HR strategy is aligned with the business strategy, and consequently, the more ambitious strategy is the more HR should be strategically oriented.
When compared to a more strategic HR role, a largely operational HR department will undertake different work and require a bigger HR team. The HR business partner group is a prime instance. When the proportion of business partners in the company is low, these business partners normally play a considerably more strategic role. When the ratio is high, the business partner assumes the job of a conventional HR counselor and becomes far more operational.
4. total headcount of the organization
Businesses can assess the function of HR in their organizations by being aware of the HR-to-employee ratio and the factors that influence it.
As companies grow in size, organizational life cycle theory suggests they face a range of problems.2015 Society for Human Resource Management
For example, in small start-up organizations, when the focus is on firm survival, HR
practices may appear unstructured and lack documentation, which can increase risk should a hiring decision or employment termination be legally challenged. Large organizations, which usually have established business strategies to reliably produce revenue, often institute formal business practices (such as formal job descriptions, established pay scales and standardized performance reviews) to manage that risk. Generally, as staff size grows and organizations become complex, the HR function becomes more formalized and sophisticated.
Executives in HR and other functional areas attempt to fit policies and processes to business needs, yet the business needs vary depending on organizations’ stages of development. HR professionals work to implement new systems to help facilitate the success of those initiatives, often requiring significant change management support. HR professionals who work in small, medium or large organizations know staff size affects how they go about implementing HR initiatives. For example, implementing an employee appraisal system for a singlesite organization of 100 employees is vastly different than implementing a system across multiple sites totaling 5,000 employees. However, HR practices change to fit and support organizations’ size and business environments.
The “HR-to-Employee Ratio” determines how many HR practitioners are utilized by an organization for every employee. It is calculated by multiplying the result by 100 after dividing the total number of full-time HR practitioners by the total number of full-time employees in an organization.
With the “HR-to-Employee Ratio”, you can get the perfect Headcount balance for your HR department, but only with a few things that you should consider in addition.
5. duties around collective Bargaining/labour agreements
A higher level of unionization within the organization results in a greater HR/staff ratio as additional work occurs.
Unions are engaged in any important employee decision. Involving union representatives and actively managing stakeholder relationships is a critical function that typically comes within the purview of the HR department.
When it comes to deciding on the right HR headcount, businesses should consider collective bargaining/labour agreements, and the processes that exist around them that are essential elements when it comes to workload assessment.
6. “Cross-border” workforce
There are many factors to consider when hiring cross-border, as it is important to:
- understand the local labour market and find qualified candidates available for the jobs,
- and be aware of any cultural differences that may exist between the existing workforce and potential new hires,
- understand the legal requirements regarding cross-border employment and further.
The more organization is distributed the more new process necessities and complexities about arose that need to be handled, therefore consequently a higher HR headcount must be involved.