Being a small business owner comes with a unique set of challenges. One of the most difficult parts is that you have to wear multiple hats everyday. Employees are one of a company’s most valuable assets, they are its “Human Capital” and keep the business running. Therefore, human resources has extreme value, and should not be overlooked.

In fact, most small and medium sized businesses have a need for multiple levels of HR skill sets that are not commonly found in one person, but cannot justify the cost of hiring an in-house HR team or do not necessarily need a full time HR presence in their current size. Finding that ideal mix of expertise can be accomplished by hiring a fractional HR consultant.

Why Your Human Capital Matters

When people think of capital, they commonly think of business capital which relates to the money or wealth needed to produce goods and services. All businesses must have capital in order to purchase assets and maintain their operations. The balance sheet provides an overview of the value of all physical and some non physical assets. Small business owners often spend significant time and resources to ensure business capital and business finances are in order, just as they should with the human capital that their company holds.

Human capital is the knowledge, skills, and abilities of your employees. It is valuable to the performance of your company because it is hard to replace and hard for your competition to copy. The demand for workers who are good at complex problem-solving, interactions with clients and colleagues, and able to adapt to new tools and technologies is rising world-wide. Past research has shown that some of the most important aspects of human capital that drive company strategy and performance are the experiences, education, and training of managers. Neglecting investments in human capital can dramatically weaken a companies competitiveness.

Human capital is extremely valuable to small businesses as the long-term success and financial performance of a company is usually directly correlated to the talents, motivation, and accomplishments of its people. A human resources department adds value to your small business by promoting this link and encouraging company leaders to train and develop employees while rewarding strong performance through increased compensation and regular promotions.

Cost Control

Recruiting, mis-training, and employee turnover can be extremely costly for any business, and small to medium sized businesses especially. Human Resources departments ensure that qualified job applicants are identified and hired, assist in the process of training while turning them into engaged employees, and reduce the likelihood of high turnover. Having a fractional HR consultant may help control costs in numerous ways that small business owners haven’t previously thought of.

  1. Recruiting: Recruiting is essential to the success of a small business. Your company loses more than time, money and effort by recruiting, hiring, and training people who perhaps shouldn’t have been brought on in the first place. Although hiring costs vary by industry, there are typically many individual costs incurred during the hiring process such as advertising costs, in-house recruiters’ salaries, third-party recruiter fees, travel expenses, sign-on bonuses, and employee referral bonuses. The cost of a bad hire can be even more detrimental to the bottom line of a company, if the new employee terminates after a short period of time, the company is subject to a number of additional costs including the cost to recruit, train and replace the bad hire.
  2. Mis-Training Employees: When employees lack the proper training, they will not understand how to do their jobs and contribute to the success of the organization. In a small business with fewer employees, it is even more critical that every employee is doing their part. Inadequately trained employees are likely to experience poor job performance and increased levels of work-related stress which directly correlates to increased turnover.
  3. Turnover: Employee turnover is so expensive for businesses because organizations pay direct exit costs when an employee leaves and incur additional costs to recruit and train new hires. In fact, it typically takes 8-12 weeks to replace a knowledge worker, and then another month or two before the replacement gets to full productivity. Incidental costs may be incurred by turnover, such as decreased productivity, knowledge loss, and lowered morale.

As demonstrated above, recruiting, mis-training, and employee turnover can be extremely expensive if you do not know exactly what you are doing. There are proper processes and procedures that need to be in place to ensure you are minimizing and controlling costs in regards to hiring new employees. A fractional HR consultant serves the purpose in saving your business money by better managing the logistics of your employees and all of these key factors. You can save money on the best benefits that will keep your employees engaged and doing the best they can for your business.


HR compliance is a process of defining policies and procedures to ensure your employment and work practices demonstrate a thorough understanding of applicable laws and regulations, while also being aware of the business’ larger human capital objectives. Compliance can cause a lot of issues, including lawsuits and up to a shut down or closure if you are not careful. Fractional HR consulting in a small business ensures that you are protected from those issues as much as possible, so that all of your hard work is not destroyed by a compliance issue.

Companies of all sizes are facing increasing human resource complexities as the number of new employment laws and regulations continue to rise, and the risk of penalties for non-compliance can have sweeping ramifications for small businesses. Small business owners should know:

  • A business that employs employees must follow employment laws including applicable federal, state, and local regulations.
  • It is very common that government agencies conduct audits to ensure compliance with ever-changing regulatory mandates. You may be subject to hefty fines and penalties if your business is not compliant.
  • Business owners are required to understand compliance obligations, and not knowing or understanding them is not a legal defense.
  • A lawsuit settlement can bankrupt a small business

Understanding the businesses strategic priorities helps lay the foundation for a better understanding of different scenarios and how compliance concerns may impact decisions.

Conclusion A fractional HR consultant will help bridge the gap between the company’s growth trajectory and objectives and compliance practices that influences essential activities such as hiring and employee training and development.

Common Compliance Issues to Be Aware of:

  • Recruiting strategies
  • Benefits compliance
  • Form I-9
  • Non-discriminatory hiring
  • Exempt vs. non-exempt status
  • Pay issues
  • Off-the-clock work
  • Improper salary deductions for exempt employees
  • Training
  • Beaks and meal periods
  • Travel time
  • And more!

HR leaders have the knowledge and skills to  handle a variety of compliance issues related to employees. A fractional HR consultant can be considered as the front line of defense for a small business to make sure it treats people fairly, legally, and keeps the business out of danger.

Investing In Your Human Capital Development is Important

For your company to achieve success and high performance, you need to acquire and nurture the best and brightest human capital available, and keep these investments in your company. Human Resources plays an essential role in developing a company’s strategy as well as handling the employee-centered activities of an organization. Having a trusted HR fractional consultant can ensure better employee retention, benefit administration, compliance, and much more.

Exemplar’s HR Fractional Consulting Has Your Small Business Covered

Exemplar’s Fractional Consulting HR team uses a unique methodology via a collaborative approach between your organization and ours that starts with identifying your specific needs. Your business will get a designated HR professional who will manage the relationship and work directly with your leaders to create a custom solution for your organization.

The Exemplar team has over 12 years of HR experience and several certificates (SPHR, and SHRM-SCP) that allows us to leverage businesses’ human capital with expertise. When you partner with Exemplar, you are ensuring your employees receive the best human capital tool they can at the best possible value. We are able to assist with recruiting, onboarding, compliance, payroll, HR department build-outs, audits, handbooks, policies, procedures, and more. Whatever your HR needs are, Exemplar has it covered!

Christopher Marston

Christopher Marston

Chief Executive Officer, Exemplar Companies, PBC


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