2023 HR Budget and Efficiency Benchmarks | Gartner

HR Effectiveness

Chief HR Officers continue to face mounting pressure to cut costs while maintaining value. And while there are various factors to consider when optimizing HR budgets, efficiency, and value, HR benchmarks are one of the factors to consider. This report provides HR benchmarks gathered from around 200 HR organizations across major industries, revenue sizes, organizational scales, and geographic regions. The benchmarks are categorized into three key metrics: (1) HR function spend as a % of revenue, (2) HR function spend per employee served, and (3) HR productivity ratios. Though the benchmarks vary by industry, a few points to note are: the average HR function spends $2,524 per employee annually; the average HR functional spend as % of revenue is 0.74%; the average HR function employs one HR full-time employee (FTE) for every 57 FTE employees. Each section summarizes the metric’s importance and how to interpret the results. Since benchmarks have inherent limitations, use them as one of several resources for informing decisions. With this as the backdrop, here is another Gartner reference that helps HR leaders make investment decisions, considering two factors 1) Benefits and Impact and 2) Investment, Time, and RiskThe two dimensions are supported by eight criteria, including strategic relevance, cost savings, and productivity gains. By considering these criteria, HR leaders can make well-informed decisions that maximize cost savings and deliver optimal value.