HR Outsourcing

Understanding Fractional HR

Exude Human Capital / October 15, 2024 October 15, 2024

Fractional human resources (HR) is a model of human resources management many businesses utilize today. It’s a unique approach to HR outsourcing that is beneficial if you need extra assistance in specific circumstances. With all the rapid changes in HR technology, regulations and strategies, fractional HR is a valuable tool that can help your businesses stay ahead.

This guide covers the meaning of fractional HR, how it works and the benefits it can offer your business. You’ll also learn how fractional HR compares to other HR management solutions and some scenarios where it’s most beneficial. With a clear understanding, you can decide if fractional HR management can help your team and organization thrive.

What Is Fractional HR?

Fractional HR is a relatively new HR model that’s become a popular option for HR management. Essentially, fractional HR refers to when businesses employ an HR expert on a temporary basis. You may use this service if you need some extra help for a specific task or a short duration. Through fractional HR, you can access specialized HR knowledge and assistance without hiring a full-time professional. New and established businesses with and without HR teams can benefit from fractional HR. What’s more, you can choose the type of support you receive depending on your current needs.

The concept of fractional services seems to be catching on, and areas outside HR seem to be adapting to the fractional model. For example, companies can hire fractional leadership to fill part-time leadership roles. You can also hire a fractional manager, financial adviser, marketer, lawyer, project manager and more.

How Does Fractional HR Work?

Some HR companies and individuals offer fractional HR services. They can offer this service along with other traditional types of HR consulting and outsourcing, or they may exclusively work with the fractional model. Instead of providing their services to one organization full-time, a fractional HR professional will help on an as-needed basis. They may work entirely remotely, visit on-site or provide a combined approach.

If you choose fractional HR services, the process may look something like this:

1. Meeting: You’ll first have an initial consultation with your chosen fractional HR professional. This is your opportunity to explain what services you think you need or describe the challenges your business is facing.
2. Assessment: The consultant will then assess your business’s needs, evaluate your current HR practices and determine which services you need. They’ll also assess how long it will take to provide these services and meet your HR goals.
3. Implementation: Once you’ve agreed to their plan, the fractional HR consultant will begin their work. Factional HR is highly customizable and flexible, so this arrangement will vary per case. They’ll partner with your existing staff to ensure a smooth integration.
4. Follow-up: As fractional HR is a temporary solution, the person you hired will eventually finish their work and leave. They’ll often provide a report and feedback, as well as advice for moving forward.

The Benefits of Fractional HR for Businesses

Why has fractional HR become so popular? Well, many businesses find that fractional HR services benefit them more than hiring someone full-time. These benefits can include:

1. Cost Savings

Hiring an HR professional full-time can be costly, and some businesses don’t always require them. Instead of paying for a full salary, benefits and training for one person, they can hire someone only when needed and save some money. This is also a cost-effective solution for businesses that can’t afford to hire someone full-time.

2. HR Expertise

Fractional HR experts have experience working with clients across different industries on various HR issues. Their exposure to a diverse HR landscape allows them to bring fresh ideas and strategies to your business. It also gives them a comprehensive understanding of HR best practices and current trends.

When you work with a fractional HR specialist, they’ll bring these valuable HR insights to your business without any long-term commitment. Access to an HR resource like this is vital to companies without an HR hire or whose team lacks the necessary skills to complete specific HR tasks. Additionally, their experience helps them understand what works best for various situations. They can use this knowledge to streamline your HR processes and align them with business goals.

3. Scalability

The fractional HR model greatly benefits businesses as they go through periods of change and growth. During these times, your company may require more HR assistance than usual. By partnering with a fractional HR professional temporarily, you can ensure any transitions are as smooth as possible. They’ll use their experience to help your business adapt to new requirements and provide additional resources where needed. As your business shifts toward its new routine and things quiet down, you may no longer need their assistance.

4. Support

The best part about a fractional HR manager is that you can rely on them to handle your HR challenges. They have the experience to tackle most problems and can take over when needed. Their support will free up team members so they can focus on key business operations. Whether your business is growing, it’s a busy time or a specific HR challenge crops up, you can keep your business running and reduce stress with a temporary HR hire.

5. Risk Mitigation

HR can be tricky to navigate as there are multiple regulations and standards to adhere to. Businesses must also deal with sensitive situations like racism, harassment and conflict. One slip up from poor HR practices can cause havoc on business culture, reputation and financial stability. When you hire a fractional HR expert, they can conduct compliance audits to assess your business’s risk. They’ll develop strategies to resolve any issues they find and ensure your business remains compliant. This way, you can avoid costly legal disputes, fines, and reputational damage.

Key Services Offered by Fractional HR Companies

Fractional HR companies typically offer services across the full range of HR management. Some vital services you can hire a fractional HR expert for include:

• Recruitment: Finding, recruiting and retaining top talent is challenging, particularly in highly competitive job environments. Fractional HR companies can help with all aspects of recruitment, including forming job descriptions, sourcing candidates, conducting interviews and creating effective onboarding processes.
• Compensation: Compensation is a common reason employees leave, making it an important consideration for all businesses. You can hire a fractional HR expert to assist with salary benchmarking and pay equity strategies.
• Employee training: Fractional HR companies can provide training resources to businesses looking to improve employee skills in a particular area. The most common training courses you’ll find are for leadership and diversity, equity, inclusion and belonging (DEIB). However, you can find courses for specific topics like interviewing, harassment prevention, allyship and giving feedback.
• Performance management: Performance management is all about clarifying responsibilities with employees and giving them the resources to do their best work. Introducing performance systems and having conversations with employees can be tricky. A fractional HR professional can step in to implement new systems and provide support.
  
• Compliance: Complying with the relevant labor regulations within your industry is paramount for business success. Through fractional HR services, you identify HR-related risks, implement risk mitigation strategies and stay ahead of law changes.
• Policy development: HR policies shape company culture and ensure the business treats all employees fairly. While developing your business HR policies, you can hire a fractional HR professional to guide decision-making and assist with employee queries.
• Conflict resolution: The way businesses handle employee relations and conflict resolution can impact company culture and employee retention. By hiring a fractional HR manager to assist with mediating disputes, you can improve employee satisfaction.
• HR strategy: Without a comprehensive, realistic HR strategy, businesses may hinder their growth. Fractional HR companies have the experience to create strategies that enhance organizational strengths, capitalize on opportunities and mitigate weaknesses.

Enhancing Employee Engagement Through Fractional HR

Employee engagement refers to how dedicated employees are to their work and the organization. A positive, collaborative company culture cultivates and supports their enthusiasm. Businesses with engaged, satisfied employees are more productive, have fewer absences and have more resilient employees. However, creating a culture that engages and inspires employees requires effective leadership and strategic HR management.
Fractional HR services can support your journey to increased employee engagement. A fractional HR expert typically starts by analyzing current employee engagement through surveys and feedback loops. Using their findings, they can begin formulating a plan to correct organizational issues affecting engagement levels. Their plan may include strategies such as:

• Recognition: Your business can create programs to recognize and reward employee contributions and achievements. This can boost work standards and company loyalty.
• Onboarding: Onboarding can be stressful, so developing a smooth and supportive onboarding process can help new recruits adapt to their role quickly. Having a mentorship program is also beneficial.
• Training: You can provide professional development opportunities to employees to enhance their skills and help them reach their career goals.
• Culture: HR managers may help your business foster a positive workplace culture where employees feel valued and accepted. They may implement work-life balance initiatives, flexible schedules and wellness programs.
• Communication: Establishing clear communication channels for employee feedback will allow them to share their experiences and help your business gauge employee morale.

When to Consider Fractional HR

If you’re still deciding if fractional HR is right for your business, here are some scenarios for when you may want to consider it:

• Limited resources: Startups and small businesses often have limited resources and may decide to do their HR management in-house without a dedicated hire. If you’re in a similar boat, your business can hire a fractional HR expert periodically to get the help you need for less.
• Fluctuating needs: Fractional HR is suitable if your business needs less HR support during quieter times and more in busy seasons. You can hire someone part-time only during busier times to save costs when their services aren’t needed.
• Growth: If your business is growing or experiencing drastic change, fractional HR leadership can help. The HR professional can integrate with your team for a short while to implement a change management plan and overcome transitional challenges.
• Specialized services: Most HR managers aren’t experts in every area of HR. When you need help with a particular task your business doesn’t have the resources for, you can get a fractional HR expert to fill the knowledge gap.
• Regulatory updates: HR regulations and industry standards are constantly evolving. If there has been a recent update to HR laws, it’s a good idea to request compliance services from a fractional HR professional. They’ll evaluate your business according to the new regulations and assist with implementing any necessary changes.

Contact Exude Human Capital for Tailored HR Solutions

At Exude, we know how difficult it can be to manage HR and focus on business operations. That’s why it’s our mission to support yours. We’re not a typical HR consulting firm — our consultants will work with you to transform your organization and connect HR, leadership development and DEIB. We offer dynamic, customized solutions to help you in whatever way works best for your business.

One of our core offerings is fractional HR services. As your business and HR requirements evolve, it can be hard to keep up with limited resources. By partnering with our experienced consultants part-time, you can use our strategies and knowledge to support your employees. You’re fully in control of when and how you receive our HR support, helping to stay within budget and reach business goals. We often provide this service to companies when they need support with complex personnel issues or an HR team member goes on unexpected leave.

Our team can help with strategic advisory, job description reviews, fractional recruiting, onboarding support and more. We specialize in coaching and training to drive individual and organizational growth. We can also support your DEIB journey through a phased approach of strategy, assessments and training.

Schedule a consult with us today!