What Is Fractional HR?

Any organization can benefit from the knowledge and experience of an HR expert. But many smaller businesses feel that they’re not large enough to justify the expense of HR, or that HR isn’t necessary. With labor shortages, increased EEOC claims, and record-breaking turnover, small businesses can’t afford to not invest in their people practices. Luckily, fractional human resources has become a popular way for businesses to meet their needs without breaking their budget.

How Fractional HR Works

If you’re familiar with fractional IT or fractional finance, you’re familiar with fractional HR. Fractional HR services provide a company with the benefits of having an HR expert on staff—without the time and expense of hiring an in-house HR professional. Instead, those services are handled by an experienced team that can scale their HR support to the organization’s unique needs.

The flexibility of fractional HR allows it to be used for a wide range of situations, including short-term needs such as parental leave or interim needs like seasonal hiring initiatives or open enrollment. Fractional HR can also assist with longer-term needs by providing a payroll specialist or a fractional CHRO who operates just like a member of your team.

Who Uses Fractional HR?

Small and Second-Stage Businesses

Smaller-sized businesses need to be agile to stay competitive and continue growing. They also tend to have tight budgets, which means they can only afford an entry-level HR professional without much experience. Fractional HR allows small and second-stage businesses to get the expertise of an experienced HR team without having to pay for a senior staff member.

Companies with Unique Initiatives or Seasonal Needs

Medium and large organizations that have peak seasons or short-term hiring initiatives can benefit from the scalability that fractional HR offers. Retailers, educational institutions, accounting firms, and other organizations can scale up their fractional HR services during periods of “crunch” and downsize them once the need has passed.

Organizations with HR Looking for Help

HR has one of the highest burnout rates of any white-collar field. Studies have shown that the vast majority of HR professionals report feeling overworked, and three out of four are considering leaving their current position. Working with a fractional HR partner that can provide redundancy on demand can keep in-house HR professionals resilient and minimize burnout.

Companies in Growth or Transition

Growth is exciting, but it can also be disruptive as you add new staff, and the processes you traditionally relied on struggle to scale. By leveraging fractional HR services, you can quickly grow your HR expertise to meet the evolving needs of your workplace without adding to your headcount and overhead.

The Benefits of Fractional HR

Affordability

Perhaps the biggest benefit of fractional HR is its cost-effectiveness. Hiring a full-time or even part-time employee can be a lengthy, time-consuming, and risky process. When factoring in that employee’s salary, time to hire, onboarding, training, development, and benefits, the total costs of a new hire quickly add up.

The median salary of an HR specialist is around $65,000 a year, while an HR manager is paid about $135,000. When factoring in benefits (typically a third of total salary), you’re looking at $87,000 a year for an HR professional and $180,000 for an HR manager. 

Many organizations try to save money by going without an HR professional or tacking those duties onto non-HR positions such as finance leaders. But that not only becomes a huge drain on the time, energy, and resources of your other team members, it also represents a significant risk that your organization is taking on. Those types of employees don’t have the knowledge and experience needed for the strategic and compliance aspects of HR.

Fractional HR allows companies to get decades of experience and the expertise of an entire team—at a fraction of the price of hiring that same expert in-house.

Scalability

It’s not always easy for small or growing businesses to anticipate the HR needs they will have each year or even each month. Fortunately, fractional HR is built to scale to the needs of your organization. If you’re going through a transitional phase, hiring a lot of employees, or reworking your internal processes and documents, you can scale up your HR capacity. After things quiet, you can easily and seamlessly scale down the amount you’re using (and paying for) fractional HR services.

Speed

If you’re looking for an HR professional for your organization, hiring a new employee can be a lengthy process. It typically takes at least a month to hire for a position, but it can take much longer, depending on the market. Plus, if you’ve never had HR staff before, it can be a challenge to know what you’re looking for to hire the right person. With fractional HR, you remove the risk from the equation and get the support of an experienced, reliable HR professional on your team who can start helping immediately.

Resilience

Fractional HR can help organizations when their in-house staff are overworked or understaffed. Since HR personnel tend to have a high level of burnout, and having to rehire HR staff can be a significant drain on your resources, ensuring resiliency for your team can be a significant benefit of fractional HR. Having built-in redundancies can stop staff departures from having a cascading turnover effect on your team.

The Cost of Fractional vs. In-House HR

In addition to the average cost of a salary that we mentioned above, hiring an HR professional for your team comes with a significant upfront investment. You need to factor in the time it takes to fill the position, which averages more than a month, with the impact on your team’s productivity during the hiring process.

Hiring data shows that it can easily cost tens of thousands of dollars to hire for HR positions, in addition to the cost of training new employees, especially if they don’t have a lot of on-the-job experience. 

Fractional HR can leapfrog much of that process and bring knowledgeable, experienced staff who can quickly integrate with your time and start solving problems.

Talk to the Fractional HR Experts

Ready to utilize fractional HR support for your business? Reach out to the team at HR Collaborative and tell us about your needs.