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HR roles and responsibilities 2016 survey: key metrics

Author: Noelle Murphy

Our 14th annual survey of HR roles reports on the key metrics for the profession, including the ratio of HR professionals to employees and cost per head.

About this survey report

This summary report covers key findings from the 2016 survey on HR roles and responsibilities, and focuses on the ratio of HR practitioners to employees and current and ongoing initiatives by sector.

XpertHR's benchmarking service has the full data on the questions from our HR roles and responsibilities survey, including:

  • ratios of HR practitioners to employees by size and sector of respondents;
  • level of HR representation throughout the organisation;
  • measures taken into account when assessing HR effectiveness; and
  • HR budgets, including budgetary trends over the past year.

HR budgets

More than one in 10 (11%) of our 535 respondents does not know if their HR function has its own budget. A further 45% reported that it does not. This is not dissimilar to our research in 2015, which showed that just under half (46%) of 354 HR practitioners had a budget in place specifically for the HR function.

Among those who provided us with budgetary information, a total of £55.6 million was made available for HR running costs during 2015, and more than £77 million for HR activities. The annual HR running cost per employee stands at a median of £636 for 2016 (see table 1) - around the same amount (£680) as recorded in 2015. However, the average amount increases somewhat to £1,058. When we look at the annual HR activities budget per employee, the median figure stands at £1,268 and an average of £2,046.

More than one in five (22%) organisations believed the spend on running costs was higher than budgeted, while three in 10 felt that the spend on all HR activities was higher than budgeted. Reflecting this, perhaps, is the finding that more than four in 10 had seen an increase in the HR running costs budget, compared with one in four who had seen a decrease during the same time. Across all HR activities, the proportions are similar - 41% of all respondents felt that the budget had increased, while just over one in four (26%) had seen it fall.

Looking to the future, respondents are generally quite positive about budgets for the HR function - nearly two in three (63%) believe that the amount of money set aside for HR running costs will increase or stay the same, while six in 10 believe that the spend across all HR activities will be increased or stay the same.

Table 1 below presents key HR metrics about the make-up of the HR function and budgets. We quote the lower quartiles (the figure for organisations in the bottom 25% of the range) and the upper quartile (top 25%). As usual, we also present the median figure - recognised as a more accurate figure over the average, as it is not skewed by a few exceptionally high or low figures. For comparison and context, we also present the mean (average) figure.

Table 1: Key HR metrics 2016

  Lower quartile Median Upper quartile Mean
Ratio of employees to HR staff (n=534) 1:38 1:62 1:107 1:99
Percentage of HR staff in managerial roles (n=354) 28% 50% 62% 49%
Annual HR department running costs per employee (n=123) £382 £636 £1,231 £1,058
Annual HR activities budget per employee (n=107) £461 £1,268 £2,361 £2,046
Source: XpertHR.

Levels of HR representation

The ratio of HR practitioners to employees is one of the key metrics when looking at the shape and structure of the HR function and its influence within an organisation. However, we do not suggest that our findings are used as targets - each organisation will have its own unique context to support its ideal ratio.

We do, however, set out specific definitions to include when respondents are calculating HR headcount, which allow for a certain level of confidence in the consistency of our findings in this area.

Respondents were asked to provide HR headcount information, based on the following guidelines:

  • Include within the HR headcount staff dealing with training, recruitment, reward and organisational development, together with the explicit addition of equal opportunities.
  • Exclude staff dealing with payroll and pensions, occupational health, health and safety and purely secretarial work.

This year, we find the median number of employees covered by an HR practitioner is 62 (see our table on key metrics), compared with 1:74 in 2015. This year, we also heard from an organisation that did not have a dedicated HR employee within the organisation, but instead, metered out aspects of the role to the senior management team.

From a high of 1:118 in 2007, we have seen the ratio of HR practitioners to employees drop to a new low of 1:62. We have seen the number of HR practitioners, as a proportion of employees, growing year on year since 2007 - see chart 1.

Two findings stand out in our research - nearly half (44.5%) tell us that the number of HR staff employed by their organisation has increased over the past two years and more than three-quarters (77.2%) of those say it was in response to a growing HR workload.

Three in 10 (31.2%) told us that numbers grew due to the establishment of an HR department - a significant proportion that demonstrates the growth in influence of the HR function within organisations as whole.

The recession certainly allowed the HR function to prove its worth, and played a key role in implementing strategies that allowed organisations to have an agile workforce - reducing when required and swelling when on the upturn. But more than that, it played a role in transforming businesses by looking at the skills required by the organisation to meet current and future needs.

Apart from the strategy role of HR, their responsibility for compliance is also increasing - the introduction of auto-enrolment for pensions, the national living wage and gender pay reporting are just a few of the regulatory initiatives that organisations need to get to grips with.

Our Benchmarking service has full information on the ratios of HR practitioners to employees, by size and sector of our respondents.

Chart 1: Ratio of HR practitioners to employees

Chart 1: Ratio of HR practitioners to employees

Source: XpertHR.

Use of HR metrics

While the overwhelming majority (97%) of our respondents collect at least some data around HR metrics, just under half (48%) believe that enough meaningful data is gathered by the HR department to measure HR performance. We also asked respondents to tell us what proportion of their time was taken up gathering and analysing HR analytics. The median figure was 5%, within a range of 2% (lower quartile) and 10% (upper quartile). The average figure quoted was 5.4%.

Table 2 shows how popular each of the metrics used are, with absence management data coming out on top. We also explored how these metrics are used - and asked respondents to tell us which metrics where taken into account when assessing HR effectiveness. The top five are as follows:

  • absence management data (59%);
  • results of employee surveys (56%);
  • staff turnover data (55%);
  • exit interview feedback (45%); and
  • disciplinaries/grievances data (38%).

In terms of ranking, these roughly follow our findings from 2015 - apart from employee surveys overtaking staff turnover data. However, and also in line with last year, the top five metrics taken into account when assessing HR effectiveness do not include spending against budget. Just over one in three (37%) factor it in when assessing how effectively the HR function is performing. Given the move towards HR analytics and metrics within HR, it is striking that more organisations refer to the results of employee surveys than actual spending against budget.

Table 2: HR metrics measured by organisations

Metric % of organisations
Absence management data 86%
Staff turnover data 79%
Exit interview feedback 73%
Results of employee surveys 63%
Disciplinaries/grievances data 57%
Performance appraisal results 54%
Spending against budget 53%
Benchmarking against similar organisations 46%
Diversity and equality data 45%
Anecdotal/informal feedback 42%
Measures of organisational performance 41%
Number of tribunal cases 33%
Data on time to fill vacancies 32%
Cost per hire 29%
Time to competence 5%
None 3%
n = 535.
Source: XpertHR.

Our research

This report is based on original research carried out online in November and December 2015. Responses were received from 535 organisations employing approximately 633,162 people. The breakdown by economic sector is as follows:

  • 368 (69%) are in private-sector services;
  • 115 (21%) are in manufacturing and production; and
  • 52 (10%) are in the public sector.

Broken down by workforce size, the respondent organisations comprise:

  • 284 (53%) with between one and 249 employees;
  • 145 (27%) employing between 250 and 999; and
  • 106 (20%) with 1,000 or more.

The smallest organisation employs six and the largest employs 42,000 people. The median number employed is 207.

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