It’s a fast-paced business environment out there. Companies of all sizes are seeking ways to remain agile, reduce costs, and still maintain high levels of efficiency. One emerging solution is fractional HR, a flexible approach to human resources management that allows businesses to access expert HR services on a part-time basis. This innovative model provides all the benefits of an in-house HR team but at a fraction of the cost, making it an attractive option for startups, small businesses, and even larger enterprises during periods of transition.
With that, let’s look at what factional HR is, its benefits for modern businesses, and key considerations to keep in mind when choosing a fractional HR provider.
What is Fractional HR?
Fractional HR is akin to contracting an accountant to take on payroll. This model means you have access to HR professionals, but they are not full-time members of your team. You get all the benefits of in-house HR without the added costs. In this way, it saves money and can provide additional resources to your company that you might not have had previously.
Benefits of Fractional HR for Modern Businesses
Using fractional HR has a multitude of benefits for modern businesses, including:
- Flexibility and scalability: Fractional HR is similar to outsourcing in that you can customize your service to your needs. Your fractional HR team can grow and change with your business.
- Expertise on demand: Fractional HR gives you access to experienced HR professionals without the long-term commitment of full-time employees.
- Focus on core business: Using fractional HR allows business leaders to focus on the core business activities while the HR experts handle the human resources tasks.
- Cost savings: A single, full-time HR manager can cost between 100k-150k, while a fractional HR team will cost only a quarter of that for a larger group.
Practical Applications for Fractional HR
Fractional HR is a great option for when you need temporary support for an existing HR team, such as during mergers, acquisitions, and restructuring. During transitional times, even larger businesses may need additional HR support. Fractional HR provides the cushion needed without the bad press of hiring during layoffs.
If your business has natural peaks and slow times, then fractional HR can be a great solution for assistance during your busy period. This support allows you to focus on your business without distractions while they handle human resources.
Finally, startups and small and medium-sized enterprises (SMEs) with limited budgets can benefit from fractional HR due to the cost savings and access to expert opinions. Using fractional HR when you start out, even if you intend to have an in-house HR department, can help set you up for success down the road.
Considerations When Choosing Fractional HR
Fractional HR has been adopted by numerous companies, big and small, over the past several years. Giving HR a seat at the table means organizations are seeing the link between people and culture, but some might still be hesitant to make the jump. For a successful partnership, consider these factors:
- Find an HR provider whose values align with yours. Read reviews to find a reputable provider with proven success and, if possible, has experience in your industry.
- Assess your business needs. While many fractional HR companies offer flexible support, you’ll want to have a general idea of what support you might need before moving forward.
- Create a plan to integrate services. Before partnering with a fractional HR provider, coordinate with your existing internal teams to understand how to minimize disruption to daily operations.
The Bottom Line
Fractional HR offers a flexible, cost-effective solution for businesses of all sizes, allowing them to tap into specialized expertise without the long-term commitment of full-time hires. Whether you’re navigating a transitional period, managing seasonal demands, or building a foundation for future growth, fractional HR can provide the support you need to keep your business running smoothly. By carefully selecting the right provider and integrating their services seamlessly with your existing team, you can maximize the benefits of fractional HR and ensure that your business remains agile and focused on its core objectives.
Paola Accettola is the principal and CEO of True North HR, a nationally recognized HR consulting team in Canada, and an HR leader committed to transforming her deep knowledge into helping companies find smart and simple HR solutions. True North HR aims to help their clients extend or supplement their HR department.
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