Recession, weak recovery put damper on HR budgets

But HR staff ratios have edged up slightly: Survey
||Last Updated: 09/14/2011

The recession and tepid recovery have dampened growth in HR department funding over the past several years, according to BNA (the Bureau of National Affairs) in Arlington, Va. However, human resource offices have not suffered any more austerity, and have perhaps even fared a little better, than other divisions or departments, according to BNA’s

HR Department Benchmarks and Analysis 2011


HR department budgets for 2010 extended a trend of modest growth but were well below those of 2006 and 2007. HR's share of total operating costs, on the other hand, appears to have increased after two successive years of modest decline, found BNA.

This suggests, on the whole, recent budget allocations in other divisions and departments have been at least as miserly as HR's, if not a little more so. The median HR department staff ratio for 2010 was up modestly from one year earlier, to the same level recorded for 2008, found the survey of 433 HR professionals and executives.

So, while many HR offices have experienced recent staffing cuts, those reductions apparently have been proportionally equivalent or slightly smaller than workforce cutbacks overall.

Key findings:

• The median budgeted change in HR department expenditures was an increase of 2.2 per cent for 2010, barely higher than the 1.8 per cent one year earlier and well below levels in 2006 and 2007 (7.2 per cent for both years).

• The median budgeted HR expenditure per employee among surveyed establishments was US$1,311 (C$1,298), slightly higher than in 2009 (US$1,277/C$1,264) and extending a recent trend of restraint in HR budget growth. (The median budgeted HR cost per worker was US$1,252/C$1,239 for 2008.)

• HR budgets for 2010 represented a median of 1.2 per cent of responding organizations' total operating costs, climbing back to levels observed in both 2006 and 2007.

• The median HR staff ratio was 1.1 staff members per 100 employees served in 2010, up from 2009 (one per 100) to the same level recorded for 2008. (Higher HR staff ratios do not necessarily indicate actual increases in HR staff levels, said BNA, as HR staffing relative to the workforce can increase because total organizational employment declined while HR staffing was unchanged or because the overall rate of workforce cutbacks outpaced cuts in HR staffing.)

• HR staff ratios have edged slightly upward over the past half-decade or so, as the median HR staff ratio has reached 1.1 human resources staff for every 100 workers in four of the past six years. This small, recent increase might reflect the impact of a down economy and concomitant reductions-in-force. That is, HR might have held on to more of their staff than other divisions and departments because HR employees were retained to deal with the fallout from workforce cutbacks — outplacement, unemployment compensation, separation processing, exit interviews and labour relations.

• Year in and year out, HR departments are far more likely to acquire new responsibilities than to relinquish any duties. One-third of the surveyed HR executives reported their departments acquired new duties without giving up any within the past year, while three per cent gave up something without taking on something else.

• Seven out of 10 surveyed establishments have farmed out at least one core HR activity to consultants or vendors. HR departments appear especially willing to hand off counselling and services — employee assistance (32 per cent), retirement planning (29 per cent), outplacement (26 per cent), and relocation (15 per cent) — to outside providers.

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