Benchmarking Your Staff

Corporate centers vary radically in size and activity. Companies with 10,000 employees, for example, may have as few as 20 people in their headquarters or as many as 4,000. (See “When Lean Isn’t Mean,” HBR Forethought, April 2005.) Given this diversity, how can companies decide what size and composition of corporate staff is right for them? And what role, if any, should benchmarking play in these decisions? Corporate staffs play three fundamentally different roles: added-value parenting (improving the performance of the company’s businesses); shared services (providing services that create economies of scale, scope, or specialization); and governance and compliance (discharging legal, regulatory, and fiduciary responsibilities). Because corporate staffs from various companies differ so much in their added-value initiatives and the services they provide, benchmarking for these two roles isn’t very useful in determining ideal HQ head counts. For these roles, it is more important to design fit-for-purpose staffs according to the company’s strategy. But the governance and compliance role is quite similar across companies and so is more amenable to benchmarking. Based on a survey of 600 corporate headquarters in the United States, Europe, and Japan, we have developed a benchmarking tool for estimating the typical median governance and compliance staff size for different types of companies. (See the exhibit “Sizing It Up.”) Sizing It Up Our benchmarking tool for corporate governance and compliance staffs considers the number of employees at a company, the average sales per employee, and the level of influence corporate staffs have over functional decisions. The tool is standardized against a European company with 10,000 employees, sales per employee of $150,000, and a headquarters with a medium level of influence over functional decisions. The median size of the governance and compliance staff for such a company is 29. This figure serves as the starting point for the benchmarking calculation. Though governance and compliance activities must be thorough, having too many people involved can lead to excessive checking and second-guessing, which can drive up costs and do little to improve the quality of the process. New government requirements may be pushing the numbers upward at companies, but our tool shows that it is possible to manage governance and compliance with strikingly few headquarters staffers. Do the calculation for your own company. If your governance and compliance staff size comes in significantly above the median, you may want to find out how similar companies are doing the same job with fewer people and consider reducing your staff.

Benchmarking Your Staff

Partner Center