The idea of “fractional” services has been touted as one of the more innovative concepts in business over the past few years. Fractional IT services. Fractional bookkeeping services. Fractional marketing services. Fractional HR services. The idea is simply to provide high expertise and value in a particular area on a part-time basis. It is especially attractive to small and mid-sized employers who aren’t ready for a full-time professional in that specific area. That part-time person, though, may not be an employee, but rather an independent contractor or consultant.
The fact is, fractional services are not a new concept, just new terminology for fairly traditional services. Small to medium sized business have been using fractional accounting, IT and marketing support for years. And, while Fractional HR (human resources) is a bit less common, it’s been around for decades, as well.
How does it work? The idea is simple. Small employers have to compete with large employers for people – attracting, compensating and retaining them. Small employers have to comply with a myriad of employment laws and regulations, just like large employers do. They also have to create a work environment where people can excel – where they are motivated and productive – so they don’t leave for greener pastures. But the fact is, the small employers often can’t afford the expertise they need on a full-time basis – they haven’t sufficiently scaled to justify that expense. So many employers do the best they can with what they have – or the best they can in spite of what they don’t have.
It normally works something like this in a small organization: the office manager, who may actually ‘manage’ one or two others, wears multiple hats, including bookkeeping, payroll and benefits, reception, ordering supplies, executive/owner assistant, computer help-desk, human resources, safety and office maintenance. It’s not that this office manager isn’t competent and conscientious, but it’s tough to be on top of things in all of those categories.
In another scenario in a small business, each department head is responsible for their own hiring, and by extension, responsible for doing any paperwork necessary, maintaining required records, figuring out their own policy enforcement, performance documentation and discipline, if needed. Of course, this method does not really promote consistency of any sort within the organization! Some of the department heads are attentive to details, and some not so much. Some are effective at interviewing and screening, and some not so much. That lack of consistency causes problems.
At best, HR functions in small employers are tackled ‘by committee’, with good intentions, but frequently with mixed results. Most small employers don’t know what they don’t know when it comes to managing people. Sometimes it’s the basics that get them in trouble: not paying people correctly; misclassifying workers and not paying overtime; not reporting injuries; not accommodating a disability; disciplining a person inappropriately or terminating a person wrongfully.
Other times, what causes problems is not knowing how to respond to an employee who complains, or to an employee who must care for a family member with a medical situation, or even what things must be documented and what information must be reported to state or federal agencies.
So, what resources are there for small and medium sized employers to help them with HR-related issues?
The truth is, resources in the HR area are not as plentiful as in accounting, technology and marketing, for example. A Google search in three midwestern cities, Madison, WI, Lincoln, NE and Sioux Falls, SD revealed a list of 15 to 20 fractional accounting services in each city. Likewise, a similar search revealed about the same number of IT service providers. But for fractional HR services, only one or two local sources popped up in each of the three cities.
One of those providers, located in Sioux Falls, SD, is Alternative HR, LLC (https://alternativehr.com). The company started in the early 90’s, well before fractional HR was even a term. According to founder and CEO Dan Oakland, his firm was actually one of the very first in the nation to pioneer and deliver retained HR services (now called fractional HR) to businesses, non-profits and public entities in South Dakota and surrounding states. He says the company has been doing that successfully for over 30 years!
According to Oakland, Alternative HR bridges the gap for scores of small and medium sized employers throughout the Midwest with their human resources expertise. Many of their clients only need occasional, or ‘as-needed’ assistance, but as businesses grow, many need help on a more regular or on-going basis. Thus, fractional, or part-time, HR support.
Alternative HR currently has a team of 15 human resource consultants who support the HR functions of dozens of small and medium sized employers (generally from 25 to 100+ employees) every month, on either an as-needed or fractional basis. The company’s HR consultants – all of whom have over 10 years of HR management experience, and most of whom are certified within the profession – help those employers with everything from compliance to compensation, recruiting to performance issues, benefits, coaching and strategic planning.
Oakland explains that the company has clients they have worked with for 25-30 years. “They were small when we started working with them. Some are still small, and they still need occasional assistance.” Oakland also explained that a number of clients started out needing fractional HR support, but then grew to a point they needed a dedicated, full-time HR professional. “We help them find that person, and we help them transition from our fractional support to their full-time talent.”
Karen DeLange is the Director of Operations for Alternative HR. According to DeLange, less than 10% of employers in the United States have one or more full-time human resource professionals on staff. “It’s the 90% who we help.” says DeLange, “They are mom-and-pop shops, family businesses, non-profits, and smaller businesses who cannot justify a full-time HR professional. We provide HR expertise, best practices and support for them. We help them compete for talent, we help them comply with state and federal regulations, and we help them solve problems and put out fires when they pop up.”
DeLange, who has been with the company for 12 years has seen tremendous growth in the demand for the company’s fractional and outsourced HR services. “Business keeps getting more complicated, rules and regulations keep getting more stringent, and competition to find and keep people is more intense than we’ve seen it in years”, says DeLange.
So how does fractional HR work?
Oakland says that the first step is to assess what’s in place and what’s not; what’s working and what’s not; what the ‘pain points’ are, and what kinds of people issues are causing the owner and/or management to lose sleep. “We also dig in deeper and look at turnover and recruiting practices, at compliance, at training, at safety, at performance management, at compensation and benefits, at employee satisfaction and at the overall work environment.”
Oakland went on to explain that in most fractional HR engagements, Alternative HR assigns one of their HR Consultants to work with that client an average of 8 to 20 hours a week – depending on size and needs. Sometimes our engagements last a few months, while the consultant helps them get their HR functions organized and assigned. Other engagements may last several months, or even a few years.
There are a number of advantages to Fractional HR support for small employers.
- Experience: When small employers first hire a full-time HR professional, they tend to go with someone with little or no experience in order to save money. By using a Fractional HR provider, odds are you will have a much more experienced person, but for a lot less money.
- Flexibility: A fractional HR consultant won’t be available all the time, but they are ‘on-call’, and with proper planning, they can be available for the heavy-lifting and critical issues that need to be addressed
- Cost Effectiveness: A highly experienced HR professional on a full-time basis will be expensive, especially when adding benefits on top of regular compensation. With Fractional HR, you will pay a higher per hour cost, but for a lot fewer hours. The trade-off will save you money.
- Expertise: By using a Fractional HR provider such as Alternative HR, you not only engage a dedicated HR consultant, but you actually have access to the knowledge and resources of the entire team. That old phrase ‘we’ve got your back’ rings very true here.
While fractional HR is still an unknown to a large percentage of small to medium sized business, it is gaining a foothold, and the future is clear – it is a growing industry.
If you are an employer in the Midwest, especially around Rapid City, Sioux City, Sioux Falls or Fargo, and want to learn more about Alternative HR and their fractional HR services, go to https://alternativehr.com/hr-services/#hr-fractional-services.
The firm offers practical and cost-effective HR solutions, including HR management support, compliance, compensation and benefit assistance, recruitment and selection services, employee development and leadership coaching.
Take the first step towards streamlining your HR processes, maximizing your business potential, and feeling better about your people. Contact Alternative HR today for a personalized consultation, and discover the benefits of partnering with one of the nation’s premier providers of HR solutions for small and medium sized employers. Your HR success starts here!
https://alternativehr.com; 888.335.8198; info@alternativehr.com
