Is it Time For Your Business to Hire a Fractional HR Leader?

While HR’s role in business strategy is certainly evident to people such as me, it is not always obvious to business leaders who are focused on other key metrics. 

I recently sat down with a client who explained why the budget for programming was easy to approve: The results of excellent programs are directly tied to company notoriety and further revenue funding. However, when we had a discussion about bringing on new talent and increasing employee salaries to market, the budget suddenly felt strained. “I might have trouble getting this approved by the board,” she explained. 

However, my recent 1:1 discussions with the team led me to believe that on the other side of the excellent programming was an overburdened, burned-out workforce. Sustainability would certainly present a problem for the company in the near future without a timely remedy. A few additional heads and a slight boost in salary could significantly improve bandwidth and morale. 

My followup question to the client was simple: “How do you plan to execute the programs you just approved without the proper team in place to do it?” 

“Right,” she said. Forbes emphasizes that “Great work starts with talented, happy employees, and it is HR’s job to hire those people and retain them long-term.” 

Today, HR professionals are commonly valued for their ability to see around corners for the business, specializing in mitigating compliance risks, talent management, organizational development, and employee engagement. From recruiting the right teams, to onboarding and retention, to performance management and leadership development, HR plays a central role in developing company culture and structure, and creating fruitful business outcomes. 

A more obvious value shift for HR professionals arose during the COVID-19 pandemic, after HR teams were unexpectedly thrown into the role of crisis management and ensuring business continuity in unprecedented times. From implementing remote work policies to fostering employee well-being and safety, HR professionals guided  organizations through unforeseen challenges. As businesses continue to adapt even four years later, undergoing huge cultural shifts such as hybrid work models, HR continues to show up as a strategic and innovative partner in the workforce. All things considered, it is evident that HR professionals are a necessary asset to thriving businesses.

The Case for Fractional HR Leadership 

Despite the critical role HR plays in organizational success, startups and small businesses often have a difficult time justifying hiring HR professionals early on. Hiring an HR professional presents a less obvious line to revenue than hiring a great salesperson might, for example. 

When resources are limited, as they often are in the early stages of a business, it’s easy to understand why trade-offs are necessary. However, the cost of not hiring an HR professional can be very expensive. I've witnessed the impact of businesses hesitating to seek HR support until confronted with pressing issues. Unfortunately, this reactive approach can lead to missed opportunities and costly consequences such as paying out pricey severance packages in lieu of adequate documentation in a termination process. 

Fractional HR leadership offers a flexible and cost-effective solution even in the face of budget constraints. By hiring a part-time HR partner, businesses can receive tailored support based on specific needs and budgetary constraints. This approach allows organizations to benefit from expert guidance in areas that concern one of their biggest assets, their people. Moreover, the flexibility of fractional HR arrangements enables businesses to create agile solutions in times of frequent change, ensuring that resources are prioritized to meet evolving organizational requirements.
 

Signs it’s Time to Engage a Fractional HR Leader 

1. Your Business is Experiencing Rapid Growth

Imagine this scenario: It’s Q1, and business is thriving. You’ve just entered a new  regional market; you have an ambitious set of Objectives and Key Results for the year; and you’ve promoted your key players into leadership roles. Suddenly, you are no longer directly managing the majority of the workforce; there are one to two degrees of separation between you and the most junior-level employees. You no longer have a direct line of sight into the day-to-day operations of the business. However, the company mission and values remain the same – you want to hire people who align with the vision you set for your entrepreneurial venture early on.  

Issues that never existed before are emerging such as: How do you ensure that you have a fair and objective performance evaluation process? What does pay parity look like across the company as new hires filter in and the market continues to fluctuate? What does success look like at each level? How are levels even determined? How much headcount and budget are you going to need to execute the strategy? 

An HR leader can use their expertise to support you in organizational development, talent management, and strategic HR planning – managing the nuances of growth while upholding your company’s culture and values. A successful HR collaboration ensures organizational agility, competitiveness with the market, and a commitment to attracting, retaining, and nurturing top talent.

2. Compliance Challenges Are Emerging 

In this scenario, imagine you run a remote-first business. While your primary office is based out of California, you’ve hired employees from several different states. Each state has its own set of employment laws, ranging from minimum wage requirements to regulations surrounding employee benefits and workplace safety. Moreover, as you scale in size, the applicability of various federal laws are becoming relevant and you’re having a hard time keeping track of which laws apply when and where. 

HR experts can ensure that businesses remain compliant with relevant federal and state regulations, and mitigate risks associated with legal non-compliance, which can have detrimental effects that far outweigh the cost of hiring an HR professional. 

3. Employee Morale and Retention Are Declining 

A third scenario: When you started the company, your first cohort of employees included your tight-knit network of like-minded individuals energized by a common intrinsic goal with an obvious desire to see the company thrive. The long hours and below-market pay were a known concession of working toward a shared vision. However, you’ve noticed a shift as you’ve scaled the workforce, the intrinsic motivators don’t quite resonate like they used to. The hours are long, the rewards aren’t as obvious, and naturally the addition of more humans invites more opportunity for misalignment. 

Suddenly, there’s a notable downward trend in employee morale or an increase in turnover rates. This may signal underlying issues within your organization’s HR practices.  Perhaps it’s time to re-introduce or rework your employee value proposition . Perhaps the company has outgrown this current iteration altogether, and there is a need to develop new company values. 

A fractional HR leader can conduct a comprehensive assessment that analyzes and provides recommendations for resolving issues that may be impacting workplace morale and retention. By prioritizing the well-being of its people, businesses can cultivate a positive work environment that leads to increased quality output, loyalty, and long-term success.

4. You are Operating on a Tight Budget 

In this next scenario, imagine that you’ve done the research and you understand the value of a great HR leader. However, your budget is tight, and you are operating with a very lean team. 

As I touched on earlier, fractional HR arrangements offer a cost-effective solution (a fraction of the cost), allowing businesses to access HR expertise as needed without the financial commitment of a full-time hire. An HR professional can help you prioritize your most imminent HR needs while helping you stay on budget. 

5. HR Tasks are Taking You Away From Your Core Role 

In this scenario, like many business executives in lean environments, you wear multiple hats. You’re the COO but you also spend an inordinate amount of time navigating daunting administrative tasks and researching answers to seemingly endless HR-related questions – all of which drag you away from the core responsibilities of your role.  

Fractional HR leaders enable business leaders to reclaim valuable (and expensive) time and delegate day-to-day HR operations to professionals.

6. You are Uncertain About What HR Support You Need 

Finally, it’s not always easy to determine precisely what HR support your company requires – but you understand that something feels off.  

A fractional HR leader can conduct a comprehensive assessment of your specific HR needs, identifying pitfalls, and developing tailored solutions to address them.

Let’s Recap

Ultimately, hiring a fractional HR leader is a cost-effective solution for businesses to meaningfully invest in their people. The timeliness of this investment is a key component to getting it right. 

It may be time to engage a fractional leader if any of the following scenarios arise: 1) your business is experiencing growth; 2) compliance changes are emerging; 3) employee morale and retention are declining; 4) you are operating on a tight budget; 5) HR tasks are taking you away from your core role; or 6) you are uncertain about what HR support you need. 

If those situations resonate with you, it’s likely time to take the next step to invest in your people through attaining fractional HR support. Contact us at Blend Me to find out how we can help your company.