Fractional HR Vs Full-Time HR: Which Is Better For Your Growing Small Business?

TLDR: For most growing small businesses, fractional HR is the smarter move. You get senior-level expertise for about a third of the cost of full-time, plus the flexibility to scale up or down without the drama of hiring and firing. Full-time HR makes sense when you're big enough to need someone on-site daily (think 75+ employees). But if you're still figuring things out? Go fractional and save yourself the headache.

---

Let's be real here: as a growing small business owner, you're probably wearing about seventeen different hats right now. CEO, sales manager, customer service rep, and oh yeah, accidental HR person when someone asks about vacation time or when Karen from accounting starts drama with the new hire.

Here's the thing: You're at a crossroads. Your business is growing (congrats, by the way!), and you know you need proper HR support. But do you hire a full-time HR person or go with fractional HR services?

The answer isn't as obvious as you might think, and getting it wrong could cost you serious money: or worse, a lawsuit that keeps you up at night.

What The Heck Is Fractional HR Anyway?

Think of fractional HR like having a personal trainer instead of moving into the gym. You get professional expertise when you need it, without the full-time commitment or overhead.

Fractional HR means hiring experienced HR professionals on a part-time, project-based, or retainer basis. For around £3,500-£4,000 per month (or about $5,000 if you're in the US), you typically get:

• 20-40 hours of dedicated HR support monthly • Access to a whole team of specialists (not just one person who googles employment law at 2 AM) • Strategic planning AND hands-on execution • Flexibility to scale up or down as your business changes • Zero payroll taxes, benefits, or office space headaches

It's like having a Swiss Army knife of HR experts who actually know what they're doing, rather than hoping your cousin who "took a business class once" can handle your employee handbook.

The Real Cost Breakdown (Brace Yourself)

Let's talk numbers because this is where it gets interesting: and where most business owners have their "oh crap" moment.

Fractional HR Costs:

• Monthly fee: Phare HR Retainer starts at £350 • Benefits, taxes, office space: £0 (because they're contractors) • Professional development, equipment: £0 • Risk if it doesn't work out: Minimal: just end the contract (with Phare, Fractional HR starts at £350/month)

Full-Time HR Costs (The Hidden Iceberg):

• Salary: £30,000-£50,000+ ($40,000-$70,000+) • Benefits package: Add another 20-30% to that salary • Payroll taxes: More money flying out the window • Office space, equipment, training: Even more costs • Risk of bad hire: Up to £22,000 ($30,000) in severance and replacement costs

The math is brutal: You could get fractional HR services for literally one-third the cost of a full-time hire. And here's the kicker: you're often getting better expertise because you're tapping into a team of specialists instead of one person who has to be mediocre at everything.

The Expertise Game-Changer

This is where fractional HR really shines, and where most small business owners have their lightbulb moment.

When you hire one full-time HR person, you're getting one person's knowledge and experience. Maybe they're great at recruitment but terrible at compliance. Or they know UK employment law inside and out but panic when you ask about diversity and inclusion strategies.

With fractional HR, you get access to specialists: • Employment law experts who actually know the latest regulations • Recruitment specialists who can spot red flags in interviews • Compensation analysts who know market rates • Employee relations pros who can handle difficult conversations • Strategic HR leaders who think bigger picture

It's like having a medical team instead of just one general practitioner. When you need heart surgery, you want a cardiologist, not someone who "dabbles in cardiology."

When Full-Time HR Actually Makes Sense

Look, I'm not completely anti-full-time HR. There are times when it's the right call, but they're fewer than you might think.

Go full-time if: • You've got 75-100+ employees who need daily support • Your budget can comfortably handle £60,000+ ($80,000+) in total annual costs • You need someone on-site for immediate employee issues • Your industry has complex, specialized HR requirements that need constant attention • You want deep cultural integration and continuity

But here's the reality check: Most growing small businesses aren't there yet. You might think you need someone full-time, but what you actually need is expert-level support on a flexible basis.

Real-World Scenarios (Because Examples Are Everything)

Scenario 1: The Scaling Software Company Sarah runs a tech startup that's grown from 15 to 45 employees in two years. She thought she needed a full-time HR person, but fractional HR gave her:

• Policy updates for rapid growth

• Recruitment support for specialized roles

• Compliance audits as regulations changed

• Leadership coaching for new managers

Cost: £4,000/month vs. £70,000+/year for full-time

Scenario 2: The Restaurant Chain Owner Mike owns three restaurants with seasonal fluctuations. Fractional HR helps him with:

• Seasonal hiring and firing processes

• Training programs that reduce turnover

• Compliance with hospitality-specific regulations

• Performance management systems

The flexibility means he can scale support during busy seasons and reduce it during slower periods.

The Flexibility Factor (This Is Huge)

Here's what nobody tells you about full-time HR hires: they're inflexible as hell.

Business slowing down? You're still paying full salary and benefits. Need specialized expertise for a specific project? Your generalist HR person is googling "how to conduct pay equity audit" at midnight.

With fractional HR: • Scale hours up during busy periods • Scale down during slower times • Access specialized expertise for specific projects • No long-term commitments or contracts

It's like having a volume knob for your HR support instead of an on/off switch.

Common Mistakes That'll Cost You

Mistake #1: Thinking you need someone full-time because you have "a lot of HR issues" Reality check: You probably need better HR support, not more hours of mediocre support.

Mistake #2: Hiring full-time too early because it "feels more professional" Reality check: Professional is getting expert help when you need it, not paying for expertise you don't use.

Mistake #3: Choosing based on hourly rates instead of total value Reality check: A £100/hour specialist who solves your problem in 2 hours beats a £25/hour generalist who takes 20 hours and still gets it wrong.

The Bottom Line (Because You're Busy)

For most growing small businesses, fractional HR is the no-brainer choice. You get:

✓ Senior-level expertise without senior-level overhead ✓ Flexibility to adapt as your business changes ✓ Cost savings that you can reinvest in growth ✓ Access to specialists, not generalists ✓ Lower risk if things don't work out

The sweet spot for making the switch to full-time HR is usually when you hit 75-100 employees and have predictable, ongoing HR needs that require daily attention.

But here's the thing: by the time you get there, you'll have learned so much from working with fractional HR experts that you'll know exactly what kind of full-time person to hire and what to look for.

Your move: Stop overthinking this. Start with fractional HR, get the expertise you need now, and save the full-time hire for when you're actually ready for that level of commitment.

---

Ready to stop playing HR roulette with your growing business? Our team at PHARE HR CONSULTING knows exactly what growing small businesses need (and what they definitely don't need to pay for). Book a free 30-minute consultation with us, and let's figure out the right HR strategy for your specific situation. No sales pressure, just straight talk about what'll actually work for your business. Book your free call here and let's get your HR sorted once and for all.