Quick Answer: If your business needs ongoing HR leadership but doesn’t yet have enough work to justify a full time HR Manager, Fractional HR is often the better option. For many growing businesses with 15 to 60 employees, it provides access to senior HR expertise without the commitment and cost of a permanent hire. The right choice depends on your growth plans, the complexity of your people challenges and the level of support your leaders need.
“We know we need more HR support, but we’re not sure whether we should hire someone or bring in external expertise.”
It’s a fair question, and it’s usually being asked at a very specific point in the business journey.
The team has grown. Managers are taking on more responsibility. Recruitment is happening more frequently. Performance conversations are becoming more complex. The founders are spending more time dealing with people issues than they would like.
Something has changed, but it’s not always obvious what the next step should be.
Many business owners assume the answer is hiring an HR Manager. Sometimes they’re right. Sometimes they’re not.
What I’ve learnt over the years is that the real question isn’t whether you need HR. The real question is what level of HR capability your business needs right now and whether hiring internally is the best way to access it.
Why This Decision Becomes Difficult for Growing Businesses
When a business is small, people management tends to happen naturally.
The founders know everyone personally. Communication is direct. Recruitment is occasional. Most issues can be solved through informal conversations.
As the business grows, those approaches become harder to sustain.
I was speaking with a business owner recently whose team had grown to just over 40 employees. The business was performing well, but she felt like every week brought another people challenge. A manager needed support with a difficult conversation. Recruitment was taking longer than expected. A new employee wasn’t settling in as quickly as hoped. Performance expectations weren’t always clear.
None of those issues were particularly serious on their own, but together they were consuming more and more leadership time.
Her immediate thought was that she needed to hire an HR Manager.
What became clear during our conversation, however, was that she didn’t necessarily need a full time HR employee. What she needed was experienced HR leadership and support to help her managers become more confident and create stronger people processes.
That’s an important distinction because they are not always the same thing.
The Real Question Isn’t “Do I Need HR?”
Most growing businesses already know they need some form of HR support.
The more useful question is:
“What level of HR support do we actually need?”
There is a big difference between needing someone to manage recruitment administration, employee paperwork and onboarding logistics, and needing someone who can guide workforce planning, leadership development, performance management and culture.
Many businesses automatically assume they need a full-time hire because that’s the model they are most familiar with.
In reality, some businesses need a person, others need capability.
Understanding that difference can save a lot of money and often leads to a better outcome.
When Hiring an Internal HR Manager Makes Sense
There are absolutely situations where hiring an HR Manager is the right decision.
As businesses become larger and more complex, the volume of day-to-day HR activity often justifies a dedicated internal role.
This may be the case if your business:
- Has 80 or more employees
- Operates across multiple locations
- Is recruiting continuously
- Has a significant volume of employee relations matters
- Requires daily HR support across multiple teams
- Has enough ongoing work to keep an HR professional fully utilised
An internal HR Manager can become deeply embedded in the business, build strong relationships and provide immediate support to leaders and employees.
For some organisations, that level of presence is exactly what is needed.
The challenge is that many businesses start considering an internal hire before there is enough work to support the role effectively.
When Fractional HR Makes More Sense
For many small and medium sized businesses, Fractional HR sits in a very practical middle ground.
You gain access to senior HR expertise, but only at the level your business currently needs.
Rather than employing someone full time, you engage an experienced HR professional for a set number of days or hours each month. They become part of your leadership rhythm, helping you tackle people challenges, improve systems and support growth.
This approach often works particularly well for businesses that:
- Have between 15 and 60 employees
- Are growing quickly
- Need stronger people processes
- Want support for managers
- Need strategic HR guidance
- Are not yet ready for a full time HR salary
One of the benefits of Fractional HR is the flexibility it provides. Businesses can increase support during periods of growth or change and reduce support once stronger foundations are in place.
Here’s a real example of why I encourage businesses to think carefully before hiring HR internally as you need to be sure there is enough strategic HR work to justify it.
What Does This Look Like in Practice?
Every business is different, but a few examples help illustrate the difference.
A professional services business with 22 employees may be experiencing its first real growth phase. Managers are new to leadership. Recruitment is becoming more frequent. Performance conversations are happening inconsistently.
In that situation, Fractional HR is often the better fit because the business needs expertise, structure and guidance rather than a full time HR employee.
A business with 45 employees may be managing significant growth and preparing for another round of hiring. The leadership team needs help with workforce planning, manager capability, engagement and onboarding.
Again, Fractional HR can often provide the right balance of strategic support and practical implementation.
A business with 90 employees operating across multiple locations may have reached the point where there is enough day to day HR activity to justify a dedicated internal HR Manager.
The answer is rarely determined by employee numbers alone, but those examples demonstrate how business needs often evolve as organisations grow.
What About Cost?
Cost should never be the only factor in a decision like this, but it is naturally part of the conversation.
A full time HR Manager comes with salary, superannuation, recruitment costs, leave entitlements, technology, training and onboarding costs.
Fractional HR gives businesses access to experienced HR leadership without committing to a full time employment cost before the workload justifies it.
If you’d like to explore the numbers in more detail, we’ve created a guide that breaks down Fractional HR costs and how they compare with hiring internally.
Many businesses need experienced HR guidance before they need a full time HR Manager.
Common Mistakes Businesses Make
One of the advantages of working with many growing businesses is that you start to see patterns.
A common mistake is hiring HR too early.
Business owners recognise that people challenges are increasing and immediately assume a full time hire is required. Sometimes the business only needs a few days of experienced support each month.
Another common mistake is waiting too long.
Leaders continue carrying people responsibilities long after they have the capacity to do so. Recruitment suffers, managers struggle and people issues become more reactive than proactive.
I also see businesses hire junior HR administrators when what they actually need is strategic guidance. The result is that administrative tasks improve, but the bigger leadership and people challenges remain.
The most successful businesses usually step back and ask what capability they need before deciding how to access it.
How to Decide Which Option Is Right for Your Business
If you’re trying to choose between hiring an HR Manager and using Fractional HR, I would encourage you to think about three things.
- First, how much HR work genuinely exists today?
- Second, what type of support do your leaders and managers need?
- And third, what is likely to happen over the next 12 months?
The answers to those questions will often provide more clarity than focusing on headcount alone.
If your business needs experienced guidance, stronger systems and manager support but doesn’t yet require a full time HR role, Fractional HR is often the most practical option.
If the volume of work is significant, ongoing and growing rapidly, an internal HR Manager may be the right investment.
There Isn’t a Magic Employee Number
One thing I’ve learnt working with growing businesses is that there isn’t a specific employee number where everyone suddenly needs HR.
I’ve worked with businesses of 25 employees that desperately needed more people support, and businesses of 70 employees that were managing quite effectively with only limited HR involvement.
The right answer depends on the complexity of the business, the capability of the leaders, the pace of growth and the challenges you are trying to solve.
That’s why I always encourage business owners to focus less on headcount and more on what is happening inside the organisation.
Not Sure Which Option Is Right?
If you’re still weighing up your options, our Fractional HR Readiness Checklist is a good place to start.
It helps business owners assess common signs that additional HR support may be needed, including leadership workload, manager capability, recruitment challenges, onboarding consistency and growth plans.
If you’d like to talk through your situation, book a free discovery call. We can discuss what’s happening in your business, explore the different options available and help you decide whether Fractional HR, an internal hire or another approach is likely to be the best fit.
Originally posted 2 June 2025. Updated 24 June 2026.
FAQs
Is Fractional HR cheaper than hiring an HR Manager?
In many cases, yes. Fractional HR provides access to experienced HR leadership without the full time salary and employment costs associated with hiring internally. The right choice depends on how much support your business actually needs.
What size business should hire an HR Manager?
There is no fixed employee number, but businesses with larger teams, multiple locations and significant day to day HR activity often benefit from a dedicated internal HR role. The decision should be based on workload and complexity rather than headcount alone.
What size business is best suited to Fractional HR?
Fractional HR is often a good fit for businesses with 15 to 60 employees that need strategic HR support but do not yet have enough work to justify a full time HR Manager.
Can Fractional HR support managers as well as business owners?
Yes. One of the biggest benefits of Fractional HR is helping managers build confidence and capability around recruitment, performance management, feedback and leadership.
How do I know whether I need Fractional HR or an internal HR Manager?
The best place to start is by assessing the volume of HR work, the type of support your leaders need and your growth plans over the next 12 months. Those factors usually provide a clearer answer than employee numbers alone.
