Fractional HR Services: Cost-Effective Human Resources Support

Two professional women, representing fractional HR executives, sit across the table from another professional.

Written by Beth Jacobs

June 11, 2024

Fractional HR services can be a flexible and cost-effective way to expand the capacity and expertise of your HR department. A fractional human resources executive offers more strategic support than an outsourced HR provider without the commitment and cost of a full-time hire. 

In this article, we’ll dive into the key differences between fractional HR, outsourced HR, and full-time HR and share some examples of initiatives that a fractional HR executive is well positioned to support. 

Fractional HR vs. Outsourced HR vs. Full-Time HR

Most companies who have grown beyond a handful of employees will need the support of one or more full-time HR specialists if they want to manage all of their HR functions in-house. However, many small businesses find it more cost-effective to take a hybrid approach to their HR management by relying on two different kinds of third-party providers of HR support: fractional HR services and outsourced HR

Fractional HR services are provided by fractional and interim staffing companies. A fractional HR executive such as an HR business partner (HRBP) provides HR support on a part-time basis. You can think of fractional HR as a partnership with an individual consultant who provides strategic leadership and execution on HR initiatives. A fractional HR executive is embedded in your organization and works closely with your existing team to address complex HR needs, such as issues affecting your company culture or retention. Their goal is to align your HR strategy with your business goals.

In contrast, outsourced HR is a service that handles routine HR processes independently from your HR team. Many HR functions can be effectively outsourced in order to free up time for your in-house HR team to focus on more strategic priorities. The two most common areas to outsource are payroll and benefits administration. If a company doesn’t have in-house legal counsel, they might also rely on outsourced legal support to handle some of the legal aspects of HR (like reviewing employment contracts and employee handbooks). Some of the best known outsourced HR providers are ADP, Paychex, and TriNet. 

In general, the kind of support and customer service you get from an outsourced HR provider is very limited and low-touch. You can’t go to them with a question about your retention strategy. If you do have a question about the services they provide, you’ll most likely need to submit a support ticket and wait for an answer. 

Benefits of Fractional HR Services

The key benefits of hiring a fractional HR consultant are related to the cost, the flexible nature of their support, and their strategic expertise. 

Access Director-Level HR Support for a Fraction of the Cost

A fractional HR executive, such as an HRBP, has several years of experience in an HR leadership role. To hire someone full-time who has director-level HR expertise in the U.S. would typically cost between $150,000 and $237,000, according to Salary.com.

Fractional HR services typically cost between $150 and $200 an hour, and you can find consultants who will partner with you for as few as 20 hours a month. Additionally, with a fractional executive, you don’t have to pay for benefits, overhead, or bonuses, and you’ll save money on hiring and onboarding

Get Speedy and Flexible Support

Fractional executives are a great solution for organizations who need high-level support as soon as possible. Maybe they’re backfilling a critical HR role, filling in for an executive absence, or expanding an HR department’s capacity during a major initiative. Fractional staffing agencies maintain a talent pool of consultants who are available to start immediately after a streamlined talent matching and interview process. For example, at vChief, we match prospects with candidates within three days after our free consultation, and most clients are able to get someone on their team within two weeks. 

Fractional executive staffing agencies typically offer flexible month-to-month retainer contracts that allow you to freely increase or decrease your level of support from one month to another and cancel with just 30 days notice. 

Augment Your HR Team with Specific HR Expertise

The HR discipline encompasses many specialty fields. It’s common for full-time HR leaders to lack expertise in some HR competencies. For instance, while a particular HR leader might be great at payroll and employee benefits, they might not be an expert in performance management or the latest learning and development strategies.

Get Personalized and Strategic Guidance

If you’re facing a tricky employee relations situation, or if you’re getting bogged down by inefficient hiring processes and need to implement a new applicant tracking system (ATS), it can be extremely helpful to be able to turn to an HR consultant who is already intimately familiar with the unique challenges your business faces, rather than trying to get advice from other business leaders or third-party advisors. 

Because a fractional HR executive is embedded in your organization, they understand your team’s strengths and they can provide tailored advice and strategic guidance on any HR challenges you may face. 

Short-term HR Challenges a Fractional HR Professional Can Address

An HR team that is stretched to capacity can leverage the support and expertise of a fractional or interim HR professional for a variety of HR initiatives

Setting up an HRIS: Selecting and implementing a Human Resources Information System (HRIS) can take anywhere between six and nine months. Many factors need to be taken into consideration to make a choice that will fit with the organization and align with the business needs

Succession planning: A fractional HR leader can help you develop your succession plan for your CEO and other leadership positions, including identifying the positions that need a succession plan, developing job descriptions for new leadership roles, crafting learning and development strategies to grow the skills of existing team members, and creating a plan for knowledge transfer when senior leaders exit the organization. 

Implementing a collective bargaining agreement: Newly unionized organizations often face a significant administrative burden related to implementing the changes specified in a collective bargaining agreement. A fractional HR consultant can provide steady guidance while navigating that process.

Assessing team culture: If a company is dealing with high employee turnover, a fractional HR expert can lead efforts to improve the team culture by conducting employee satisfaction surveys, evaluating the results, and making recommendations for a new employee engagement plan to boost retention.

Setting up employee recognition programs: Companies who are struggling to retain top talent may want to evaluate their employee recognition programs and look for additional ways to recognize and reward high performing team members. This often goes beyond financial incentives and involves assessing benefits packages, workplace culture, and perks like flexible schedules and remote work. 

Complying with new employment regulations: When organizations grow beyond certain employment thresholds, they become subject to new state and federal regulations. Complying with these regulations can involve scaling up existing HR processes and HR policies, investing in new software systems, expanding benefits, and/or creating new policies from scratch — all of which are appropriate projects for a fractional HR executive. 

Covering an absence or medical leave: A fractional HR executive can fill in for any HR leader, including a full-time HRBP or HR director, during an extended absence such as a sabbatical or medical leave. 

Managing hiring processes: The escalating use of generative AI by job-seekers to write cover letters, update resumes, and submit applications is overwhelming many talent acquisition teams, with some recruiters sharing that job applications are now getting more than 1,000 applicants in 24 hours. While many companies have been experimenting with AI-driven hiring platforms, research has shown that AI can exacerbate biases in hiring and screen out some of the best-qualified candidates before the human interview stage. Plus, interacting AI screening tools can also negatively impact the candidate experience. For companies struggling to sift through a mountain of applicants for key roles, a fractional HR executive could help set up more efficient, equitable, and accurate candidate screening processes, while also prioritizing the candidate experience.

Other Fractional Executives Who Can Provide Part-Time HR Support

While many complex and strategic HR challenges are most appropriate for the support of a fractional HRBP, there are some scenarios where the expertise of an HRBP is not needed, and an organization would be better served by other types of fractional executives. Two fractional executive positions we’d like to highlight are the chief of staff and the associate chief of staff. 

Chief of Staff: A Generalist Who Can Handle Hiring & Other HR Essentials

A chief of staff is a generalist who serves as a thought partner and strategic doer, helping leaders maximize their effectiveness by letting them focus on their top priorities. Chief of staff candidates tend to have a more varied background than HRBP candidates, with some having past experience in roles like founder or chief operating officer.

A chief of staff could be a good fit for providing HR support for an organization if HR tasks are only a small portion of the scope of work they’re looking to cover. If the HR tasks make up less than 35 percent of the scope of work, a CoS can likely handle the HR tasks and could be the best type of candidate to bring relevant leadership experience for the other 65 percent of the scope of work. 

For example, if a CEO is looking for someone who can take on tasks like meeting facilitation, project management, and hiring, a chief of staff could be a great fit. The most important aspects of talent acquisition are understanding organizational needs, the competencies needed for the role, and the business context. None of those exercises require technical HR expertise, and many fractional chief of staff candidates will have managed a hiring process at some point in their career.

Associate Chief of Staff: A Senior-Level Doer Who Can Provide Project Management Support to HR Teams

If your HR team needs additional project management support, hiring an associate chief of staff (ACoS) could be an appropriate way to expand their capacity. An ACoS brings less leadership and work experience than a chief of staff, and thus is available for a lower hourly rate. They often have manager-level experience (operations manager, project manager, or systems and process manager), rather than C-suite level experience. They excel at creative problem-solving, project management, and process development, and can be a valuable asset on any team. Some HR initiatives they could effectively support include reviewing resumes or planning and organizing an off-site team retreat.  

Get Fractional HR Support in Less Than Two Weeks

vChief provides flexible HR staffing services that add capacity, fill gaps, and drive growth. Our consultative approach helps uncover your most urgent needs and matches you with fractional executives with relevant industry experience. Our fractional HR experts work on flexible month-to-month retainer contracts. You can cancel anytime with only 30 days notice. As your needs change from month to month, you can flex your hours up or down freely. The average time from your first consultation to your fractional HR team member’s first day is just two weeks.

Schedule your free needs assessment today.

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