Data Watch

HR Budgets Grow Significantly

From 2005 to 2006, the median budgeted expense for Human Resource (HR) activities and programs increased by nearly one-quarter, according to HR Department Benchmarks and Analysis 2007, a report by Kennedy Information’s parent company, the Bureau of National Affairs, Inc. Actual expenditures increased year over year from 2004 to 2006, and HR budgets as a percentage of overall budgets are at a 10-year high.

Furthermore, reporting to upper management is good for HR departments’ budgets, the report finds. On average, an HR department whose head reports to a CEO or president enjoys an expenditure budget that is more than a third higher, as a percentage of the company’s total operating cost, than the budget of an HR department whose head reports to a vice-president or others even lower in the hierarchy.

Even so, per capita expenditures budgeted for HR activities and programs decrease as a company’s workforce grows. Whereas a firm with a workforce of less than 250 budgeted a per capita median of $2,246 last year, a firm employing a workforce of more than 2,500 budgeted less than one-quarter of that. As the report observes, this trends emulates similar differences in HR staff-to-employee ratios (explored by Recruiting Trends’ Data Watch last week and covered in the findings) and suggest that larger companies, able to address their HR needs more efficiently, enjoy economies of scale.