What is “Fractional HR” and why should I consider it?

Feb 22, 2019 | Blog

Running a small business is your dream. It can be exciting, frustrating, rewarding, and stressful…all at the same time! Yet, instead of having the time to grow your business you are spending a lot of time on (or worrying about) HR issues. According to a 2014 Small Business Association study, HR work consumes 25-25% of an owner’s time. Most small business owners know they will eventually grow to the point where they need professional HR expertise, but right now the cost of hiring a dedicated HR expert just isn’t in the plan. Or is it?

Enter the concept of “Fractional HR”. Sorry, I know it is a fancy term for a simple concept. At its core, you “subscribe” to an HR service or expert to be your “24×7 Concierge” HR expert. What makes this “Fractional” concept valuable to a small business is you have access to expertise you normally couldn’t afford to hire. It’s affordable because you share this resource with a group of other small business owners by each paying a small monthly retainer. Its value to you is you have an on-call HR leader who is invested in understanding your business objectives and challenges and can actively participate on the fly with issues and planning. So, you have that HR expert who is a part of your business without the cost of hiring.

Let’s consider a few examples.

  • You just landed that big contract with a customer you have been targeting for a year. Then reality hits that in order to support this customer you need to hire some new employees. The question is, what kind of employee do you need? Where will you find them? How do you hire the right fit? How much should you pay?
  • You heard from a friend of yours that their business just was visited by ICE (US Immigration and Customs Enforcement) and they struggled to produce I-9 documentation or worse, they had undocumented employees. Or perhaps a former employee angry at being let go files a claim with the Department of Labor alleging they were not paid overtime. Are you prepared?
  • You have an employee who just isn’t producing at work. You don’t want to fire them, but are unsure of what to do. What are your options?

In each of these cases, what you really need is a resource that already knows your business and can be quickly engaged for consultation and assistance. Sometimes it is just a phone call or quick meeting to discuss. In other cases, it is auditing your I-9 records, helping coach an employee or manager, making sure you have proper documentation to support letting an employee go, etc. Remember, that established relationship with your Fractional HR partner means they already know your business and objectives (and likely your employees). They can immediately jump in and assist.

Finally, a Fractional HR relationship can also be a useful resource even if you have an HR Administrator or Director in your small business. The first reason is just to add mentoring and support to your HR team. It is most likely HR is 1) just a piece of their job, and 2) they lack the formal training and experience of a seasoned HR professional. This can be a great support to help them grow and develop.

The second reason is more candid. Let’s face it. Is that HR person you hired empowered to walk into your office and advise you when you are doing something stupid that could result in risk to your business? Probably not. Having a trusted 3rd party in the equation can help you work through these issues and “speak truth to power”.

Remember, it all comes down to helping your business grow and thrive while managing risk. If it doesn’t you lack the seasoned counsel to help you navigate these complex issues. There are plenty of skilled HR practitioners and consultants out there. Find one that fits your culture and needs. You won’t be sorry.

Chris Thomas, SHRM-SCP is the Principal Consultant with The CTCS Group in Canton, GA. The CTCS Group is focused on providing Fortune 500 HR expertise at an affordable cost to help small businesses grow and thrive. You can request a free consultation at www.thectcsgroup.com.

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