Fractional HR Can Help Your Small Business

Eric Mochnacz
November 19, 2020

As any business attempts to scale, it must undergo critical change to meet business goals.  Any decisions that the business leaders make in order to move the needle will have a direct or indirect impact on an organization’s people.  Having a skilled human resources professional leading your people function can be key to helping your business and your people successfully navigate organizational change.  By choosing a fractional HR partner, rather than going to market to hire your HR head, you can capitalize on their expertise without the overhead and expense of an internal hire.

What is Fractional HR?

Simply put, fractional HR is when a company opts to outsource its HR function.  Your business, rather than choosing to hire an HR professional or build out an HR department, opts to work with a consultant or consulting firm to develop and execute on your people operations, processes and procedures.  By teaming up with an external partner, the business saves money on payroll taxes, employee benefits and other employee costs that they aren’t responsible for in a fractional relationship.

Having an external human resources partner, like Red Clover, can provide a much-needed fresh perspective to addressing the challenges in your business.  At times, it’s easy for organization founders and leaders to do things the way they’ve always been done, without recognizing the detrimental impact it’s having on the business and its employees.  Your fractional HR resource can provide unique and innovative solutions that will finally help your organization move through the obstacles holding it back from meeting its full potential. 

How Can Fractional HR Work for Your Business?

A competent fractional HR provider is able to leverage the human capital management experience of their collective team to provide the flexible and cost-effective people solutions for your business.  Through a thorough discovery conversation with you and your colleagues, your qualified, outsourced HR provider can identify your needs and the most effective way to help you meet them.  Depending on the firm you choose, they may be able to assist your business in a number of ways to elevate your Human Resources function, based on the team of professionals they’ve built.  Red Clover’s certified consultant team don’t have traditional, corporate HR backgrounds, which allows us to leverage our years of management and leadership experience in a diverse range of industries to serve our clients in a variety of ways.  We have experience in the traditional employee lifecycle processes, while also having worked directly with business owners in employer brand initiatives, management development planning and company culture identification and implementation. 

Components of Fractional HR 

Recruiting, Interviewing and Onboarding – Perceived as the most crucial function of any HR department, a fractional HR provider can develop these key employee lifecycle processes.  They can revise job descriptions, identify core competencies for those positions, develop effective interview questions, and train managers on effective interviewing techniques.  Skilled outsourced HR practitioners are also equipped to develop new employee onboarding that focuses on employee engagement, integration and long-term retention. 

Performance Development – Working with your fractional HR partner, you can develop critical feedback cycles for your employees so they are having regular, formal and informal performance development conversations with their managers.  HR can develop the rhythms for daily team huddles, weekly one-on-ones, and monthly team meetings.  Also, they can provide support to management in having difficult performance conversations with their direct reports.  Although performance management shouldn’t be a once a year event, qualified HR consultants can help you develop a standard document for formal performance development that allows your people to identify how they have performed towards core values, performance accomplishments and set goals to achieve before the next formal discussion. 

Employee Relations – Not only are employee relations fraught with potential legal implications, there are emotional stakes associated with managing employee relations issues properly.  You want an emotionally intelligent and competent professional handling the issues that inevitably arise when managing a workforce.  An outside HR partner also can bring an impartial viewpoint to employee issues.  If the complaint warrants a workplace investigation, no business wants to wing it.  Fractional HR is the resour who oversees the investigation process and can seamlessly partner with your general or outside counsel to mitigate risk and be compliant in investigation procedures.  

Compensation Planning – How you pay your people is essential to your ability to grow as a business.  Throughout the people operations industry, a number of organizations provide compensation credentialing programs that certify fractional HR practitioner’s ability to build comprehensive compensation plans.  Working with your HR partner, you can develop salary bands, bonus structures and communication plans when you’re ready to implement a structure for how you pay your people.  

Terminations/Reductions in Force – One of the more challenging aspects of running a business is when you need to terminate an employee or implement a larger reduction in force.  Having the appropriate HR support will help you establish your decision criteria and create communication plans to deliver the message directly, but with empathy.  They will complete the due diligence to ensure the termination decisions are not adversely affecting members of protected classes.  Similar to serious employee relations issues, your outsourced HR partner can work with legal counsel to strategize your business’s approach to separation and general releases, WARN notices, and other required components of a reduction in force.  

Is Your Business Ready for Fractional HR?

If you are a small or medium-sized business who feels like you are treading water with your HR function, consider partnering with a fractional HR firm.  If you are struggling with retaining top performers or attracting qualified talent, outsourcing your HR function may be the solution you need to build a better employee experience.  If you’re committed to making the essential change in your business in order to allow it to flourish, consider working with Red Clover to help you meet your ambitious goals at the fraction of a cost.

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The Results

Construction and Contracting

A commercial roofing contractor was in hyper growth mode. They had goals to increase their field workforce to expand their service area to additional states and geographical locations. If they were to grow their field workforce, they would also need to increase their administrative, operational and sales headcount to support the additional workload created by increased field work. Additionally, they were challenged in workforce retention and development, experiencing high turnover, and did not have a dedicated Human Resources professional to manage employee relations and compliance issues that come with trying to scale a business.

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