As the owner of a fractional HR services firm, you might think I am inclined to overestimate the value of HR for a small organization. “When is the right time to add HR?” and “Isn’t HR expensive?” are questions frequently posed to us and ones that we were reminded of during CED’s recent Venture Connect conference. While there is no “one size fits all” answer to these questions, there are a few reasons startups could benefit from HR strategy at an early stage.
Just as startups outsource finance, legal and IT functions, HR is another area that makes business sense to engage fractionally. At Performentor, we play the role of co-authoring values-aligned solutions for a wide range of businesses and nonprofits. Below we describe the top reasons that organizational leaders decide to bring on a fractional HR service like ours.
Reason 1 – Known Knowns
While business leaders may be good at recruiting and onboarding initially, it can begin to conflict with all of the other leadership responsibilities. Leaders prioritize where they could use some assistance in areas such as employee handbooks, policies, recruitment and retention, and culture strategy. One founder recently cited getting the right people in place as his company’s most important success driver. Other clients mention wanting to be sure that their handbooks and policies reflect current regulations and expected changes in work location while reflecting their core values.
Reason 2 – Known Unknowns
As companies scale, communication and alignment through osmosis don’t always work like they used to. Leaders begin to sense the “us vs. them vibe” and begin to ask questions.”How do we fix this? How can we find out what the employee experience really is? We’ve been doing pretty well with finding great people, but we’re seeing a lot more turnover than we expected. What’s going on?”
By engaging in a fractional HR services model, founders and leaders realize an opportunity cost associated with making the best use of their time and resources. This frees up time to work on the business and not just in the business.
Reason 3 – Unknown Unknowns
Once companies gain the funding and/or the momentum for future growth, it’s challenging to maintain a great culture while rapidly scaling. The questions now become “How do leaders prepare teams for growth without introducing a horrible bureaucracy? Who can help do these things without needing to hire a full-time, expensive expert?” Whether it’s compliance, scalable systems, or process improvement, many business leaders appreciate help figuring out what decisions and small changes can be made now to prevent future problems.
At Performentor, we assemble small teams to support our clients so business leaders get the best of both worlds– a range of expertise to help them with their people practices challenges and a reasonable cost for their smaller size organizations. Because our operating principles dictate that we “become one we with our clients”, it’s not the kind of experience one expects from a consulting firm. We become part of the team and focus on putting the business owners’ vision into place. Whether it’s a 10-person team or rapidly approaching 70 team members, your business goes through predictable challenges based on headcount. For a more in-depth view on the types of challenges that appear at different points in growth, check out our article titled A Roadmap for Your Business’ Growth – performentor.biz.
Fractional HR services make affordable options for mitigating risks and accessing expertise commonly only found in larger organizations. We welcome questions or discussions with scaling companies or nonprofits who are considering when to add an HR function.