Fractional HR vs. Outsourced HR: What’s the Difference?

Hiring a fractional human resources (HR) team can help your company improve its HR functions. But what is fractional HR? If you’re thinking it means outsourced HR, think again. Many people think that outsourced HR and fractional HR are—and mean—the same thing.

At Culture Works, we think there’s a big difference… Let’s dive into why.

What’s the Difference between Fractional HR and Outsourced HR?

Let’s break down the primary differences between the two.

Fractional HR

Think of it like this: Fractional relationships are more like adding another team member (or a few team members!) to your organization on a part-time basis.

This considered, hiring a fractional HR team to partner with your in-house HR stakeholder or team involves a more strategic partnership. In a fractional relationship, the fractional team acts as a member of your organization, fulfilling the roles and responsibilities of traditional HR members but without being full-time company employees.

In short, fractional HR services are like hiring part-time employees to assist your existing team. It’s a partnership rather than a replacement. At Culture Works, we believe fractional human resources can help optimize:

• Your company’s human resources
• And its company culture

Outsourced HR

Outsourcing your HR is a bit easier to understand. Many aspects of business can be outsourced in today’s world. For example:

• Marketing
• Accounting
• Payroll
• IT
• And, of course, human resources!

All departments can be outsourced. So, what is outsourced HR?

According to the Society for Human Resource Management (SHRM), “HR outsourcing is the use of an outside service to handle some or all of your company’s HR tasks. HR outsourcing functions [can] include:

• Payroll processing
• Employee benefits administration
• And other business needs unrelated to day-to-day company functions”

Most of the time, outsourced HR means completely relying on the outsourced team instead of an in-house team. In some cases, however, outsourced HR can be a strategic partnership between your existing team with an HR company that performs similar or complementary functions.

Most likely, however, an outsourced team is often a replacement for an in-house team or role.

Why Should You Consider a Fractional HR Company?

So, why should you consider a fractional HR company? Here are three reasons why your business might consider partnering with a fractional HR company (like Culture Works!)

1. It Saves You Money

CEOs and other business leaders strive to make their company the best possible place to work. In order to do that, leaders need to invest in operationalizing their culture—plus, there’s no business owner who wouldn’t like to cut costs where they can.

Hiring a fractional HR company is a cost-effective way to optimize your human resources. Hiring a fractional HR team can help reduce the cost of full-time employees while optimizing your existing team’s functionality.

In fact, did you know that the cost of hiring one full-time, in-house employee (with salary, benefits, etc.) can cost the same as receiving an entire fractional team?

2. It Provides Additional Expertise and Resources

A fractional HR team can help provide additional expertise and resources to your business.

When you hire a team of human resources experts, you receive a depth of expertise that is different from hiring just another in-house team member. With an entire fractional team, you open yourself up to a greater network of people who can help. 

You also give yourself access to the resources that only HR professionals who have been in the industry for 10+ years have access to. Who wouldn’t want that level of expertise and resources?

Our team at Culture Works is comprised of HR experts with years of experience under their belt, including:

• HR Consultants and Generalists
• Culture Operations Partners
• L&D Specialists
• Culture and Branding Operation Specialists
• And more

Each and every member understands how to integrate company culture with HR operations in order to create a successful company. Read on to learn more about what we do at Culture Works.

3. It Can Cater to Specific Needs

Fractional teams can tailor their game plan to your specific needs as a company.

For example, at Culture Works, we can perform assessments prior to our engagements. This helps tailor our approach to your company’s needs. Based on these assessments, we decide where our team can help your HR department operationalize its culture, talent, and HR.
So, there you have it… The difference between fractional HR and outsourced HR! Interested in learning more? Read on to learn more about when to hire a fractional HR team.