What Is Fractional HR? How It Works for Small Businesses

Who handles HR at your business right now? Is it you, squeezing hiring questions and team problems in between everything else, or an office manager who picked it up because somebody had to? HR falls on business owners or managers who already have full plates, and at some point the people questions start to outgrow the time anyone has for them.

Fractional HR is one way to close that gap. Below I cover what fractional HR means, what the work looks like from week to week, what it covers and what it doesn't, how it compares with outsourced HR and a PEO, and how to tell whether your business is ready. I'm Allisha McCartney, and Fractional HR is one of the seven services I offer at HRish Solutions, so where it helps, I'll also tell you how it works with me.

What fractional HR means

What is fractional HR, then? It's HR leadership you get for a fraction of a full-time role: an experienced HR professional works with your business for a set share of their time, such as a number of hours each month, and works with other businesses the rest of the time. You get the judgment of someone who has handled the hard people decisions before, without building an HR department inside the business.

Continuity matters most. A fractional HR partner gets to know your business, your people and your plans, and keeps coming back, so the advice in month six builds on what happened in month one. That's what separates it from calling an HR consultant once about a single problem, which is a perfectly good choice when you only have one problem.

Fractional HR can also include interim cover, where someone steps into an HR manager's role for a while. I come back to that below.

How fractional HR works week to week

A fractional HR arrangement generally comes down to three questions: how many hours you have, who decides what those hours go toward, and how you reach your HR partner between meetings. Your answers shape the week-to-week work.

With me, there are three options for hours right now, 15, 25 or 40 a month, and I can be flexible when I need to be. Deciding where those hours go is a shared job.

Usually I work side by side with leadership to decide what matters most right now and what will give the best return on investment while lightening their load. If something more pressing comes up partway through the month, the plan can pivot.

Leadership meetings with me happen mostly by video. I'm happy to meet in person now and then too, and there's one client I usually meet in person once a month.

Between meetings, who on your team can contact me is your call. Most of the time, a client has a select group of people who contact me directly, and front-line team members reach me through their manager.

A fractional HR partner can also help you keep an eye on a few HR numbers, such as turnover and how long it takes to fill an opening, so the decisions in those meetings rest on more than a feeling. My post on HR metrics for small businesses covers which ones are worth tracking on a small team.

What a fractional HR partner does (and doesn't do)

Fractional HR sits at the leadership end of HR. The work is the decisions behind the paperwork, such as who you hire next, how the team is structured, how a change gets rolled out and what the HR plan for the coming year looks like.

In my Fractional HR work, that covers:

• Strategy: HR strategy development, and putting an HR roadmap into practice.
• Leadership support: leadership advising and coaching, and taking part in your leadership meetings.
• Planning: workforce planning support.
• Culture and change: culture strategy development and organizational change management.
• Advice on its own: I can also do standalone leadership advisory.

Interim cover

Fractional HR can also mean filling the seat for a while. I can step in as an interim HR manager or director while you hire one. The work is whatever gap your HR person was handling: it might be interviews, day-to-day HR questions, meetings, benefits enrollment or running the new hire process. How long it lasts and how many hours it takes vary by company and needs, and the work is remote, with some in-person time if needed. I'll even help train the new hire.

Where the edges are

A fractional HR partner isn't a payroll company, a benefits broker, a recruiting agency or a law firm, and it helps to know where those lines sit before you start. With me, they sit here:

• Payroll: I don't process payroll, but I help with wage and hour compliance and with choosing a payroll provider.
• Benefits: I'm not a benefits broker, but I help you find one, choose plans that fit and help with enrollment.
• Recruiting: I'm not a recruiting or staffing agency. If you're on a Monthly partnership, I may also help with recruiting on a short-term basis.
• Legal advice: I'm not a lawyer, so when a question needs an employment attorney, I stay in your corner and consult one on your behalf.

Fractional HR vs. outsourced HR and a PEO

Outsourced HR is a broad label for handing some or all of your HR work to an outside provider, so fractional HR is one kind of outsourced HR. Within that label, a fractional HR partner works like a part-time member of your leadership team, while other outsourced setups may focus on handling set tasks for you. With outsourced HR support from me, you usually keep the day-to-day people management and the final calls, although it depends on the business.

A PEO, or professional employer organization, is a different arrangement. The IRS describes PEOs as handling various payroll administration and tax reporting responsibilities for their business clients, and it runs a voluntary certification program for them. HRish isn't a PEO: you keep your team, your payroll and your providers, and I work alongside them. If you're weighing the two, ask yourself whether you need someone to run payroll and tax administration, someone to help lead the people side of the business, or both.

Signs your business is ready

There's no headcount where fractional HR suddenly becomes a must. The better signals are moments when the people side takes more time than you have, or when the same problems keep coming back. When owners reach out to me, they can feel like they're hitting a brick wall, dealing with the same things again and again no matter what they try.

Some signs it may be time:

• Hiring is speeding up: you're adding people faster than your processes can keep up, or you're nearing a headcount where new rules start to apply.
• People problems land on your desk: conflict, complaints, a performance problem or a termination you're unsure how to handle.
• Your managers learned on the job: they were promoted for being good at the work, not for leading people, and they need someone to turn to.
• Growth feels messy: roles are unclear, pay gets decided case by case and nobody has planned the next hires.
• You're tired of being the HR department: the hours it takes are coming out of running the business.

Fractional HR doesn't need a big team. I love working with owners just starting out or with fewer than 15 people, and my sweet spot is a team of 25 to 100, where I find owners see the value.

It does need something from you. HRish is a better fit for small and growing businesses that want practical HR support and are willing to be involved in the process. If you're after a quick fix, a stack of policies or just someone to check compliance boxes, I'm not the right fit. You don't need to know exactly what help you need, though. I'm especially interested in working with owners who know they need help with the people side of their business but don't necessarily know what that help should look like yet.

How to choose a fractional HR partner

Whoever you talk to, a short conversation will tell you a lot. These are the questions I'd ask any fractional HR partner, including me:

1. How do you decide what my hours go toward? Look for someone who sets priorities with you and adjusts them when something urgent comes up, rather than working through a fixed list.
2. Will you learn the business before recommending anything? A partner who arrives with a ready-made set of policies before understanding how you work is selling a package.
3. Who on my team can contact you, and how quickly do you reply? Ask what happens when a manager needs an answer the same day.
4. Do you explain the reasons behind your advice? Your managers should come away knowing why, so they can handle the next similar situation themselves.
5. What happens when a question needs a lawyer? You want someone who stays involved once a lawyer is brought in.
6. What don't you do? Clear edges around payroll, benefits and recruiting save confusion later.

Here's how I answer a few of them. I take the time to understand your business, your people and how you actually work, then build HR around what makes sense for you. Email usually gets a reply from me within 1 to 2 hours, and I usually pick up the phone right away unless I'm in a meeting. When I give HR advice, I always explain the reasons behind it. I have the most experience with service industries, and I have experience doing HR in all 50 states, so I can work with businesses whose team members are in other states.

If you're wondering whether fractional HR fits your business, you can read how my Fractional HR service works, or contact me to book a consultation.