How fractional HR scales systems when founder-led HR hits its limits

Founders and finance leaders aren’t trained to tackle people ops problems. Yet it’s not uncommon to find them doing exactly that at small and medium-sized businesses (SMBs). This shifting focus can seriously undercut your ability to scale: Fast-growing SMBs are 20% more likely than zero-growth companies to apply HR best practices, according to Asure.* Without the right skills, tools, and knowledge, it’s tough to develop a people program that actually helps SMBs grow. 

Luckily, there are ways to introduce proactive people-management practices even if you aren’t ready to hire a full-time HR leader. Fractional human resources involves bringing in help from a people leadership professional on a contract or part-time basis. 

In this guide, we’ll explore what fractional HR is and how it can be an important tool as part of an effective scaling strategy to get your HR team off the ground.

* Asure, 2024

What’s fractional HR?

Fractional HR support is an arrangement where companies bring in experienced HR leaders to help with people ops tasks on a part-time, contract, or retained basis. In practice, this means you’ll get the advantage of senior-level expertise on a regular schedule without the commitment of an in-house team member.

Despite their similarities, fractional HR and HR consultants aren’t the same thing. HR consultants only work on a specific project or problem area (e.g., designing a compensation framework). Fractional HR companies also aren’t the same as HR agencies, which are outsourced teams like an administrative services organization (ASO) or a professional employer organization (PEO) that handles tasks outside your internal business.

A few of the most common tasks fractional HR professionals help with include: 

• Developing your people strategies and HR processes 
• Supporting managers and employee relations
• Advising leadership on talent, culture, and workforce planning

What fractional HR services can do for a growing company

“Being in HR doesn’t mean you’re not part of the business. The shift is realizing that every tactic — hiring, L&D, benefits — must align to business strategy and outcomes.” 
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— Luck Dookchitra, former VP of People and Culture at Leapsome

Fractional HR usually enters the conversation when people problems get too overwhelming to handle internally. This roadblock often happens when companies are scaling fast and need more structure around processes like hiring and onboarding, but don’t have the time to build them. Founders find they’re distracted by HR tasks and not spending enough time making high-level business decisions, yet they don’t have room in their budget to add another executive-level salary to their payroll.

To bridge the gap, a fractional HR strategy provides:

• Access to experienced HR leadership: Partnering with fractional HR providers means you’re getting strategic guidance from people ops pros who know how to navigate organizational growing pains.

• Greater flexibility and lower costs: You get to take advantage of a seasoned HR exec’s skills in your organization for far less money than hiring a full-time employee costs, and they can assist with a wider range of tasks than an HR consultant. This flexibility makes them a strong fit for SMBs that need help building a people structure for the first time. 

• Faster implementation of people processes: Fractional HR can whip up compliant, workable frameworks for hiring, leadership development, and performance management while you focus on scaling.

The real cost of waiting too long to invest in people leadership

“The purpose of an HR function is to create a people strategy that most effectively drives business goals. It starts with the business, then you build your people strategy from there.” 
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— Melanie Naranjo, Chief People Officer at Ethena

Cost savings and flexibility are generally the biggest benefits of fractional HR programs. These measures are undeniably draws, but they overshadow the real long-term value of working with an expert. The longer you wait to call for HR guidance, the more likely you are to face operational obstacles, like:

• Inconsistent management practices: Without an HR framework, there’s no shared guide managers can use to hone their feedback, which results in uneven employee experiences. Considering Gallup surveys show managers account for 70% of the variance in your employees’ engagement scores, this lack of continuity can snowball into major problems. 

• Rising turnover and disengagement: If you can identify engagement risks early and intervene immediately, you have a lot of power over turnover rates. In fact, Gallup found that 42% of employees who quit said their companies could have done something to prevent their departure decision.

• A lack of career development and performance structure: If employees don’t feel like you’re offering a future path for growth, they aren’t as likely to stay. On the flip side, Gartner’s data shows that employees who feel valued and supported are 4.1 times more likely to stick around.

Waning engagement is a telltale sign that trouble’s brewing in your teams. The easiest way to track this data is to set up routine surveys. Your fractional HR leader collects the responses, organizes and analyzes the data, and then uses that analysis to come up with actionable strategies to raise employee sentiments. Leapsome’s Engagement Surveys feature is designed to help you track this and other important metrics across teams, so you can develop the best possible people-first policies.

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🚨 Stay ahead of people problems with survey data 
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Leapsome’s Engagement Surveys feature highlights red flags, so fractional HR can guide your team toward a stronger foundation and away from crisis.
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👉 Explore Engagement Surveys

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The maturity test: Do you need fractional HR or just better systems?

Fractional HR feels like the ultimate quick-fix when people problems start piling up. According to a 2024 FRAK report, 73% of fractional HR professionals stated that scaling businesses are their biggest clients. But that doesn’t necessarily mean fractional HR is always the right answer when moving from founder-led to structured HR leadership. In some cases, you could solve the bulk of your issues just by addressing inefficient HR processes.

Signs you may need fractional HR

To figure out if your issues are solely systems-based or require professional guidance, start by identifying your current growth stage and the major bottlenecks in your scaling efforts. If you notice several of these common warning signs, professional guidance could be the right move:

• There’s no dedicated people expertise on your team: If people decisions always fall on a founder’s shoulders, that’s time lost for other strategic initiatives. But your employees aren’t getting the expert guidance they need to feel secure and engaged. When nobody truly owns the people function, fractional HR can bring continuity to your processes and lighten leadership’s load.

• Managers need support, but a full-time hire isn’t justified: “In-between stage” scaling SMBs often have managers who handle tons of tasks without the training or framework necessary to make people-first decisions. Fractional HR typically fits when you need a stronger framework to get going.

• Growth is creating new people, culture, or compliance challenges: At some point, scaling will expose issues like sluggish time-to-hire or compliance risks your business never had to think about before. These are normal signs your organization is maturing, but you still need to put processes in place so those small issues don’t become big operational challenges. Fractional HR leaders can create those processes based on practical experience.

“HR shouldn’t just support business decisions — you’re shaping them. You have to think like a profit center, not an administrative silo.” 

— Anita Anthonj, Founder and CEO at Talaera

Organizations often assume HR leadership will wipe away all their worries, only to discover that poor data management and visibility is what’s really holding them back. Leapsome’s all-in-one HRIS supports employee growth without requiring a jump to fractional or full-time HR. For instance, with Leapsome’s Performance Reviews feature, you can create ongoing review cycles for managers that sync with all your employee records and feedback in a single centralized platform.

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💪 Strengthen your core systems 
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Before opting for fractional HR, uncover any unaddressed areas in your core people systems with Leapsome’s all-in-one HR and people management platform.
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👉 Explore HRIS tools

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How Leapsome helps organizations support strategic HR growth

No matter what your HR department looks like, you can’t run smooth people operations with disconnected systems. Often, the biggest challenge small companies face is a lack of visibility into their processes, meaning they don’t actually understand what’s going on and can’t solve the root problem and move forward with clarity.

Leapsome’s HRIS and people management platform provides a convenient, centralized software hub for all your employee data. In addition to keeping your employee records in one place, Leapsome gives HR reps and founders multiple tools to monitor and manage your people ops, including:

• Engagement surveys: Get a pulse for how your employees feel and chart changes over time so you never miss misalignment signals.

• Performance reviews: Set structured review cycles and provide continuous feedback, so managers know how to lead effective growth conversations and employees stay motivated to grow.

• Goals and OKRs: Help employees get a sense for how their work contributes to company-wide objectives and operational success.

• Leapsome Academy: Solidify expert management strategies with Leapsome’s courses on leadership and coaching.

Even if you don’t opt for fractional HR, Leapsome’s all-in-one platform gives your HR tasks the structure they need to be useful today and years from now.

“Automating the invisible work gives HR leaders back time for culture, strategy, and meaningful connection.”  — Emma Leeds, Founder, CEO, and Chief People Consultant at People Function 

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👟 Start your HR strategy on the right foot
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Leapsome’s centralized HRIS and people management software provides the tools you’ll need for complete visibility into a connected HR ecosystem, no matter how you structure your HR team.
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👉 Request a demo

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FAQ

What’s the difference between fractional HR and HR consulting?

Fractional HR offers ongoing support for your company’s HR processes, typically in a part-time or contract model. HR consulting is only for short-term projects or specific issues with a clear start and end date.