That’s why more mid-sized companies are adopting a Fractional HR model. It provides experienced HR leadership and operational support without the cost or commitment of a full internal team.
But this isn’t outsourcing as usual. It’s a smarter way to align HR with business growth. Here’s why the model is gaining momentum—and how it could work for your organization.
Fractional HR Is Not the Same as Outsourcing
The term "outsourced HR" is often used loosely, but it typically refers to handing off isolated tasks to a third party—like payroll or handbook creation—without deeper integration into the business. Fractional HR is different.
A fractional HR partner becomes embedded in your team, aligned with your goals, and responsible for both strategic and tactical HR support. They work across your organization just like a full-time leader would—but only for the hours or functions you need.
Whether you’re tackling compliance challenges, improving recruiting outcomes, or refining your company culture, the fractional model gives you access to the right expertise at the right time.
When the Model Makes the Most Sense
No organization can thrive without retaining talented, ambitious employees. And the best and brightest will want a clear career path—one that validates their value and provides a visible sign of their progress. Yet, small and mid-sized businesses can’t continually promote employees through job titles and roles of increasing responsibility; there simply aren’t enough such slots to fill.
In the face of this reality, more organizations will make personalized career development a priority in 2025. Hyper-personalized development enables smaller businesses to overco
Mid-sized companies (typically 25 to 250 employees) turn to fractional HR when their needs start to outpace their internal resources. Common inflection points include:
- Fast Growth: New roles, faster hiring timelines, and scaling challenges put pressure on people operations. You need structure—fast.
- Compliance Complexity: As you grow and expand into new states, the regulatory landscape becomes harder to manage. Local labor laws, evolving wage requirements, and leave mandates are just the start.
- Frequent Employee Issues: More team members often mean more people challenges. Frontline managers might not be trained to handle employee relations effectively, leading to costly patterns.
- Unrealistic Hiring Expectations: It’s hard to find one HR professional who can handle everything from recruiting to compliance to strategy. And even harder to justify hiring a full team.
- Budget Constraints: Hiring several full-time HR professionals is often too costly. With fractional HR, you only pay for the time and skills you need.me the challenges of a limited corporate ladder and offer advancement opportunities that fit each individual’s preferences and needs.
What You Gain from a Fractional HR Partner
A seasoned Fractional HR partner can take on a broad range of functions—shaped around your business’s current state and future goals. Capabilities typically include:
- Strategic HR planning
- Recruiting and retention support
- Policy development and handbook creation
- Compliance audits and risk mitigation
- Employee relations and engagement
- Performance management design
- Compensation analysis
- AI strategy and usage policies
- AI strategy and usage policies
- Training and leadership development
It’s not about adding another vendor. It’s about gaining a hands-on partner with both the strategic insight and execution ability to move the business forward.
Addressing the Common Misconceptions
Some CEOs hesitate to adopt the fractional model due to two common misconceptions:
- “We’re too big for this model.”
Even companies with over 100 employees often need only portions of multiple HR skill sets—not full-time generalists. One NorthstarPMO client, a national travel brand, retained its fractional HR partner even after hiring an internal coordinator. Why? Because the strategic oversight and flexibility remained essential. - “We don’t want another third party.”
A good fractional HR partner becomes part of your team. In most cases, employees won’t know they’re external. They attend leadership meetings, shape culture, and coach managers just like an internal leader—without the overhead.
Real Results from Real Businesses
- A creative agency hired a fractional HR team to build a structured onboarding process after growing to 25 employees. The result? A faster ramp-up for new hires and a 50% reduction in time-to-fill for open roles.
- A medical services company needed both strategy and administration—but didn’t have the budget to hire both. A fractional partner helped recruit and manage a junior internal HR coordinator while also leading key initiatives like compliance and performance management. It was a cost-effective solution with strategic impact.
Frequently Asked Questions About Fractional HR
How is fractional HR different from outsourced HR?
Fractional HR partners become part of your team. They’re embedded in the organization and provide customized strategic and tactical support—not just task-based services.
Can we afford fractional HR?
Yes. Most mid-sized companies find that it’s more cost-effective than hiring one or more full-time HR professionals. You get the right mix of skills, only when you need them.
Will the fractional partner understand our business?
A qualified partner will conduct a detailed discovery and onboarding process to understand your current state, goals, and culture—and align HR efforts accordingly.
What if our needs change over time?
That’s the point. Fractional HR is flexible. Your provider can adjust staffing, hours, and expertise as your company evolves—whether that means scaling up, down, or adding specialized support.
Will employees know the HR team is external?
In most cases, they won’t. Fractional HR professionals operate just like internal staff, attend team meetings, and use your communication channels. They’re seen as part of the team.
How fast can we get started?
A typical onboarding process includes a needs assessment and roadmap. From there, implementation can begin quickly—often within days or weeks, not months.
A Flexible Model That Grows with You
The most valuable feature of Fractional HR is its adaptability. As your company evolves, your partner can flex with you—adjusting the mix of skills and hours, bringing in specialists when needed, and scaling up or down without disruption.
At NorthstarPMO, we build HR partnerships designed for longevity, not just short-term fixes. Whether you’re preparing for your next phase of growth or need help solving immediate challenges, our team can provide the right support without the full-time price tag.
Want to see if Fractional HR is right for your business?
Download our comprehensive guide to Fractional HR for Mid-Sized Businesses to explore the model, benefits, and what implementation really looks like.