What is Fractional HR? 3 reasons why it’s hot, 8 benefits & what it costs.
What is Fractional HR? 3 reasons why it’s hot, 8 benefits & what it costs.
By Margaret Bailey - AugmentHR HR Services
In today’s ever-changing business environment, companies are looking for more flexible, cost-effective ways to manage their human resources needs. Fractional HR addresses this need directly. In this article, I’ll share my insights from 25 years in HR helping a wide range of companies to explore what fractional HR is, why it’s gaining popularity - searches for it are up 60% on Google - , the benefits of hiring fractional HR employees, what services they provide, and how much it typically costs.
Below, we’ll discuss the following:
- What is fractional HR?
- Why is fractional HR so popular right now?
- What are the benefits of fractional HR employees?
- How much does fractional HR cost?
- What does fractional HR do? What are fractional HR services?
What is Fractional HR?
Fractional HR refers to
outsourcing HR services to an external professional or firm on a part-time, contract, or as-needed basis, rather than hiring a full-time, in-house HR employee or team. These professionals are often referred to as fractional HR consultants or fractional HR leaders. This is an alternative to having a full-time HR department or person.
What is fractional HR leadership?
A version of fractional HR, fractional HR leadership is a service for a company to hire a senior-level human resources professional, such as an HR Director, VP of HR, or Chief People Officer. This professional is hired on a part-time basis to manage the needs of small businesses.
What is fractional recruiting?
Fractional recruiting is a hiring model where a company brings in an experienced recruiter or recruiting team on a part-time, contract, or project basis instead of employing a full-time internal recruiter. It’s common for many types and sizes of companies to use fractional recruiting because it’s a flexible and cost-effective way to access professional recruiting services only when you need them.
Why is fractional HR so popular right now?
Fractional HR has become an extremely popular tactic for businesses because of its flexibility, ease of access to expertise, and cost effectiveness:
- Flexibility: This model offers businesses, especially small to medium-sized organizations, the ability to engage an experienced HR leader without the need to hire someone full-time. Many of these businesses do not require a full-time HR leader, but having a fractional leader two or three days a week is a practical and effective solution. These leaders serve as the Head of HR, working closely with the leadership team to drive HR strategies and solutions.
- Access to HR executive expertise: By working with a fractional HR leader, businesses gain access to highly qualified and experienced professionals. This works well for projects aimed at upskilling the organization or during periods of executive leave, such as maternity or sick leave. As a result of their background and seniority, fractional leaders can step into these roles seamlessly, working alongside the leadership team.
- Cost efficiency: In these uncertain economic times, companies are always looking for ways to reduce HR department costs. Hiring a fractional HR leader on a part-time or project basis allows organizations to benefit from executive-level support without incurring the costs associated with a full-time hire, such as bonuses, benefits, and long-term compensation packages. Businesses can determine the length of time they want the Fractional leader in place, whether that is for a specific project or ongoing.
8 benefits of fractional HR employees
Using a fractional HR employee rather than a traditional full-time person is beneficial for companies for many reasons, including:
- Cost-Effective:
There is no full-time salary or benefits required.
- Access to Senior-Level Expertise:
Work with experienced HR professionals without hiring a full-time executive. There is no need to offer detailed training.
- Scalable and Flexible Support:
You can easily increase or reduce support as your business needs change.
- Faster Implementation:
Fractional HR professionals can quickly assess your needs and start delivering results.
- Strategic Guidance:
Get help with long-term workforce planning, culture development, and HR strategy.
- Support for Internal Teams:
They can act as a mentor or resource for existing HR staff and managers.
- Objective Perspective:
Gain a fresh, unbiased view of your organization’s HR challenges and opportunities.
- Ideal for Transitional Periods: Perfect during times of growth, restructuring, leadership changes, or temporary HR gaps.
How much does fractional HR cost?
Now to the big question. How much does it cost? Fractional HR fees vary based on the level and experience of the individual you hire. Companies can expect to pay between $150 and $250 per hour. Depending on your needs, you may be able to hire on a project fee or a monthly retainer.
What does fractional HR do? What are fractional HR services?
Fractional HR service providers offer the same human resources functions that are performed by internal HR departments.
They offer a wide range of services that help companies manage their people effectively and stay compliant with employment laws. They create and implement HR policies and procedures, such as employee handbooks and workplace guidelines, ensuring the organization operates smoothly and within legal requirements.
Recruitment and hiring support is another key area, where fractional HR experts assist with writing job descriptions, posting roles, screening candidates, and coordinating interviews. They also manage onboarding and offboarding processes to ensure employees enter and exit the company in a structured and professional manner.
Performance management is a common focus as well. They can design review systems, goal-setting frameworks, and feedback loops that improve employee engagement and productivity.
Fractional HR professionals can also handle employee relations by addressing workplace issues, mediating conflicts, and coaching managers on effective people management. They provide guidance on compensation and benefits, helping companies remain competitive in the job market.
A final word on fractional HR
Amongst the companies I help as an HR consultant, Fractional HR has become a popular way for companies to manage the human resources function of their company. The beauty of fractional HR is that it can be whatever you need it to be, and when you need it. Fractional HR professionals deliver comprehensive HR services—just on a flexible, part-time basis—making them an ideal solution for startups, small businesses, or organizations in transition.
If you’re interested in learning more about fractional HR and whether it might be the right model for your company, contact us and we’d be happy to share some case studies and cost details.
In 25 years in HR, Margaret Bailey has done it all. From running a department of over 30 HR professionals to hiring over 2000 high-tech employees to securing ‘Best Employer’ status for her company, she is an accomplished and knowledgeable HR planning resource for a wide range of companies large and small, public sector and private, in Canada or internationally. She is a senior HR consultant with AugmentHR, an HR services company in Toronto offering a variety of outsourced services via senior, dedicated HR experts.
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