When your computer is running smoothly, you tend to not think too hard about the background processes. But an overloaded processor slows down the entire system (or worse, crashes and displays the infamous blue screen of death). For many businesses, the in-house HR team is that background processor, working diligently to keep the whole operation running. So it’s one of the first places you should check if your “system” starts crashing.
A struggling human resources department is often evident long before team members begin to voice complaints. You just need to know how to identify the signs. Don’t wait for the figurative blue screen; instead, watch for the common indicators that your in-house HR team needs support.
1. Your Expense-to-HR and Employee-to-HR Ratios May be Imbalanced
Most businesses that maintain positive balance sheets have an accountant hounding them about ratios like revenue per employee. The importance of such figures can’t be denied, but they’re not the only ratio influencing a healthy balance sheet. A few key HR ratios can impact revenue, even if you don’t see that impact immediately.
One of these is the HR-to-employee ratio, which can be calculated pretty easily. Divide the number of HR staff by the total number of full-time employees, then multiply that number by 100:
(HR / Total FTEs ) x 100
For example, if your business has 135 FTEs and two in-house HR staff members, your equation would look like this:
(2 / 135) x 100 = 1.48
Your HR ratio would be 1.48.
What, then, is a good HR-to-employee ratio? The answer to that isn’t always straightforward. According to the Society for Human Resource Management (SHRM), the average HR-to-FTE will vary notably based on the size of the business:
- Small businesses (1-250 employees):40
- Medium-sized businesses (250-1000 employees):22
- Large businesses (1001+ employees):03
A lower-than-average HR-to-employee ratio may be an early indication that your HR team is heading for burnout. Overworked employees tend to be less productive, less engaged and more likely to quit (among other issues). Your HR team is normally responsible for handling these types of employee issues when they occur across your organization. But who handles it when these problems are within your HR department?
Consider what’s happening with your business to determine if your HR-to-employee ratio is negatively impacting your in-house HR department. There are situations when a lower-than-normal average for your size is manageable. At other times (such as a high-growth or rapid scaling period), your team may need some additional support.
How much are you budgeting for HR personnel and expenses? Small businesses tend to spend more on HR per full-time equivalent (FTE), on average, compared to medium-sized and large enterprises. SHRM reports the following HR-expense-to-FTE ratios (meaning the amount of human resources dollars spent per FTE):
- Small businesses (1-250 employees): $3,592
- Medium-sized businesses (250-1000 employees): $1,897
- Large businesses (1001+ employees): $1,427
It may seem counterintuitive to have higher HR expenses per employee when you’re smaller. According to SHRM, however, “Such results suggest that early development of the HR function in small organizations requires higher infrastructure and outside consulting investments.” In other words, larger organizations have their HR infrastructure established and have already spent the resources necessary to build them. Smaller organizations should devote more resources as they expand to establish more efficient HR processes.
Calculate your HR-expense-to-FTE ratio by dividing your total HR expenses by the number of FTEs. For example, a budget of $200,000 with 50 FTEs ($100,000 /75) would give an HR-expense-to-FTE ratio of $1,333. This is below average, and it could be a sign that your HR team needs assistance—especially if both this and your HR-to-FTE ratio are below average.
Again, while average ratios are a way to apply math to the situation, they aren’t the only indicator to consider if you want to assure your company has a high-functioning HR team. Check the pulse of your team on a regular basis. Look at the day-to-day operations and strategic initiatives to find warning signs that your in-house HR department is struggling. Consider adding staff or outsourcing projects to provide support. Don’t wait until turnover creates a crisis.
2. HR Tasks Are Taking Longer to Complete
Your in-house HR team likely wears several hats. In fact, many such teams handle nearly a dozen or more mission-critical responsibilities, including (but not limited to):
- Payroll management
- Benefits management
- Updating policies
- Managing employee records
- Executing disciplinary actions
- Researching and staying active with employment laws
- Organizing employee engagement activities
- Handling interpersonal disputes
- Creating and sending communications to employees
Larger organizations benefit from having departments dedicated to specific HR tasks. But for smaller companies, those few in-house HR team members may be responsible for almost everything. That could mean important tasks take longer to complete, potentially creating delays in realizing some of your business goals.
If you notice a slowdown for HR tasks, your HR team may need additional support.
3. HR Tasks Are Being Delegated to Non-HR Staff
An in-house HR team struggling to manage its work may begin delegating tasks to non-HR staff members. You might start by shifting responsibilities that don’t require access to confidential employee information. Such tasks include employee engagement activities, writing and sending business-wide communications, and some recruitment and hiring activities.
Having non-HR employees participate in a limited portion of this work can be a feasible option. People often enjoy planning and carrying out employee events, for example. And when it comes to recruitment and hiring, experienced team members may have a better idea of whether a potential new hire is a good fit.
However, tapping into non-HR resources too often may pull them away from their core duties. That doesn’t solve the problem; it just moves the slow down to other areas. When this happens, it could indicate the need for additional HR support.
4. Slow Hiring is Delaying Growth Plans
Start-up culture may be all about working 18 hour days, but that’s hardly a sustainable or healthy environment for anyone. Staffing at appropriate levels to handle your strategic growth plans should include staffing up your in-house HR team.
Human resources is often overlooked when it comes to the number of hours required. As the burden grows on staff already feeling the weight of numerous responsibilities and tight deadlines, something has to give. That something could be hiring.
Any business with growth plans knows that slow hiring pushes these plans further down the calendar. Granted, slow hiring isn’t always because your HR team is overloaded with work. Creating unrealistic expectations for time-to-hire, for example, can be at fault (among other non-HR factors). Only so many unicorns exist in the job market.
As you plan for growth, don’t forget to include HR so that they can meet the hiring goals you set.
5. Your Employee Engagement Scores Are Either Low or Going Down
Employee engagement is a way to measure how happy or unhappy employees are with their jobs and how invested they are in the company’s success. While engagement can be measured in several ways, it’s often accomplished through simple surveys using questions with a sliding scale from 1 (low) to 5 (high).
Regardless of your measurement strategy, low employee engagement scores are never a good sign. A sharp decline in previously-high scores is also a sign you shouldn’t ignore. Low or decreasing engagement scores are unlikely to be caused directly by your in-house HR department. They could, however, be influenced by the team’s lack of time to address issues or create ways to boost engagement.
6. Your In-House HR Team Is Begging for Help
This may seem obvious, but it should be said. When your in-house HR team expresses frustrations about feeling overworked, listen to them. HR staff are among the most diligent workers on your team, accustomed to working under stressful conditions and limited timeframes. But we all have a breaking point. Once human resources teams start voicing concerns about workload, it’s time to listen and determine your next steps.
How do I support my human resources department?
The answer is simple: the same way you’d support any team showing signs of struggle. Check in regularly. Listen to their concerns and work with them to find solutions. While there are numerous ways to extend support, consider relieving some of the pressure by bringing in additional help. This could involve:
- Outsourcing HR tasks to a HR consulting firm
- Hiring a full-time or part-time HR person
- Hiring an independent contractor
Each of these avenues has value, so consider your budget, growth plans and your team’s specific struggles when exploring them. And ensure your in-house HR staff is directly involved in the discussion and decision. After all, they’ll likely have the best understanding of how you can support them.
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