How Fractional HR Makes a Big Impact for Growing Companies
United Business ConsultantsThe UBC team · 3 min read
Somebody at your company is running HR. The real question is whether they were trained for it, whether they have time for it and whether they know it is their job.
Who is running HR at small businesses
In late August, FrankCrum published a survey of 1,000 small business owners and employees who handle HR. The findings will sound familiar to a lot of owners:
39% of small businesses have no dedicated HR department or employee. HR is handled by the owner (15%), shared informally (14%) or absorbed by an office manager (10%).
43% of the people handling HR spend 10 or more hours a week on it. For 13%, it is 20 hours or more.
42% took on HR work with no increase in pay.
Only 13% of people who play a role in HR decisions hold an HR title.
Now put that next to the hiring picture. NFIB's August jobs report found 35% of small business owners had openings they could not fill, 11 points above the historical average. Among owners trying to hire, 82% reported few or no qualified applicants, and 23% named labor quality as their top operating problem.
So the typical growing business has a hard hiring market and real people risk, managed by someone doing it on the side.
What fractional HR is
Fractional HR gives you an experienced HR leader for a set number of hours each month. You get senior guidance on compliance, people strategy and hiring without adding a full-time HR executive.
It is different from a PEO. A PEO becomes a co-employer and bundles payroll and benefits. Fractional HR does not change who employs your people. You keep control and add leadership. If the model is new to you, our primer on what fractional HR is covers the basics.
Five places fractional HR makes the biggest impact
1. It gives the owner time back
Ten hours a week is a quarter of a standard work week. When that time belongs to the owner or the operations lead, it comes straight out of sales, customers and running the business.
2. It keeps you ahead of the rules that change as you grow
Employment law is tied to headcount. Most federal anti-discrimination laws apply once you have 15 employees, and age discrimination law applies at 20, according to the EEOC. The Family and Medical Leave Act covers private employers with 50 or more employees. The Affordable Care Act's employer rules apply at 50 full-time and full-time equivalent employees.
States add their own layers, and they move quickly. Colorado rewrote its AI hiring law in May. Starting January 1, 2027, employers that use automated tools to materially influence employment decisions about Colorado residents must give notice, explain an adverse decision within 30 days, offer a path to correction and human review, and keep records for three years, according to SHRM's summary.
A fractional HR leader tracks which rules apply to you now and which are coming with your next 10 hires or your next state. This post is general information, not legal advice.
3. It makes hiring repeatable
Most small companies hire differently every time. A fractional HR leader puts the basics in place: role profiles tied to outcomes, structured interviews, pay ranges and an onboarding plan. When qualified applicants are scarce, a clear and fast process is an advantage.
4. It handles hard conversations early
Performance problems, conflict between managers and terminations go better with someone experienced in the room. They also go better with documentation that was written at the time, not reconstructed later.
5. It builds the pay and retention structure you have been improvising
Pay bands, benefits guidance and regular check-ins with your people cost far less than replacing them. In a market where most owners report few or no qualified applicants, keeping a good employee is the easiest hire you will make.
Signs it is time
You are approaching 50 employees
You are opening a new location or hiring in a new state
Employee relations issues are landing on the owner's desk more often
The CEO or office manager is spending hours a week on HR
You are about to hire several people at once
What it looks like with UBC
UBC's fractional HR work is led by Greg Davis, our strategic HR consulting partner, who brings more than 25 years in HR and SHRM certification. Every plan includes a dedicated fractional HR partner, strategic check-ins, compliance monitoring and critical HR documentation. Because UBC is also a search firm, hiring support comes from the same team.
For the financial case, see our earlier post on the ROI of fractional HR.
Not sure where you stand? Request a free HR audit or call 404-480-0297.
