How Much Does An HR Consultancy Cost?
There were 5.5 million small or medium-sized businesses (SMEs) in the UK in 2023, representing over 99% of the business population (House of Commons Library).
With growing a business comes responsibility for a fair bit of HR administration, and the need for HR expertise. After all, the people in your business are your business, and taking good care of them is key to your company’s success. But how do you do that as a busy MD without the relevant experience and spare time? Hiring an HR manager makes sense for larger companies, but less so for a smaller team, so, one more flexible solution many SMEs are turning to is to use an HR consultant. But how much do HR service providers?
HR Consultants have the skills and expertise to take care of all your people needs, saving you money and freeing you up to focus on crucial business functions. And we’re not just talking paperwork and payroll here. An HR consultant can help you build a happy team of hard-working, high-performing people that drive your business forward and are dedicated to its success.
Experience HR consultancy with no strings attached
Table of Contents
Cost Factor 1: How many employees do you have?
Cost Factor 2: Do you need ongoing or pay-as-you-go support?
Cost Factor 3. Which HR services do you require?
Talk To An HR Consultant
Frequently Asked Questions
Cost Factor 1: How many employees do you have?
This one is obvious. The more employees you have working for your business, the greater your HR needs. Managing 1-10 employees is a different task from managing 250, and your consultancy fees will naturally reflect that.
As a small business owner, it can be tempting to keep costs down by managing your HR functions yourself. But while the level of HR support may vary, it is no less crucial for smaller teams.
Why? Just as you are an expert in your field, an HR consultant is an expert in people management, development, and productivity.
As well as providing support on day-to-day issues such as sickness, payroll, and pensions, an independent HR specialist can help streamline your processes and connect you with the right people to grow your team effectively.
What’s more, an HR consultant will also ensure you adhere to the most up-to-date employment laws, which can save you a whole heap of time, money, and trouble down the line.
Make A Profit
In fact, outsourcing your HR is an excellent way for small businesses to make more money. If you own a small business, chances are you often find yourself working long hours, drowning in coffee, and trying to remember what a weekend feels like. But on average, 70% of that time is spent poring over administrative tasks, including HR functions, that don’t actually contribute to revenue! Outsourcing your HR frees you up to focus on why you’re here in the first place—growing your business and smashing your goals. And who knows? You might even get a weekend off.
View our HR consultancy for small businesses.
Cost Factor 2: Do you need ongoing or pay-as-you-go support?
The beauty of HR consultancy is its flexibility. Businesses can opt for retained, ad-hoc, or project-based services depending on the level and frequency of support required. Let’s explore these options.
Retained HR Services: Charged at a monthly rate
If the words ‘retainer agreement’ make you want to run a mile, you’re not alone. Many business owners see retainers as unwanted, long-term commitments that tie you into paying an expensive monthly fee. But when implemented correctly, a monthly retainer can be highly beneficial for your business. And when it comes to HR consultancy, retained services are often the smartest option for SMEs.
See our retained HR prices.
Opting for a monthly retainer is a cost-effective way to ensure your HR functions tick along nicely, as well as offering on-hand resources and support as and when you need them. In effect, a monthly retainer provides all the benefits of an in-house HR department, without the expensive overheads. Hiring a full-time, HR operations team might make sense for large corporations, but retainer-based HR services are the most cost-effective option for most SMEs.
No Surprises
There are other benefits too. With a retainer agreement, you know just how much you’re spending each month and exactly what you are receiving in return, allowing you to budget accordingly. Plus, effective retainer services are not one-size-fits-all but are tailored to your business’s size and specific requirements. This means you only pay for the services you really need, with the flexibility to add to these functions as your business grows.
Because retained services depend on your business size and requirements, prices can vary from a few hundred to several thousand pounds a month. But in general, retained HR consulting fees work out cheaper per hour than a pay-as-you-go service. So whether you are just starting out or have an established employee base, retained HR consulting services are the preferred choice for many small and medium-sized businesses.
With our retained services, there’s no minimum contract length; we just ask for 30 days’ notice if a client wishes to end their contract for any reason.
Ad-Hoc HR Support: Charged at an hourly/daily rate
If you aren’t quite ready to take on a monthly HR package, chances are you will still need specialist support from time to time. Ad-hoc freelance HR consultant services work on a pay-as-you-go basis and can cover anything from day-to-day HR advice to administrative support, recruitment services, and employee training. Some consultants offer a day or half-day rate, while others opt for an hourly fee. They will often stipulate the minimum number of hours or days that can be purchased at a time.
Of course, we like to be different! To ensure that our support is affordable and accessible to all, we have chosen to offer ad-hoc support at a quarter-hour rate, with no minimum spend. It’s a popular choice with small business owners who are just starting out, many of whom go on to use our retained services when their business expands.
A clear advantage to purchasing support on an ad-hoc basis is you can spend as little or as much as you require, when and if you need to. It is a ‘no strings’ service ideal for smaller businesses that do not yet require ongoing support. However, if you find yourself frequently using ad-hoc services, it’s probably time to think about switching to a monthly retainer.
Fixed-Price HR Consulting Services: Project-by-project Basis
Project-based consultancy is ideal for one-off assignments that require specialist HR support. These projects might include:
- Writing an employee handbook
- Redundancy project management
- Developing appraisal processes
- Writing contract templates
- Recruiting new talent
- Overseeing disciplinary action
- Reviewing your company’s policies and procedures
The price of projects such as these depends on the time, resources, and expertise required to complete the project. Of course, the advantage of fixed-price support is that you know exactly what you are getting and the total billable hours.
No surprise charges here, thank you!
Project-based support comes into its own with employee relations issues such as redundancies, grievances, or dismissals. These situations are complex and emotionally loaded (for both you and your employees) — not to mention a legal minefield.
An experienced HR specialist can manage the whole process for you, including all consultation meetings, appeals, and documentation, for a one-off project fee. As well as ensuring you follow the correct legal procedures, HR consultants are also experienced in managing sensitive situations and can reduce stress and anxiety for all involved.
Cost Factor 3. Which HR services do you require?
HR consultants offer a broad range of services, from payroll management and mandatory paperwork to performance evaluations, redundancy management, and employee training programmes.
Here is a comprehensive list of the tasks a HR consultant will take care of for you:
- Payroll Management: Ensuring employees are paid accurately and on time, including processing salaries, bonuses, and deductions.
- Employee Records Maintenance: Keeping accurate and up-to-date records of employee details, contracts, and legal documents.
- Attendance Tracking: Monitoring employee attendance, managing leave requests, and tracking absences.
- Onboarding and Offboarding: Handling the paperwork and processes involved in hiring new employees and exiting departing staff.
- Compliance Management: Ensuring the company adheres to employment laws and regulations, including health and safety standards.
- Performance Management: Assisting with setting goals, tracking progress, and managing performance reviews.
- Benefits Administration: Managing employee benefits, such as pensions, health insurance, and other perks.
- Disciplinary Procedures: Documenting and managing disciplinary actions and grievances.
- Training Coordination: Organising and tracking employee training and development programmes.
- Employee Communication: Managing internal communications, including announcements, updates, and policy changes.
Naturally, the price of these services varies depending on both the time and work required by your consultant. And of course, services that require a specialism, such as recruitment, training, or employment tribunal support, will cost more than day-to-day HR tasks.
Talk To An HR Consultant
There is no question that HR consultancy is a smart investment for your company. Outsourcing your HR consulting services increases efficiency, reduces risk, and ensures that your people are in the very best hands. And because the price of HR consultancy is relative to your business needs, usage, and size, it is accessible and affordable for all.
The biggest conclusion you can draw echoes the words of Dave Ulrich:
“People are our customer’s greatest asset.”
Understanding the HR support you require can be confusing. But as consultants, we are here to help. So if you aren’t sure what you need, or would like a quote, give us a call. Whether you are just starting out or running an established corporation, we’re here to find the right level of support for your business.
Frequently Asked Questions
Here are some frequently asked questions about the cost of HR consultancy.
How much do HR services cost in the UK?
HR consultancy costs in the UK vary depending on your business needs, size, and the type of service you require. For smaller businesses, ad-hoc support might start from £75 per hour, while a monthly retainer for ongoing services could range from £300 to £1,000 or more. Project-based services, such as employee handbooks or redundancy management, are typically priced based on the scope and complexity of the work. The key is to choose a package that aligns with your needs, ensuring your HR functions are handled professionally without breaking the bank.
How much should HR cost per employee?
The amounts HR consultants charge per employee can vary widely depending on the level of support your business requires. Typically, businesses might expect to spend between £200 to £500 per employee annually for outsourced HR services. This cost includes essential services like payroll, legal compliance and, and employee relations. For more comprehensive packages, including recruitment and training, costs could be higher. The exact amount depends on the size of your company and the complexity of your HR needs, ensuring you receive tailored, expert support that aligns with your business objectives.
What is a good consulting fee?
A good consulting fee strikes the right balance between value and expertise. In the HR industry, hourly rate can range from £75 to £150 per hour, depending on the consultant’s experience and the complexity of your needs. It’s important to consider the level of service and the specific support you require. At The HR Consultants, our pedigree and extensive experience in the field ensure that you receive tailored, expert advice at competitive hourly rates throughout. Ready to take your HR to the next level? Contact us today to discuss the best package for your business.