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Fractional HR: A Key Ingredient for Early-Stage Company Growth

Fractional leadership offers a strategic solution to access expertise and support without neglecting vital HR requirements.

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Mar 18, 2024
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Last updated on Mar 18, 2024

Early to mid-stage startups and mid-size businesses require HR support from day one. Numerous processes, policies, and cultural components are vital from the outset. However, it's common for HR and People teams to be hired later as companies grow. Early-stage companies often face limited resources, making it challenging to build and maintain a robust HR function. This can leave gaps in essential policies, processes, and engagement tools.

While prioritizing HR from the start is crucial, hiring a full-time leader into that vertical isn't always necessary. The field of fractional work is growing exponentially and executive leadership should strongly rely on this type of work to develop HR verticals ahead of building an entire People Ops team. Let's explore why fractional HR leadership is essential for the success of early-stage companies.

Is Fractional HR Leadership Right For Your Organization? 

Early stage companies that are working to scale often don’t need dedicated, full-time leadership for specific positions. The priorities of early stage companies are vast and often competing. With rapid growth and scalability, hiring a full-time leader in each department is not always feasible financially and operationally. Companies can leverage the experience and specialized knowledge of fractional HR professionals to address specific needs. Fractional leadership allows companies to have a point of contact in every vertical without the overhead of hiring a full-time team before the company is ready.

While your organization might not be ready for full-time HR leadership, fractional HR leaders can build foundational processes, ensure compliance with Employment Laws, and help define and implement the organization’s strategy. This is crucial while the company is growing, saving time for a full-time leader by establishing essential processes beforehand.

The Role of HR in Early-Stage Companies

HR duties are often piecemeal and divided among Finance, Operations, and even the CEO in early-stage companies. Fractional HR leaders can step in with their vast experience and expertise, consolidating all responsibilities and owning them entirely. This frees up others to focus on more crucial initiatives within their purview.

Experienced Fractional HR Leaders can come into the organization, assess internal policies, processes, and cultural aspects, and provide strategic guidance. They lay the groundwork for everything from Performance Review Processes to Onboarding and Offboarding and Compensation Strategies, providing the company with essential processes and a great starting point for growth.

By ensuring compliance and mitigating risks, fractional HR leadership helps protect the company's reputation and financial well-being. Fractional HR leaders can focus on strategic initiatives that drive business growth while handling day-to-day HR tasks.

Advantages of Fractional HR Leadership

A Fractional HR leader will ensure your organization has the essential HR practices in place, are compliant with federal and state employment laws and provides a starting point to grow the department.

Fractional HR leaders are experts in their work. They can come in and usually get right to work on the essential priorities right away. This is incredibly cost-effective for businesses as they are able to rely on a senior leader on a part-time or less than part-time basis and still be confident that they are getting the expertise they need. No longer do businesses need to wait until they raise additional funding or get to a certain level to bring in full-time leadership. It will be better to bring someone in on a fractional basis than neglect that vertical entirely until the time is perfect. 

Flexibility in engagements also allows companies to scale HR support based on their evolving needs. Fractionals are in this line of work because they enjoy the flexibility that comes with it (highs and lows included!), so they will likely be amenable to varying levels of dedicated support. The benefit is you get someone in a vertical to get the necessary work done, and the Fractional is already comfortable with the flexible nature of the role.

Tips for Choosing the Right Fractional HR Leader

Industry fit and experience, seniority level and areas of focus are just a few traits that companies should evaluate when speaking with a potential HR leader.  Industry-specific experience ensures that the Fractional HR leader can provide strategic guidance aligned with industry expectations. They can predict what the company will need down the road and plan accordingly.

Your organization may not need a Fractional CHRO or VP of HR - that's ok. Fractional HR leaders can come in the form of a consultant on a Senior Manager or Director level. Oftentimes this level of seniority is fitting for companies who need the essentials of HR developed and managed. Look for an individual whose seniority aligns with your needs. Need strategic advice? Look for someone more senior. Need the basics of HR operations implemented? A director level should suffice!

If your organization's needs are more general, many HR leaders have a generalist background that will be incredibly helpful to develop your HR org. They can tailor solutions based on your company’s size and demographics and ensure that policies align with the organization's position. This is also a great chance for a trial run. Different HR professionals have different approaches, and by engaging with a Fractional, you and your organization can determine what type of management and leadership style works best within your organization.

Successful Fractional HR Leadership

The best Fractional HR leaders will engage with you and your team in a way that fits the organization. They will plug in and solve the specific issues you brought them in for on a much quicker timeline and often require little to no training. They will also build a robust and scalable HR organization that your future full-time HR leader can fit right into and lead from.

Fractional HR leadership offers a strategic solution for early-stage companies to access HR expertise and support without neglecting vital HR requirements. By considering and engaging with fractional HR leadership, early-stage companies can enhance their HR capabilities and position themselves for long-term success. The future of HR in the startup ecosystem relies on innovative approaches like fractional HR leadership to meet the evolving needs of growing companies.

Your Partner for Success - People First 
People First HR Consulting has successfully developed HR verticals and provided HR expertise for various startups in the tech, biotech and pharmaceutical, agency and retail sectors. The approach to startup needs is completely tailored to each company’s immediate needs and the foundation of HR policies is always built with a core message in mind - People First. Ensuring company’s are compliant with varying employment law requirements, building competitive parental leave policies and benefit offerings and ensuring onboarding processes are welcoming are just a few of the important initiatives People First partners with its clients on. 
As a strategic partner, People First will be able to help you achieve all your HR needs. With a proven track record of managing full remote U.S and international teams and ensuring compliance and testimonials to their service offerings, the firm can be your trusted partner in developing or scaling your company’s HR vertical. 
You can learn more about their work here or connect with Lauryn on Linked In.

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