What’s the Difference Between Fractional HR Leaders and HR Consultants?

Navigating HR Choices for Small Businesses and Startups. The absence of an established HR structure can lead to missteps that impede growth, giving rise to issues like poor employee culture, high turnover rates, and potentially costly legal complications.
6 min read | by Whitnee Payton
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Leaders of startups and small businesses are often forced to balance many competing priorities. A scaling company often faces challenges that pertain to human resources, spanning from compliance issues to hurdles in talent acquisition. 

The absence of an established HR structure can lead to missteps that impede growth, giving rise to issues like poor employee culture, high turnover rates, and potentially costly legal complications. It’s important for senior leaders to recognize and avoid these pitfalls while growing their organization.

Fortunately, small businesses that don’t have the budget or workload for a full-time HR executive have options when it comes to procuring support for their HR needs, whether it’s bringing in a consultant or a fractional HR leader.

As we explore the differences between those options, I encourage you to take into account what is most important for your organization. Though there are similarities in the two types of HR support, the differences are based on the desired outcome.

What Does it Mean to Bring in a Fractional HR Leader?

Fractional HR is the practice of bringing in HR support on a part-time basis. Fractional HR leaders provide strategic guidance, expertise, and solutions on an ongoing, long-term basis, such as a yearlong contract. This model has gained popularity as organizations recognize the need for specialized HR support and flexibility. Learn more about the rise of fractional HR here. 

Fractional HR leaders are often embedded within a company to provide continuous support and guidance. Being an integral part of the leadership team means that a fractional leader builds relationships and gains a deep understanding of what the organization needs. This approach enables direct ownership of initiatives and provides transparency to the rest of the company.

Because a fractional HR leader is a part of the company and operates similarly to full-time employees, they have a better perspective on the company’s culture and are better equipped to help impart lasting change. 

Learn more about the other benefits, including cost savings, that utilizing a fractional HR model can provide here. 

What Does it Mean to Bring in an HR Consultant?

An HR consultant is a professional engaged on a project or case-by-case basis who also provides strategic guidance, expertise, and solutions in various aspects of HR. They are typically brought in to address specific challenges, offer process improvements, or provide insights into strategic HR initiatives. 

A consultant might be the right solution when a company needs a subject matter expert focused on an initiative but doesn’t require the person to be embedded within the organization or to actively manage people and demonstrate leadership. 

Some consultants internalize a company’s processes, which may have drawbacks. For example, you may hire an HR consultant to support onboarding and find that you don’t have direct insight into where they store important employee documents. This lack of transparency can pose challenges, particularly for scaling organizations, where clear communication and understanding of key processes are crucial for cohesive and sustainable growth.

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Choosing a Fractional HR Leader or an HR Consultant 

In deciding what kind of HR support to engage, it is important to consider your organization’s specific needs, goals, and budget constraints. While bringing in a consultant for a one-off project may offer a cost-effective solution in the short term, a fractional HR leader may be better aligned with your long-term organizational objectives–and can solve a multitude of HR challenges. 

If you aim to have customizable solutions tailored to your organization’s needs, created with your company’s goals and vision in mind, then you should choose fractional HR support. Not only are fractional HR executives deeply involved in the day-to-day operations of the organization, they actively participate in decision-making processes. 

By partnering with internal stakeholders, fractional HR leaders have a greater potential to build a strong partnership. HR consultants tend to provide external expertise and recommendations with less direct involvement in implementation.

Because fractional HR experts often work with several companies at the same time, they bring a wealth of diverse experience to the table. They are not only regarded as subject matter experts but as industry experts. Their depth of knowledge and insights into industry dynamics is why fractional HR leaders are easily regarded and respected as an internal employee. 

The traditional approach to HR consulting does not offer the same level of involvement. Many HR consultants may have a narrower focus, which can impact the range and depth of insights they bring to the table, especially as it concerns supporting smaller companies. However, there are many cases where companies only need support for a specific project, meaning that an HR consultant could be the right choice. 

Ideally, HR consultants would be used for special projects to augment the more robust support provided by a fractional HR leader who is already a part of your organization. 

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What’s Right for Your Organization?

When faced with the decision between fractional HR leadership and hiring an HR consultant, it is essential to consider several factors. It is important to collaborate with your team to understand the best solution for your organization. Choosing between these options ultimately comes down to what work needs to be done, and whether you need long-term or project-based support for HR challenges. 

Considering that fractional HR supports long-term scalable solutions and acts as internal staff, it could be best for smaller companies to pursue a fractional HR leader to support growth and mitigate risk. For startups, fractional HR leaders have the knowledge to help build their HR practices on a solid foundation. 

As we noted, leaders face many decisions and competing priorities when running a startup or small business. Having a fractional HR leader embedded in your organization can help ease the burden of managing challenges in the realm of people operations and have a lasting, meaningful impact for your employees.

Understanding diverse perspectives within your organization can lead to more effective decision-making and sustainable HR solutions tailored to your company’s culture and priorities. Reach out to Blend Me to see how we can help you assess your needs and determine which solution is the best fit for your organizations.

Originally Published by Whitnee Payton on Thursday, April 4, 2024 | Updated on Tuesday, April 23, 2024
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