Understanding the Types of HR Consulting Services

HR consulting firms can make a difference in developing your human resources initiatives and providing an outside perspective for them. Here is everything you need to know about the basics of HR consulting and how it can foster your entire HR function.

What Does an HR Consultant Do?

HR consultants are professionals who have in-depth knowledge of a particular facet of human resources. They often have experience in HR management consulting for specific industries, such as manufacturing, healthcare, or software development.

In many cases, companies hire them or HR consulting services like HR Collaborative as independent contractors because they lack the in-house bandwidth, expertise, or both to lead a special project from ideation through implementation.

Who Benefits from Working with an HR Consulting Firm?

Companies of all types can benefit from working with a consultant for HR. Some of the organizations that benefit the most from HR consultant services include:

• Small businesses: Most small companies don’t have a fully staffed HR department—instead, they often have another staff member who covers HR services. With HR consultants, these companies can both receive additional bandwidth to develop their organization and expertise from an experienced professional.
• Medium-sized businesses: Organizations with hundreds of employees have to be able to manage a large amount of human capital with very few specialists. Working with an HR consultant can provide the expertise to make company-wide people decisions such as a biennial wage and compensation analysis.
• Enterprise businesses: While organizations with tens of thousands of employees may have HR specialists on staff, it doesn’t always make sense to add staff for special projects. They often work with HR consultants for complex projects to have additional expertise, and so they can utilize budgetary dollars set aside for such projects.
• Growing businesses: Companies that are exiting the startup phase or otherwise shifting into new growth phases can benefit from the human resource consulting perspective as they change the scale of their teams and operations.

Organizations of practically any size or type can benefit from the insights HR consultants can provide, whether they’re trying to roll out a special project or scale their HR operations to achieve new business goals.

Types of HR Consulting Services

Human Capital Management (HCM)

In this service model, HR consultants work with businesses to develop strategies that increase the value of their workforce. This includes recommending ways to increase productivity based on the company’s needs, supporting talent acquisition initiatives, and transforming the HR department’s overall functions.

Working with an HCM consultant helps companies better understand how to maximize the performance of their employees and balance that with developing employee satisfaction and retention. 

At a glance, HCM consultants help companies improve processes such as:

• Onboarding
• Recruitment
• Payroll
• Training
• Benefits services
• Compliance

People Analytics Reporting

Working with an HR consultant who specializes in people and analytics reporting makes it easier to determine if HR operations and initiatives are having a positive effect.

These consultants conduct data analysis and design ways to analyze the effectiveness of your HR decision-making. They also supply the data to their clients in ways that are visually understandable and that demonstrate where their company’s workforce metrics started, where they are now, and where they’re headed in the future based on current trends.

People analytics experts can also help HR leaders make better decisions around benefits, diversity, compliance, and other organizational goals.

Compensation Management

With inflation, changing labor expectations, and unforeseen industrial shifts, it’s easy for an organization’s compensation practices to fall out of step with the market and give way to pay inequality. Compensation management consultants can advise organizations on multiple aspects of compensation management. They provide organizations with stronger cross-industry compensation benchmarks and wage analytics than they would receive relying on industry groups.

With the insights of a compensation management consultant, organizations can attract talented candidates while also ensuring fair compensation for the work current employees do.

Benefits Advising

While pay still tops the priority list for many employees, having a competitive benefits package with comprehensive health insurance, retirement contributions, and meaningful perks like pet insurance, tuition reimbursement, or childcare stipends can make a difference in attracting and retaining talent.

These consultants specialize in helping businesses develop and implement employee benefits programs. They help employers better understand the continually changing benefits landscape to offer the best possible plan for employees. They also make it easier to negotiate with benefits providers because they’ve developed relationships for other clients. 

Talent Management

Talent management consultants play a pivotal role in improving companies’ hiring processes. Their skills typically go beyond the realm of recruitment—they also help with retention, strategic workforce planning, and setting up human resources KPIs so leadership always has a pulse on the effectiveness of their workforce development strategies.

Learning and Development

When HR departments have their hands full with hiring initiatives or handling other major shifts in the company’s structure, learning and development tend to take a backseat. However, working with a learning and development (L&D) HR consultant enables companies to assess their employees’ current capabilities and find areas for improvement.

Learning and development consultants can also research your training needs and implement strategies that allow employees to reskill, upskill, and cross-train for productivity.

Organizational Development

Organization development consultants focus on improving a company’s overall effectiveness through planned change. They work closely with businesses to identify areas where organizational processes, structures, and culture can be improved to achieve strategic goals. OD consultants may conduct assessments of current organizational practices, engage in leadership development, and design interventions that promote positive change.

Their approach typically involves a deep dive into the organization’s culture, communication patterns, decision-making processes, and more. By doing so, OD consultants help businesses build a more adaptive and resilient organizational structure, improve employee engagement, and align the company’s mission with its operational practices.

HR Compliance

HR compliance specialists provide companies with strategic guidance on adhering to local, state, and federal labor laws. They can help companies with everything from creating policies to auditing those you already have in place. They can provide valuable insight into when the company should seek legal counsel and help organizations plan for upcoming legislative changes. Compliance specialists are also familiar with regulatory requirements that will kick in as companies scale in headcount or geography.

HR compliance consultants work with leadership to understand and mitigate risks. They protect the company from fines, penalties, and attorney fees.

Ways to Work With an HR Consultant

Along with the different specialties within HR consulting, there are also various ways to work together. Here are the most common types of HR consultation.

Project-Based

Have a specialized project you need to complete, but lack the time or resources to work on it? HR consultants can work with you on a project-by-project basis. They can also scope the project out with established budgets and timelines before the work begins. You should plan to discuss any changes or additional services you need as early as possible with your HR consultant if you anticipate it going beyond the original project scope.

Project-based HR consultants usually collect payment in one lump sum at the beginning of the project, or break it into multiple installments.

Hourly

You can also hire HR consultants at an hourly rate. Taking this route provides you more control over the work’s budget and timeline. Most HR consultants will work with you before the project begins to negotiate total hours, whether it’s a weekly or monthly rate, or for the entire scope of the project. The HR consultant or the company they work for will invoice and report hours regularly with details of the work done.

Fractional

Fractional HR consultants work in a contract-based or part-time capacity as an extension of your current team—without having to commit to a full-time HR representative. They can be specialized or serve as generalists, or even as managers and leaders. Organizations can keep these HR experts on retainer for a set, recurring amount. This setup eliminates the variability of hourly work and expands potential scopes of work beyond a singular project.

This is an ideal setup for small or medium-sized organizations with undefined HR initiatives and infrastructure needs requiring a reliable, consistent HR resource.

Work with an HR Consulting Firm

Ready to learn more about how a fractional HR consultant can help your organization thrive? Connect with us today and see how we can provide you with your perfect HR consulting team.