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Although human resources is an essential function in any business, the optimum level of HR staffing can vary by industry, company size and boom-and-bust labor market cycles. ADP Research Institute recently analyzed HR staffing levels and how they differ by industry.
"In tight labor markets, organizations will bulk up their HR offices with recruiters and other specialists to gain an advantage in the pursuit of talent," researchers said. "HR divisions might shrink when labor demand cools. We found that HR personnel counts, when measured as a share of total staffing, are up more than 10% since 2018. We also found evidence that might suggest that HR staffing can affect employee turnover."
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Among the takeaway messages from the study:
- HR staffing is rising in today's hot labor market. Demand for workers boils over as the economy continues to recover from the COVID-19. Against that backdrop, it's no surprise that HR staffing ratios have grown more than 10% since 2018.
- Labor market fluctuations affect some industries — and their HR staffing ratios — more than others. Low-wage workers have gained the most from the post-pandemic hiring boom. HR staffing ratios, likewise, have grown the fastest in industries with a large, low-wage frontline workforce.
- HR isn't just for large employers. Companies with fewer than 50 workers may average more than two HR staff members. Although HR staffing ratios grew faster and more steadily for larger companies between 2018 and 2023, staffing ratios at the smallest employers are up 3.8% since 2018.
- Recruiters make up the largest share of HR staffers, but their dominance fades as hiring cools. As U.S. demand for workers rises, so does demand for recruiters, as organizations work to attract talent. As a result, recruiters as a share of HR staff grew more than 26% from 2018 through April 2023.
Related: 87% of staffing, recruiting, and HR leaders have a positive outlook on hiring
- Employers that expand their HR ranks might reduce employee turnover, but only to a point. Although more research is needed to determine whether the relationship between HR staffing and turnover is causal, evidence so far suggests that reduced HR staffing is accompanied by high employee turnover. That return on increased HR staffing diminishes after a point, however.
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Alan Goforth
Alan Goforth is a freelance writer in suburban Kansas City. In addition to freelancing for several publications, he has written a dozen books about sports and other topics.
