Fractional human resources (HR) are sometimes referred to as part-time HR, outsourced HR or interim HR. The term “fractional” implies that you are getting all the benefits of a regular head of HR or team tailored to the needs of a small to medium-sized organization.
Is the fractional model right for all businesses? Not always. HR should be an integral part of a leadership team. However, small to mid-sized companies cannot always commit to a full-time resource, either from a cost or volume of work perspective. This is where the fractional HR model may be the best solution.
When someone thinks of an HR consultant, they often think of someone who may not be fully engaged with an organization. That's not the case. A fractional HR consultant acts as a readily available, flexible and seamless part of a leadership team, a driving force to the success of your business and promptly available for employees.
There are advantages to fractional HR.
Fractional HR services can be well suited to your current and rapidly changing future business environment by providing the following benefits:
Flexibility – Increase or decrease HR services to match the needs of the business. Many smaller businesses do not need full-time support on a regular basis. That support many ebbs and flow, fractional HR allows you that flexibility.
Cost Effectiveness – Regular full-time staff can be expensive especially if not fully used to full capacity. Fractional HR as it implies is a fraction of the cost. A quick example, a full-time HR leader including base salary and benefits can easily exceed $200,000 per year. The fractional model typically is 40% of that expense. Of course, that expense varies based on services necessary.
Accounting Treatment Advantage – Consultants and contingent workers can be accrued differently than regular full-time employees and as a result are not recorded as fixed overhead.
Ease of Severability – If the consulting business arrangement ends there are no added expenses typically incurred with full time employees such as severance, unemployment liability etc.
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