ADP reveals what an ideal HR team looks like

HR teams have transformed in the last four years, overcoming unprecedented compliance and retention challenges and earning themselves recognition as an essential piece of company-wide success. But are they poised to handle what's coming next?

As hiring slows due to political and economic uncertainty, organizations are placing more emphasis on retaining their best talent. However, an understaffed or even overstaffed HR team could influence a company's ability to do just that. Using its payroll data, ADP found a correlation between the number of HR staff and employee turnover. If an organization had between one and eight HR team members per 200 employees, the turnover rate fell by 1.3%. On the other hand, if an organization had more than nine HR staff members per 200 employees, the turnover rate started to increase by around 0.4%. 

While this data doesn't necessarily mean organizations should rush to hire or fire HR talent, it does point to a possible reason why companies are struggling to manage their people — HR teams may not have enough talent on the right tasks.

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"This is a really good time to pause and take a breath, look at your organization and ask yourself if we are staffed appropriately," says Amy Leschke-Kahle, vice president of talent insights and innovation at ADP. "Do we have enough HR folks to focus on retention, compliance and talent activation and development?"

Leschke-Kahle underlines that the 'ideal' ratio ADP found is not the right ratio for all organizations. Instead, she hopes this data encourages employers to reflect on whether they have enough HR workers focused on their organization's biggest talent and compliance concerns. For example, if hiring is no longer a priority but retention is, then those on the recruitment end of HR can focus on internal talent development and mobility. If an organization anticipates new compliance challenges brought by legislation like clean slate laws or AI tool bias regulations, then the company should ensure they have HR talent solely focused on keeping everyone out of legal trouble. 

"We tend to smoosh a lot of stuff together into HR roles," says Leschke-Kahle. "Sometimes you may have someone responsible for everything — compliance and employee relations. You have to think about the structure of your HR teams. Are you supporting folks who may be strong on one side of that equation and not the other?"

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For companies with a small HR team, the solution also doesn't fully lie in hiring more HR talent, but rather in hiring or developing HR talent for what the organization needs. Notably, ADP found that while the number of HR personnel for every 100 employees increased by 11% since 2018, the share of recruiters on HR teams grew by 20% in the same time — proof that to some extent hiring efforts around HR teams reflected organizational concerns. Now that a majority of companies are deprioritizing hiring, their HR strategies have to change too, explains Leschke-Kahle. 

"The beautiful part about that data is that it opens up the conversation around what [employers'] HR staffing looks like," she says. "Oftentimes, organizations ask themselves that question in a short-sighted, urgent kind of way as opposed to thinking about it on a more strategic level: How do we serve our employees, our market and our organization?"

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If the pandemic has taught employers anything, it's that HR teams are essential to keeping organizations above water when crisis strikes; they're more than worth the investment. And while every year will bring new challenges for companies to handle, employers shouldn't expect it ever to get easier, so a strong HR team is a must, underlines Leschke-Kahle. 

"There's no such thing as an unchallenging year," she says. "When you think about your HR team, ask yourself if you have the right people in the right places."