Fractional HR vs. HR Consulting: Which is Better for Your Business Right Now?

We get it… Your business is growing, but you are now struggling to find time to dedicate to the growing number of HR tasks in your calendar. You probably can’t help but imagine how much easier your life would be if you were to find an external HR expert to take the reins and guide your business in the right direction… If this resonates with you, know that you have options, which include engaging a Fractional HR or HR Consulting provider!

Establishing strong HR foundations and processes before you make your first full-time HR hire will certainly set you up for long-term success. However, it can be challenging to decide which option is best for your business right now. (Don’t worry, we’re here to help)!

If you are looking to scale, receive advice from an HR expert, and develop several aspects of your HR strategy, you may wish to consider Fractional HR support. But, if you are looking for more specific advice in one area – such as talent management or learning and development – you may be better served by HR Consulting.

If you’re still undecided, we’re going to dive into the pros and cons of Fractional HR versus HR Consulting below. By the end of this, you will be better able to make the best possible decision for your unique business!

What are Fractional HR and HR Consulting?

Fractional HR

Fractional HR is exactly what it sounds like – you get a fraction of a professional’s time, but only pay a fraction of the price you’d pay for a full-time hire. It empowers business owners to bring on experts who know how to implement a full suite of HR strategies. And when their company is of an appropriate size, they can bring on that full-time person and leverage their Fraction HR partner to ramp that person in.

The best part about Fraction HR? It’s one consistent monthly subscription fee to cover whatever comes up. No project-by-project quotes, estimated hours or worrying about what this month’s invoice is going to be…

HR Consulting

An HR Consulting service is more ‘a la carte.’ You would have a consultant sign a contract to take care of a certain aspect of your business such as payroll, recruiting, or building an employee handbook. Your consultant would assist you on your specific project and part ways once they have delivered what was expected of them. They may be specialists or HR generalists… It really depends on who you engage.

HR consulting services may very well be more cost-effective if you only have a handful of specific issues to tackle.

Why Choose One Over the Other?

Fractional HR

Budget: As previously mentioned, Fractional HR comes at a fraction of the cost of a full-time hire. It’s also priced as a monthly subscription, which means predictable cost control. Your Fraction HR partner is incentivized to help you build proactive HR strategies because of this.

Headcount: If you want the positive impact of Modern HR Strategies, but do not yet have enough staff to keep a full-time HR person busy, Fractional HR can handle most of your needs. It usually works best for companies of 50 employees or fewer.

Expertise and Impact: You will have a senior HR expert on your side offering Expert HR Advice and implementing high-impact strategies across multiple areas. When you’re ready, that same senior HR expert can help you recruit a full-time HR person to take the reins.

HR Consulting

Budget: Depending on how many HR functions you want taken care of by an outsourced service, this could be a more costly and long-term endeavour. Billing is usually by the hour, so the more issues that arise, the higher your bill will climb. Therefore, HR Consulting firms are generally incentivized to be more reactive in nature, as that’s more profitable for them.

Headcount: It varies! HR Consulting can help small, medium, and large businesses. They’re typically less concerned with the size of your business and more interested in the size of the project.

Expertise and Impact: An HR Consulting firm can help you tackle one or several HR-related tasks on a project-by-project basis. You may be connected with either a specialist or an HR professional with more general knowledge depending on the project. They complete their task and leave the final product in your hands. There’s often no guarantee you’ll be able to engage the same person from one project to the next if you’re looking for continuity.

How can Fractional HR help your business?

Please keep in mind that we can only speak for ourselves here at Castle HR when we outline what Fractional HR can do.

Our Fractional HR can help you:

  • Establish an ongoing partnership with an experienced HR expert backed by a full support team.
  • Feel confident in knowing that a senior-level HR generalist is leading your HR strategies and functions.
  • Implement and understand proven HR strategies and processes, such as how to foster a winning culture or how to best approach talent acquisition (for example).
  • Develop your HR technology stack for increased performance and efficiencies.
  • Have the peace of mind of knowing that we’re always just a phone call or email away.

Our Fractional HR does NOT include:

  • Payroll functions.
  • Processing benefits.
  • Offer in-office services – most Fractional HR teams function 100% remotely.
  • Additional recruiting fees.

For specific larger tasks like compensation reviews, both our Fractional HR, as well as most HR Consulting services, will be able to help!

How can HR Consulting help your business?

HR Consulting can:

  • Help you fix very specific issues within your HR strategy in a budget-friendly manner.
  • Provide a short-term investment in your people strategy and growth.
  • Allow for either virtual or in-person HR services.
  • Compliment your already established HR role(s); for example, you may bring on a consultant exclusively to tackle your recruiting needs because nobody else on your team has the necessary time or experience.

Fractional HR vs. HR Consulting: What Is Best for You?

It really depends on your company’s budget, headcount, and the maturity of your current policies, practices and procedures.

Fractional HR is likely the solution for you if you are looking for a full infusion of HR strategies and tools that will help your company scale faster. It’s a practical way to get access to an experienced HR professional without blowing your budget or suddenly needing to find ‘make-work’ projects to keep your new full-time hire busy.

At Castle HR, our modern approach to Fractional HR includes the key processes and playbooks startups and SMBs need, including, but not limited to:

Alternatively, HR Consulting may be the best fit for your company if you have a very specific or localized HR problem. Typically, businesses with an established HR department (of any size) will bring in a consultant on a contract basis to engage with a specialist, solve their issue, and then mutually move on.

If you are still unsure which option suits your current needs, or, if you would like to discuss your business goals, we would be more than happy to set aside some time to talk about it!

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