HR benchmarks – what can you learn from them?

Why HR benchmarks can be useful

CEOs and CFOs in particular love a benchmark, but too often HR benchmarks only focus on costs. They rarely explore value, influence, or impact.

If your HR function is respected, delivers results, and is seen as a true strategic partner, leaders are far less likely to question whether costs stack up against other organisations. HR’s value will already be clear.

HR benchmarks don’t always compare apples with apples – sectors, markets, business models and organisational maturity all differ. In addition, the breadth of HR’s role varies enormously in different organisations. However, they are a useful sense-check when looking at your own HR costs and capacity.

Below we explore how HR benchmarks can be used, what they do and don’t reveal, and how you can build a more informative picture of HR’s value.

HR is not just about the costs

The number that your CEO is most likely to look for is the cost of HR as a percentage of revenue. They are likely to compare this to external benchmarks for HR costs. This applies to every function – for example logistics, marketing or production – and functional leaders are expected to manage (reduce, usually) that percentage.

An external benchmark for HR costs often appears in the reports that CEOs and CFOs read or in the analysis provided by consultants. That means CHROs need to be ready for questions about the cost of their HR function. While this scrutiny can feel like a challenge, it is also an opportunity to position HR alongside other core functions and demonstrate its strategic contribution.

We’ve pulled together recent research for you on 2025 HR benchmarks.

What the research says – what operating benchmarks tell you

HR costs as a percentage of revenue and operating expenses

According to Gartner’s 2025 research, HR spend averages 0.74% of revenue and 1.52% of operating expenses. This equates to roughly $2,500 per employee each year, with recruitment, total rewards, and learning & development accounting for the largest share. HR technology is the area with the highest planned growth. PwC Saratoga reports a similar picture, with a median HR cost of $2,267 per employee, rising to $3,615 in the upper quartile.

HR-to-employee ratio, or ‘HR capacity’

Why the ratio matters

The HR-to-employee ratio is often used as another term for HR capacity, but what counts as ‘good’ depends heavily on context. Factors such as industry, geography, compliance requirements, and whether HR’s role is mainly transactional or strategic all shape the number. HR technology adoption is a major factor in determining ratios. Many HR teams still run multiple unconnected systems for recruitment, performance, and talent management, and some lack sufficient core platforms altogether.

HR benchmarks are useful, but they should be treated as a guide rather than a rule.

Broad patterns

• Smaller organisations: ratios are higher due to baseline HR needs, which doesn’t necessarily mean inefficiency.
• Medium to large organisations: most studies converge around 1 HR professional per 80–100 employees, with an overall average of about 1:85.
• Larger organisations: benefit from economies of scale and often operate at 1 per 100–200 employees.

The table below brings together recent benchmarks from different sources. It highlights how ratios vary by organisation size, geography, and methodology, which is why it’s best to use them as reference points rather than hard rules.

HR to employee ratio, or ‘HR capacity’

Key takeaway

There is no single ‘right’ ratio. Benchmarks give you a useful starting point, but the right level of HR staffing depends on your organisation’s complexity, the maturity of your HR technology, and the strategic role HR is expected to play.

HRBPs to employee ratio

Research suggests an average of around 1 HRBP for every 58 employees. In practice, this number varies widely depending on context. The role of an HRBP is defined very differently across organisations – in some cases it’s closer to an HR administrator, while in others it means a strategic partner with regional or even global responsibilities.

Business leaders often want more HRBPs rather than fewer, because this is where they see HR’s work in action and a good HRBP will be highly valued for the way they support line leaders and managers both operationally and strategically.

HRBPs are uniquely placed to understand what’s needed at the frontline of organisational performance. Research also shows that their role is among the least likely to be automated. When the wider HR function listens to the insight HRBPs bring, it is far more likely to deliver value.

Impact of AI on HR functions

AI and automation are hot topics in HR, with some predictions suggesting that up to 60% of HR tasks could eventually be automated. Yet, adoption remains slow. In our experience, progress is often held back because:

• Many HR teams still use multiple disconnected systems, making AI integration difficult.
• HR functions are often under-resourced, and the organisation-wide implications of AI can feel overwhelming.
• HR is not always positioned strategically enough to shape early conversations on how AI should reshape people and talent practices.

Gartner’s research, HR Technology: Best Practices & Its Role in HR Management, highlights that many organisations are prioritising HR technology not only to reduce administration but also to give managers and employees tools that make work faster and easier. Yet it is still too early to see consistent trends. For now, the hype around AI in HR continues to outweigh real-world progress.

What role do you want HR to play in your organisation’s AI journey?

Some HR benchmark calculations you can try

A few simple calculations can help frame conversations about HR’s value:

• HR spend as % of revenue = HR budget ÷ revenue
  → shows how HR compares with other functions tracked against revenue.
• HR cost per employee = HR budget ÷ headcount
  → highlights the investment made in each employee.
• HR-to-employee ratio = HR FTEs ÷ total employees × 100
  → indicates the capacity of the HR team relative to workforce size.

Running these numbers provides context for discussions about efficiency, investment, and return.

What HR benchmarks don’t tell you

A CHRO once told us proudly that his HR function was ‘bottom quartile’ in cost. But when we spoke to his senior business leaders, they lacked confidence that HR could deliver what their ambitious company needed. They wanted more leadership development, stronger succession planning, better business partnering, and richer data. In this case, pride in a low-cost function was actually holding the organisation back from investing in what mattered.

Benchmarks reveal costs and ratios, but they don’t measure impact. A low-cost HR function might sound efficient, but if business leaders feel HR isn’t meeting their needs, for example in leadership development, succession, or data-driven insight – then the function is underpowered. The real question is about value as well as cost.

Over the last decade, the online streaming company Netflix has expanded its HR team 47% faster than the rest of the organisation. If leaders had relied only on a simple HR-to-employee ratio benchmark, they might have concluded that Netflix was ‘overspending’ on HR and pushed for cuts. In reality, Netflix treated HR as a performance enabler rather than a cost centre. By investing in HR capability, backed by people analytics and a clear definition of what high performance looks like, they were able to scale the business effectively.

This shows how benchmarking without context can drive the wrong conclusions. Executives focused only on keeping HR ‘lean’ would have missed the value created by building a stronger HR function. In practice, organisations need to think like business leaders whose expertise happens to be in HR, and align resource decisions with strategy rather than arbitrary ratios. When HR is positioned as a driver of performance, it has the space to design and deliver paths to higher performance instead of being limited to a reactive role.

The Netflix example underlines that benchmarks should be a reference point, not a rule. The real test is whether HR’s structure, investment, and activity are aligned with organisational strategy and delivering measurable impact.

What else do you need to truly calculate HR’s value to the business

HR’s value depends on how business leaders view its priorities and how well those priorities are delivered. Several factors shape the level of resources HR needs, including maturity, leadership capability, talent profile, technology, and outsourcing. When HR partners strategically with the CEO, its goals align closely with business priorities and its value is clear. In contrast, when leaders see HR mainly as a problem-solver for line managers, workloads rise but perceived value falls.

In our experience, there are several factors that determine how many resources an HR function really needs. These include:

HR maturity

Research from Paul Kearns at The Maturity Institute provides two useful ways to think about HR maturity, illustrated in the following diagrams:

• How well established the function is – it can be valuable to place your own organisation on this scale to see where you sit.