How Big Should Your HR Team Be? Check Out Our Calculator & Find Out

The human resources (HR) team is responsible for various tasks, from recruiting and onboarding new employees in a company to managing payroll and benefits. But how big should this team be, especially if you are a smaller business? There is no one-size-fits-all answer, as the ideal HR headcount will vary depending on the size and needs of the organization.

Stacey Gibson, Director of Human Resources at Stratus HR breaks down everything you need to know about how big your HR team should be.

While we don’t have a direct answer to the exact size, we can offer guidelines that can help you determine what works best for your business. You can use a ratio, which should be proportional to the employees in a company. For example, a company with 100 employees may have a team of five HR professionals, while a company with 1,000 employees may have a team of 10-15 HR professionals. Keep in mind that if your HR  team is too small, they will be overwhelmed and unable to keep up with the demands.

Ultimately, the ideal HR headcount size will vary from one organization to another. The best way to determine the right team size for your company is to assess your needs and ensure the team can handle the workload.

To find out where your business stands and how many HR team members you should employ, check out our calculator.

HR Responsibilities In Small Businesses

The first step in determining the HR ratio that works for your company is to list all the jobs that need to be done. Common HR jobs include:

• Recruiting: Drafting job postings, distributing advertisements, reviewing resumes, conducting interviews, setting up follow-up meetings, and updating applicants on their status.
• Offering jobs: Gathering data for making offers, dealing with manager and applicant negotiations as well as the back and forth, and ensuring pre-employment tests are taken.
• Situating up new employees: Setting up their email, badges, and other technological and security needs, providing paperwork, conducting training, and orienting with the workplace and coworkers.
• Scheduling employees and processing payroll: Keeping track of employee hours worked, communicating with upper management for necessary approvals, issuing payroll deductions and checks, adjusting withholdings as needed, and fielding inquiries from workers about their pay.
• Taking care of benefits: Benefits administration includes searching for and implementing new plans, holding open enrollment meetings, administering enrollments, setting up employee deductions, reconciling benefit plans, communicating with a broker, and answering employees' questions.
• Managing employee relationships: Researching conflict management in various contexts, updating the employee handbook, developing and implementing procedures for conflict reporting, holding meetings with staff, supervising performance evaluations and related record keeping, and providing ongoing staff and professional training.
• Keeping everything in compliance: Guaranteeing compliance with employment laws, informing employees of any changes to these laws, assessing your staffing levels in light of the new rules, crafting systems to track your progress toward compliance, and filing all required reports on time.
• Encouraging morale and employee engagement: Making sure your employees are happy and healthy and implementing programs, surveys, and other measures to boost morale.

Small businesses usually provide only the most essential human resources services to lower the HR headcount. However, economies of scale favor large companies, so even when cutting back, small businesses still need a higher HR ratio of staff to employees.

Society for Human Resource Management suggests the following staffing levels for HR departments:

• 1-25 employees: 1 HR person
• 26-50 employees: 2 HR people
• 51-200 employees: 1 HR person for every 50 employees
• 201-500 employees: 1 HR person for every 100 employees
• 500+ employees: 1 HR person for every 150 employees

These estimates are based on the average human resource department size as a percentage of the total workforce. A company with a more intricate organizational structure may need a larger HR department than the suggested number to manage all HR tasks effectively.

For smaller businesses, this could be a choice between securing the engineer who can make vital adjustments to their company's next major product launch. Or they could choose to employ a skilled HR professional who can supervise compliance, handle all staff issues, boost morale, recruit and retain your top talent, and help you find a desirable benefits package.

Minimizing HR Costs For Small Businesses

It’s important to understand where costs come from so that you can keep HR manageable for your small business. The main categories that make up HR costs are salaries, benefits, training, development, and compliance.

Of these, salaries and benefits make up the largest portion. To reduce these costs, you can be strategic about hiring and offer competitive salaries and benefits packages. You can manage training and development costs by ensuring that employees are properly trained and that they have the opportunity to develop their skills. And by staying up-to-date on employment laws, you can ensure that all HR policies and procedures are compliant to minimize compliance costs. 

Managing these items can be daunting and expensive for small businesses. Luckily, there are ways to keep costs manageable by outsourcing your HR. Here are four tips to help you do just that:

• Use A HR Software System

There are various software systems available that can help small businesses with their HR needs. By using one of these systems, you can automate many of the tasks that would normally be done by an HR person, such as tracking employee vacation days and creating performance reviews. This can save you a significant amount of money in HR costs.

• Outsource Your Payroll

One of the most time-consuming and expensive aspects of HR is payroll. Luckily, some companies will handle all of your payroll needs for a reasonable fee. This can free up time to focus on other aspects of your business.

• Hire A HR Consultant

If you don't have the time or resources to manage your HR needs on your own, consider hiring an HR consultant. These professionals can help you with various tasks, such as creating employee handbooks and developing training programs. Hiring an HR consultant can reduce costs while getting the expert help you need.

• Use An Online HR Resource

Various online HR resources can provide templates for employee handbooks, job descriptions, and more. An online HR resource can save time and money while getting the HR help you need.

Keeping HR Costs Manageable With Stratus

Stratus HR is a PEO built for and by HR professionals. We combine software made to make your life easier with a team of HR experts ready to offer support and consulting. With Stratus, you can minimize time spent doing administrative HR work and create time in your day to focus on important people work, like employee engagement.

To learn more about how we can support your HR team and help fill in the gaps, book a free consultation with us today.