HR Outsourcing for your business 

In this dynamic and ever changing business landscape, the questions of “What is HR outsourcing?” and “Do I need a fractional HR team?” have become increasingly relevant. HR outsourcing is a strategic practice that involves delegating various human resource tasks to external experts that you or your company may not have the time and focus for. This comprehensive guide delves into HR outsourcing, fractional HR leadership, its myriad benefits, and how it is reshaping the way businesses manage their human capital and expenses.

Understanding Fractional HR Outsourcing

HR outsourcing is a process where businesses entrust external agencies with their HR functions. This approach covers various aspects of human resources, from recruitment and payroll to training and compliance. By opting for HR outsourcing, companies access the expertise of respected HR consulting firms, which can significantly enhance their HR functions and employee engagement. This strategy allows for more focused and strategic internal management on important projects and stratetgy, as external specialists handle the complexities of HR management for your company. 

Benefits of Outsourced and Fractional HR Services

What are the main benefits of outsourcing human resource functions? This question is central to understanding the value proposition of HR outsourcing. And while this may not be the same for every company, there are parallels to consider which the primary benefits include:

  • HR Cost Reduction

    By outsourcing HR functions, companies can significantly cut costs associated with maintaining an in-house HR team. No more full-time salary or department structure, just targeted and precise HR help at a fraction of the cost.

  • Access to hr Expertise

    HR outsourcing firms provide specialized knowledge and skills, offering expert guidance in areas like legal compliance and employee development. Fractional HR providers also can lean on their experience from multiple industries to help facilitate the best options for your own business.

  • Efficiency and Productivity

    Outsourcing streamlines HR processes, allowing businesses to focus on core activities while the outsourced team handles HR tasks. Stay engaged with your employees, but focus on the most pressing business needs at the same time.

  • hr Compliance and Risk Management

    With HR outsourcing, companies benefit from up-to-date compliance with labor laws and reduced legal risks. Rules and regulations change constantly, and a fractional HR provider specializes in staying up to date for you, so you can avoid unnecessary risk to your business.

The Impact of Fractional HR on Leadership

How does fractional HR support help leadership? This question highlights the role of fractional HR services in bolstering organizational leadership and productivity. Fractional HR services bring a flexible approach to human resources, providing part-time or project-based HR support. This method is especially beneficial for small to medium-sized businesses that might not require or cannot afford a full-time HR team as part of their company.

Outsourced HR Leaders

Fractional HR leaders, such as fractional HR managers and fractional HR consultants, offer targeted insights and strategies, helping businesses navigate complex HR landscapes. Additionally, they adapt their services to the specific needs of the company, providing a personalized approach to HR management. Fractional HR leaders help other leaders in your company!

Choosing the Right Outsourced HR Provider

What should companies look for when choosing an HR outsourcing provider? Several key factors for you to think about when making a decision for your next  fractional HR expert:

  • Fractional HR Expertise and Experience

    The provider should have a proven track record in HR management, demonstrating expertise in various HR functions. These functions can include payroll, benefits administration, HR government compliance, employee handbook development, recruiting, onboarding strategy & process, training, turnover reduction, compensation & benefit strategy, salary range guidance, termination compliance, unemployment claims, worker’s compensation, and a multitude of other functions. It’s a lot to think about for any business owner!

  • Customizable Services

    The ability to offer customized HR solutions, tailored to the specific needs of the business, is crucial. You and your company are not like anyone else, and the right fractional HR provider understands this and learns your business inside and out.

  • Quality of Service

    Look for providers who have established standards for service quality and client satisfaction. Check for testimonials, ask other business owners, and lean on your network to ensure the HR outsourcing company stands behind their work and clients.

  • Cultural Fit

    The provider should align with the company’s culture and values. This seems very simple, but making sure that there are no glaring differences in approach and enforcement between your company mission statement and mantra and a provider is key for success.

Custom Tailored fractional HR Solutions

Can HR outsourcing be customized to fit specific company needs? Yes, as mentioned above a great fractional HR provider can make your dreams come true. This is a significant advantage of HR outsourcing vs having just an in-house HR staff. Providers can tailor their services to meet the unique requirements of each business. This flexibility ensures that companies of all sizes and industries can benefit from outsourced human resources, whether they need full-scale HR management or fractional HR support for their small to medium business.

Ensuring Quality of Fractional HR Services 

Ensuring quality in HR outsourcing involves setting clear expectations and maintaining open communication between all parties. Regular performance reviews and feedback sessions can help assess the effectiveness of the services provided. Additionally, companies should establish key performance indicators (KPIs) to measure the provider’s success and ensure alignment with business objectives. The best fractional HR providers are transparent as your partner, not hiding the inner workings of their plan.

Measuring Success of Fractional HR Services

The success of HR outsourcing is typically measured by improved business performance, cost savings, employee satisfaction and retention, and the alignment of HR strategies with overall business goals. Regular assessments and adjustments are necessary to ensure the HR outsourcing strategy remains effective and continues to support the business’s evolving needs, as well as focused on making the right decisions and the right time.

Best Practices for Managing Outsourced HR Relationships

Managing the relationship with an HR outsourcing provider requires clear communication, regular updates, and a shared vision for HR and company goals. Establishing a partnership approach, where both parties work collaboratively, can lead to more successful outcomes across the board. Regular meetings and open dialogue are key to ensuring that the HR services provided align with the company’s evolving needs, as well as having your HR provider involved when large changes occur within the organization.

 Technology’s Role in Human Resources Outsourcing

Technology plays a critical role in HR outsourcing. Advanced software and platforms enable efficient data management, streamlined processes, and better employee engagement. Providers leveraging cutting-edge technology can offer more sophisticated and effective HR solutions, from automated payroll systems to comprehensive talent management tools. Understanding the how and when to utilize these tools are paramount to your success, and a fractional HR expert can guide you through the technical maze of systems and updates.

Make the Right HR Solutions Choice for Your Company

Deciding whether outsourcing your human resources function is suitable for your company involves a comprehensive assessment of various factors. While every company is different, the need for a human resources department is most likely apparent. This decision is pivotal for companies grappling with the complexities of modern HR management and cost variables. Here are some final, key considerations to determine if HR outsourcing aligns with your business goals and structure:

  • Understand Actual Business Needs

    Evaluate your company’s specific HR requirements. Does your business need expertise in certain areas like compliance, employee training, or benefits administration? HR outsourcing, particularly services like fractional HR leadership, can provide specialized skills and knowledge that may be lacking internally via years of experience, new eyes on problems, and more.

  • Assess Your Company Size and Structure

    The size and structure of your company play a crucial role in this decision. Small to medium-sized enterprises may benefit significantly from fractional HR services, gaining access to top-tier HR expertise without the full-time expense and talent seeking process. Larger companies might leverage outsourced HR for more complex, specialized tasks while maintaining an in-house team for day-to-day operations with employees needs and performance.

  • Fractional HR Cost-Benefit Analysis

    Consider the financial implications. Outsourcing can lead to significant cost savings by reducing the need for a full-time HR staff and the associated expenses. However, it’s essential to analyze the costs versus the benefits to ensure it’s a financially sound decision for not only your immediate needs, but also how your human resources department may evolve over the next year or more.

  • Long-Term Strategic Goal Alignment

     Align your HR strategy with your long-term business goals. Can HR outsourcing help achieve these objectives? Providers that offer fractional HR leadership, fractional HR consulting, and fully developed human resources plans can offer strategic insights and help steer HR policies that support overall business growth and adaptability, saving you pain and missteps immediately.

  • Quality and Customization of HR Services

    Ensure the HR outsourcing provider can offer customized solutions tailored to your business’s unique needs. The ability to adapt services to the evolving demands of your company is crucial for a successful partnership, and only the proper experience and expertise of working in the fractional HR space will let the right provider understand your unique business needs.

  • Company Cultural Fit

    The provider should align with your company’s culture and values. A good cultural fit ensures that the outsourced HR services expert will seamlessly integrate with your existing team mentality and business ethos. It also allows for your staff, employees, and contractors to “buy-in” to changes that may arise from hiring a fractional HR team or leader that will undoubtedly need to be involved in change management and communication. Culture matters!


In conclusion, deciding to outsource your human resources function is a significant decision and forward thinking strategic move. It requires careful consideration of your company’s current needs, future objectives, and the specific benefits that HR outsourcing can provide. By thoroughly evaluating these aspects discussed above, you can make an informed decision on whether HR outsourcing is the right path for you and your company.

We Can Help You With Your HR Outsourcing Project

At Preferred CFO, we know your business is unique, as are the challenges and opportunities you face. With our customized outsourced HR services options, we can help manage everything from tedious HR solutions such as payroll, recruiting, onboarding decisions, and benefits, as well as expert advisory and process development for leadership, engagement, retention, training, and more. 

If you’re unsure whether we provide a service that fits your needs, please contact us. We specialize in customizable, fractional HR solutions and outsourcing, and are available via phone or email to discuss your business goals and challenges. 

About the Author

Tom Applegarth Human Resources Expert Preferred CFO HR Outsourcing Fractional HR

tom applegarth

Tom Applegarth is a 30-year veteran in the Human Resources industry, with experience spanning manufacturing plants, retail stores, and divisions of Fortune 500 companies. Tom has HR experience across the United States as well as Europe, Asia, and Latin America.

His experience has brought significant, measurable improvements in employee engagement, attrition reduction, recruitment of the best and the brightest employees, and establishment of high-impact HR processes and improvements.

Tom has over 30 years of experience, including serving at high-profile companies such as Goodyear Tires, Belden, Potter Electric, and Young Living.

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