Right-Sizing Your HR Team for Global Growth

What is the ideal HR-to-employee ratio? Ensuring your HR team is large enough to scale your workforce — but not so large that you’re wasting resources — can become a key question when expanding into new markets. This applies whether you’re hiring through an employer of record (EOR), using a professional employer organization (PEO), or supporting your direct employees with your internal HR team. In this Q&A with Principal Global HR Consultant Andrew Fassett, we’ll take a look at HR-to-employee ratios, common mistakes and warning signs of an overextended HR team, and when it might be time to turn to HR outsourcing for extra support.

Is there a standard HR-to-employee ratio once you’re operating in more than one country?

• Unfortunately, it’s not as simple to set an equation such as 1:100 or 2:500, or x amount per regional area (in the case of global expansion). Nuance is required when looking at areas like coverage of employment law requirements, how much experience an HR team has in their various locations, and the maturity of the HR department. 
• A more mature department may have the processes and automation already set to ensure a smoother experience for every facet of HR. Examples include an internal employee service desk, a hiring pipeline, and benefits experience. 
• It may be better to say, “Do we have the experience required to both handle current processes/compliance and ensure proper growth?” vs. “As we grow, we require x amount of new HR folks in order to keep processes going.” Delve into current employee experience, response times, and process adaption.

What signals show that an HR team has become overextended?

The first indication tends to be the employee experience. That is, you see it not only in findings from a survey or during performance cycle questioning but also in the day-to-day experience along the entire HR life cycle. 

What are some questions that leaders can ask to ensure HR teams aren’t becoming overextended?

• Hiring process: Do candidates and hiring managers find the hiring process to be adequate? Does it bring in the best fit for the position? Is it in compliance with all geographical requirements, such as Equal Employment Opportunity (EEO) reporting, public compensation, General Data Protection Regulation (GDPR) processing, etc.?
• Ongoing management: Are regular employees receiving the proper care and attention they need? Are there any benefits issues, missed opportunities, or a general lack of knowledge that may affect the employee’s experience? 
• Leadership engagement: Do the more strategic members of HR (think human resources business partners, or HRBPs, etc.) work with leaders to ensure people and business needs properly align? Is performance properly calibrated and factored? Are they helping to ensure “the right people in the right places,” in order to drive growth in their respective areas?

How should a company think about staffing as it goes from two countries to five to ten? Does the model change shape or just scale?

HR is a multi-faceted department that requires many types of skills, and most non-HR folks don’t even realize this! Among others, you need people who have the experience to understand the required standards and ensure compliance in each country. In a global setting, this drastically shifts goalposts.

When is hiring a local HR person the right answer, and when is it the wrong one?

The answer comes down to exposure and compliance. Some questions you might want to ask are:

• How large is the company footprint in the country, and how does that affect their compliance standards? Many countries have certain items (think internal work rules, work councils, benefits thresholds, and termination requirements) tied to employee count.
• Does your HR team have an understanding of local requirements and employment law foundations? These might include collective bargaining agreement (CBA) or modern award requirements, information processing standards, and regulations found in countrywide acts, regional codes, and CBAs.
• Is your HR team prepared to fully handle the growth requirements and ensure a continued, strong employee experience? In the end, it is your people who drive business growth.

What’s the most common mistake when sizing an HR team for international growth?

What companies get wrong is that they focus on size, compared to the aforementioned experience set. You could have one HR individual for every 10 employees or one per 1,000, but the negative experience could be the same. Without an understanding of the underlying foundations required for a compliant and successful department, risk will steadily and continuously build.

When it comes to complying with local labor laws, ignorance is not a defense. It can lead to noncompliance and a drastically reduced employee experience throughout the entire HR life cycle — among the employees in your new host countries and other employees who have to deal with the fallout once the compliance risks finally boil over. This is why clients often turn to us for EOR or HR (advisory) services from the start. It ensures a compliant and happy employee base that benefits the company as a whole.

How does Core HR from Safeguard Global help international teams?

Core HR handles the day-to-day HR for people you employ directly in your own entities abroad, covering employment contracts, onboarding, sourcing benefits and managing renewals, and local compliance. This helps your central team support more countries without adding an HR hire in each one. Find out more about Core HR.