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THE DETERMINANTS OF THE NUMBER OF HR STAFF IN ORGANISATIONS: THEORY AND EMPIRICAL EVIDENCE

JOS VAN OMMEREN CHRIS BREWSTER

Cranfield School of Management Cranfield Bedford MK43 0AL UK E-mail: J.Van_Ommeren@cranfield.ac.uk. Tel: + 44 (0) 1234-751122; Fax: + 44 (0) 1234 751276. April 1999

ABSTRACT The current paper develops a range of hypotheses about the determinants of the human resources staff ratios in organisations and tests them using empirical survey data from European organisations. We find that country of residence, sector and organisational size, are the key determinants of HR staff ratios. We also identify other determinants of HR staff ratios. For example, in capital-intensive organisations, and in organisations that make use of job rotation, higher HR staff ratios are observed. Devolution of HR responsibilities to line management effectively reduces the number of HR staff. Interestingly, higher staff turnover rates are not associated with higher HR staff ratios.

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1. INTRODUCTION Human resource management specialists feel under pressure to justify themselves and to prove that their departments are not overstaffed. There are two sets of reasons for this. The first is that senior managers outside the function inevitably see the department as an "overhead" cost and wonder whether the organisation has enough people in it to support the human resource management policies or, more frequently, whether it has too many. The second reason for human resource specialists to ensure that they have only enough staff in the function is that other employees outside the function may see human resource specialists as the group that has been responsible for ensuring that organisations are "lean" and downsized. It creates difficulties when the department that is seen to have such responsibilities cannot provide evidence that it too is tightly and cost-effectively managed. It is not sufficient for human resource management specialists to organise the wage administration or to show how a strategic approach to human resource management may contribute to the organisation's business objectives. They also have to show that the HR department is properly staffed.

Information on the link between organisational characteristics and the size of the organisation's HR staff is therefore useful for HR practitioners, and top management, who wish to be informed whether the size of their organisations' HR staff is different from similar organisations. Although we are aware of the existence of rules of thumb (in the United States, the HR staff ratio is re-commended to be around 0.01, thus one HR staff member per hundred employees, see Walker, 1988), we argue that these are too crude, and, accordingly, misleading. We will demonstrate that a sound description of the

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HR staff ratios of a great variety of organisations needs to distinguish at least between country of residence, industrial sector and size of organisation; and preferably also between labour and capital intensive organisations, extent of training, the degree of HR responsibilities assigned to line management, and the use of job rotation in order to be useful as a benchmark. Information on less tangible issues such as HR strategies may also be useful.

Information on the link between organisational characteristics and the size of the organisation's HR staff is not only useful for practitioners, but may also be used to test theories of management, and of human resource management in particular. Human resource management theories typically describe how organisations make use of their human resources at an operational, medium-term and long-term level (Sundaram and Black, 1992). The way in which organisations make use of their human resources affects the organisation of the HR departments and therefore the number of HR staff needed. In other words, an organisation is assumed to choose the size of its HR department in such a way that it adapts to the specific situation...
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