07/12/14 By Jennifer Brown

Human-ResourcesOne of the first questions I often get from potential clients is how much does Human Resources (HR) support cost? This is a tough question because HR support can take many forms. For example, you could hire an employee, consultant, or administrative services outsourcing (ASO)/ professional employer organization (PEO).

Therefore, it’s important to first start with a few questions to get you focused on how best to support your HR needs:

– How many employees do you have?
– What HR areas are you spending your time on?
– What areas of HR are you struggling with?
– Do you expect to add more employees in the upcoming year?
– Are you looking to be acquired by or merge with/purchase another company?
– How do you see your HR strategies and practices supporting the achievement of your business objectives?

The volume and type of HR activities and your business objectives will often help determine the type of support you need. For example, if you have:

• a lot of HR work (which is often fueled by ongoing recruiting and staffing needs, a focus on employee development, compliance needs, maintaining employee relations, and/or preparing a business for future sale); then you would likely benefit from hiring an in-house HR generalist, manager or director.

HR salaries for small businesses (less than 150 employees) often depend on your business location and industry and typical ranges are: HR Generalist $55,000 – $70,000; Manager $75,000 – $95,000; Director $100, 000 – $130,000. But, don’t forget the cost of benefits and other fringe items which can be upwards of 30% of salary.

• a smaller amount of HR work with minimal hiring needs and fewer ongoing HR programs to implement, then a HR Consultant is probably a better choice that will be more cost-effective than hiring a HR employee. In addition, if you have in-house HR staff, but need additional support, then an HR Consultant can be a great option.

HR consulting fees vary widely based on the work. For example, you may need:

– an on-call HR advisor,
– the key employee documents (e.g., application, offer letter, new employee checklist and hiring materials, employee handbook) developed,
– HR processes (recruiting, performance management, leave) set-up,
– a compensation study completed,
– benefits package designed,
– an HR compliance review/audit completed and action plan developed, and/or
– strategic HR coaching and guidance.
Fees for the above services typically range from $2,500 – $15,000.

• significant HR administrative needs, then ASOs and PEOs can be helpful. They often provide outsourced HR administrative services and some consultative services. For example, their fees usually include payroll, health and other insurance, unemployment administration, and workers compensation insurance.

ASOs and PEOs charge a per employee fee based on the services you choose and fees can range from $600 – $2,500/employee per year. Sometimes, they charge a percentage fee (e.g., 2% – 6%) of payroll costs.

As you consider how best to support your HR needs, make sure to take some time to think through the type of help you need and the different approaches available to you.

YOUR TURN: What type of HR support do you use and how has it helped your business?


photo credit David Castillo Dominici via FreeDigitalPhotos.net