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How much does outsourced HR consultancy cost?

How much does HR consultancy cost?

The people in your business are your business. Taking good care of them is paramount to its growth and success. But doing so requires training, experience and a great deal of time — something that the majority of small business owners simply do not have. At the same time, many SMEs cannot justify the cost of hiring a full-time HR manager to take on this crucial workload. So what is the answer?

The solution lies in outsourced HR consultancy. HR consultants have the skills and expertise to care for 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 care about its success. Not bad for a week’s work.

This all sounds great. But how much does it cost?

Spoiler alert! There is no simple answer to this question. And if there were, I definitely wouldn’t be gearing up to write over a thousand words on the subject.

That is because the cost of HR consultancy is ultimately dependent upon your business needs. And these can vary. A lot. It probably goes without saying that a large development firm employing hundreds of labourers will not have the same HR needs as a small online baby clothing store. But the size of your business is just one of many cost factors that come into play. Pricing can also depend upon the types of services required, the consultant’s expertise and the frequency of contact and support.

In this article, we take a closer look at these cost factors and explore how they affect your business.

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 to 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 in 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.

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 labouring 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.

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 bind and gag 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.

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 team might make sense for large corporations, but retainer-based HR services are the most cost-effective option for most SMEs.

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 services are the option of choice for many small and medium-sized businesses.

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 HR 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 who 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 Project Support: Charged on a 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 handbooks
• 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 how much it will cost you from the word go. 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.

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.

To wrap up…

There is no question that HR consultancy is a smart investment for your company. Outsourcing HR 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.

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, 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.