While some business owners and executives may think that HR consulting is a waste of money, it can entirely revolutionize a business’ HR practices and services, improving employee quality of life as well as smoothing out business operations in general. As an organization grows, the challenges of managing talent, bringing in more people, developing compensation plans that align with its vision and goals, and fostering a positive culture naturally increase as well.
Many human resources departments are typically overwhelmed with day-to-day tasks and may not be able to keep up with the growing needs of a booming company. In this scenario, hiring an HR consultant may be the best way forward for business owners.
Businesses can hand over just about any human resources problem, including an entire reorganization of HR practices, to a strong group of HR consultants and expect a purpose-built solution.
In this article, we will dive into the world of HR consultants, who they are, what they do, when a business might need them, how business owners can hire them, and what they should expect when bringing one of these professionals on board of their organizations.
What Is Human Resources (HR) Consulting?
Human resources (HR) consulting involves providing professional guidance and solutions to organizations to optimize their workforce. HR consultants are specialists who assess a company’s current human resource policies and practices and offer advice on enhancing them.
The main role of an HR consultant is to analyze an organization’s HR needs, identify gaps or issues, and develop strategies to address them. They conduct research, gather data, and provide recommendations on improving various aspects like recruitment, compensation, training, retention, and compliance.
Some key responsibilities of an HR consultant include:
- Meeting with clients to understand their specific HR needs and challenges. This involves discussions with the leadership team, managers, and employees.
- Reviewing current HR policies, processes, and programs to identify opportunities for improvement. Some of the most common areas that will be evaluated include hiring, onboarding, training, performance management, compensation, and benefits.
- Conducting research and benchmarking studies to compare the client’s HR practices against competitors or industry standards. Surveys, interviews, and data analysis are used to provide insights.
- Providing advisory services to help organizations enhance their HR strategy and operations. Consultants share the best practices and give expert recommendations tailored to the client’s business objectives, culture, and budget.
- Facilitating change management when new HR initiatives are implemented to boost employee adoption. This includes communications, training, and measuring progress.
- Ensuring legal compliance by regularly auditing policies and documenting processes. Consultants verify adherence to regulations like equal opportunity, safety, and privacy.
- Designing and implementing new HR programs to address issues like high turnover, low engagement, lack of diversity, and poor talent acquisition.
Businesses utilize HR consultants when they lack internal expertise, run into a particularly difficult HR hurdle, or just need an independent assessment. Consultants provide strategic and operational support to help organizations get the most out of their HR functions.
Also read: Top 10 Benefits of Using Payroll Software
Benefits of HR Consulting
An HR consultant can become a valuable asset to a company for many reasons including its expertise, unbiased opinion, alignment with the company’s goals, and commitment to implementing the best practices to ensure that the project that this professional has been tasked with is completed successfully.
Here are some other key benefits of hiring an HR consultant:
- Expert guidance: Consultants are HR experts who provide strategic advice based on years of experience across industries and companies and a proven track record. They bring an outside perspective to identify issues and propose solutions.
- Cost-effectiveness: Hiring consultants on an as-needed basis (generally) costs less than having a full-time HR executive. They provide HR support without adding too much overhead.
- Flexibility: Consultants work on whatever you want them to work on, allowing companies to supplement existing HR staff.
- Specialized skills: Consultants have niche expertise in areas like compensation, recruitment, training, etc. Companies can utilize their services to get help in specific areas of weakness.
- Neutrality: As external agents, consultants can assess issues more objectively without internal bias.
- Best practices: Consultants are up-to-date on the latest HR trends, technologies, and regulations. They help implement proven solutions tailored for the organization.
- Change management: Consultants have experience in implementing changes smoothly across organizations. They facilitate the adoption of new initiatives.
- Compliance: Consultants ensure policies and processes are legally compliant, minimizing legal risks for the company.
- Scalability: Consulting services can be scaled up or down as per changing business needs. Companies aren’t locked into fixed HR costs.
The outside expertise and perspective consultants provide give businesses an effective way to strengthen HR capabilities and achieve organizational goals.
How to Decide If Your Business Needs HR Consulting?
Bringing in an HR consultant allows companies to bridge capability gaps and streamline the functions of their in-house HR department to prepare and set up the business to succeed at any of the different stages of its development.
In this section, we will be providing a list of 13 reasons and possible signals that business owners can keep an eye on to determine if this would be a good time to bring in an HR consultant.
- Rapid business growth: As a company expands quickly, its HR needs become more important and more complex. Existing HR staff may be overwhelmed handling recruitment, onboarding, training, and compliance for a larger workforce, especially if many new employees are being hired at once. HR consultants can provide the necessary support and expertise.
- High employee turnover: A consistently high turnover rate indicates problems with company culture, compensation, management, etc. HR consultants can objectively analyze reasons for turnover and propose improvements.
- Leadership changes: When top leadership positions change hands, HR policies may need some realignment. HR consultants can ensure smooth transitions and adaptation of HR practices.
- Mergers & acquisitions: Major business restructuring requires updated/unified HR policies and processes. HR consultants can facilitate this change management across the merged entities.
- Lawsuits or compliance issues: Any lawsuits or compliance issues related to HR suggest that there are problems with the company’s policies or procedures. HR consultants can review systems to ensure legal and regulatory compliance.
- Lack of employee engagement: Poor engagement levels signal ineffective HR practices relating to workplace environment, rewards, development, etc. Consultants can diagnose issues through surveys and improve engagement.
- Absence of performance management: Lack of performance evaluation frameworks leads to a lack of role clarity, identification of training needs, and fair compensation. Consultants can implement performance measurement processes.
- Weak talent acquisition: If recruitment channels are not optimized to source suitable candidates, the business often suffers. Consultants can overhaul and strengthen the organization’s hiring methodology and pipelines.
- Inadequate training programs: Insufficient focus on employee training and development leads to stagnating productivity. Consultants can develop training plans aligned with the business’s goals.
- No succession planning: When senior management roles lack a succession plan, business continuity is at risk. Consultants can help build a leadership pipeline.
- Lack of HR technology: Outdated HR information systems or their absence reduces operational efficiency. Consultants typically recommend and implement suitable HRMS solutions.
- Opaque policies: Ambiguous company policies lead to employee disputes and potential lawsuits. An HR consultant can formulate clear, compliant policies, and handbooks.
- Absence of an HR department: Companies without any HR staff are exposed to major compliance and employee relations risks. On-demand HR consultants can offer their support to avoid these headaches.
What to Look for in the Best HR Consultants
There are many valuable skills that an HR consultant will bring to the table. However, the best HR consultant for a specific business will be the one who can diagnose the current situation and offer his/her expertise on the matter to optimize the company’s internal processes, help the business scale, and improve compliance.
Here we share six qualifications that business owners should look for in an HR consultant during the interviewing and hiring process to make sure that the candidate they go with is a good fit.
#1 – Extensive HR experience
A strong track record working in senior HR leadership roles across different companies and industries is essential. Look for at least 10 years of hands-on experience managing the full spectrum of HR functions as it demonstrates the ability to implement best practices and drive impact. Longevity across diverse business contexts ensures exposure to varied challenges and scenarios. This breeds adaptability and creative problem-solving skills. Extensive experience is key to providing sound judgment and expertise.
#2 – Subject matter expertise
Deep knowledge and skills in the specific HR discipline needed by the company are critical, whether it’s compensation design, labor relations, and organizational development, among others. Avoid generalists if specialized help is required for a particular HR issue. A narrow industry or function focus enables consultants to offer targeted insights and solutions. For example, an expert in compensation can help revamp pay structures and bonus policies to attract talent. Leveraging niche expertise gets desired results faster.
#3 – Familiarity with regulations
Staying up to date with the latest changes in labor laws as well as health and safety regulations is crucial. This minimizes legal risks and ensures HR practices are aligned with new regulations. HR is a field prone to frequent regulatory changes, so consultants must demonstrate knowledge of legal nuances across the locations where their clients operate. They should also have experience implementing compliance programs and training company staff on new policies as laws evolve.
#4 – Methodical data analysis
Leveraging HR metrics, surveys, audits, and qualitative data through methodical analysis provides strategic insights and helps identify issues accurately. Strong analytical skills are a must for consultants. They should adopt a data-driven approach to diagnosing problems before offering solutions. Using metrics also helps in tracking improvement over time after implementing changes. Companies benefit from number-crunching abilities combined with people skills.
#5 – Change management experience
Having guided organizations through major transitions like mergers, workforce expansion or contraction, new technology implementation, and other similar events is invaluable for companies experiencing the same kinds of shifts. This allows the smooth implementation of new programs with minimal disruption. Change management ensures employee adoption and continued productivity amid flux. Consultants experienced in communications, training, and measuring progress can manage the people side of change effectively.
#6 – Customized solutions
Assessing each client’s unique needs and challenges is necessary to provide tailored solutions instead of one-size-fits-all approaches. Consultants must focus on solving specific business goals instead of applying generic, textbook methods. Customizing proposals based on strategies, culture, budget, and other similar factors ensures relevance and practicality. The solutions should combine the consultant’s expertise with the company’s environment for maximum impact.
Examples of Some of the Best HR Consultants in the World
HR consulting firms can be found in most corners of the world. There are both a handful of well-established global companies that provide services to the largest corporations in the globe and local vendors that may be more in touch with the ins and outs of their geographical market.
The size of your company and the type of service that you are looking for will be the most relevant factors to consider when picking an HR consultant. In this section, we provide examples of five of the best HR consulting firms in the world so that you know what to look for in a great firm.
#1 – PwC
- Location: New York, NY; Over 800 offices worldwide.
- Overview: Founded in 1998, PwC is one of the Big Four accounting and consultancy firms. It provides HR consulting services spanning talent strategy, change management, HR function design, and digital HR tools.
- Services: PwC offers end-to-end HR transformation encompassing HR strategy, operating model design, process optimization, technology implementation, and upskilling programs.
- What makes it stand out? PwC combines HR expertise with capabilities in emerging technologies like AI and cloud to enable digital transformation of the HR function.
#2 – Mercer
- Location: New York, NY; Offices in over 25 US cities.
- Overview: Founded in 1945, Mercer is a subsidiary of Marsh McLennan focusing on HR consulting, investment, and insurance services.
- Services: Mercer provides HR strategy, talent acquisition, compensation and benefits design, HR function transformation, HR technology advisory, and skills development.
- What makes it stand out? Mercer adopts a targeted interaction model to reshape HR into a strategic function and enhance employee experience.
#3 – McKinsey & Company
- Location: New York, NY; Over 130 offices worldwide.
- Overview: Founded in 1926, McKinsey is a global management consulting firm serving leading businesses, governments, non-profits, and institutions.
- Services: McKinsey offers talent management, organization design, HR analytics, workforce planning, recruiting process optimization, and capability building.
- What makes it stand out? McKinsey combines tremendous industry expertise with proprietary analytics tools like People Analytics and Skills Finder to strengthen talent capabilities.
#4 – PA Consulting
- Location: London, UK; Dozens of offices in the UK, United States, and across Europe.
- Overview: Founded in 1943 in the UK, PA Consulting provides management and IT consulting services across sectors globally.
- Services: PA Consulting provides leadership consulting, strategic workforce transformation, change management, talent optimization, and culture-shaping services.
- What makes it stand out? PA adopts a human-centered approach and multidisciplinary teams to enable people-focused transformation.
#5 – Accenture
- Location: Dublin, Ireland; Offices in over 200 cities globally.
- Overview: Founded in 1989, Accenture is a Fortune Global 500 company and a global professional services firm.
- Services: Accenture offers talent strategy, leadership development, employee experience design, inclusion and diversity advisory, HR function consulting, and change management.
- What makes it stand out? Accenture helps clients drive workforce transformation and enrich employee experience through leading digital capabilities.
How to Hire an HR Consulting Firm for Your Business
Once the business owner has identified that it is a good time to hire an HR consulting firm or a standalone consultant, it is important to follow a systematic procedure that ensures that the right candidate, whether that is an individual or an organization, will be picked for the job.
In this section, we share 9 steps that business owners can follow to hire an HR consultant, starting with a diagnosis of the organization’s requirements to monitoring the success of the policies and procedures implemented by this professional.
#1 – Determine Organizational Needs
The first step is to clearly identify the specific HR needs and gaps in your organization. Analyze areas where internal HR teams may be struggling or lacking expertise. Common pain points can affect recruitment, compensation, training, compliance, and employee relations, among other areas. Define the objectives that you want the proposed HR solutions to achieve. Outline the scope of work required in detail. This self-assessment helps determine if an external consultant is required and what qualities they should possess.
#2 – Research HR Consulting Firms
With organizational needs defined, start researching potential HR consulting firms that can address those needs. Search online directories, ask business networks for referrals, or find firms specialized in your industry. Make a list of suitable HR consultants or consulting companies based on service offerings matching your requirements. Screen them as per experience, clientele, capabilities, and fees to narrow down options.
#3 – Evaluate Consultant Qualifications
Vet the shortlisted HR consultants thoroughly based on relevant qualifications. Gauge their depth of knowledge and track record in delivering solutions similar to what your organization needs. Look for specific subject matter expertise, extensive industry experience, training credentials, methodologies used, and customer testimonials. Ensure they have successfully handled transitions like yours. Interview consultants to assess communication skills and cultural fit.
#4 – Define the Project Scope
Once you have selected an HR consultant, clearly define expectations and goals through a project scope document. Outline the specific problems they need to diagnose, solutions to implement, metrics for success, costs, timelines, and team involved. Develop a project plan collaboratively with milestones mapped to business objectives. Get buy-in from leadership on the project’s parameters.
#5 – Hire and Onboard the Consultant
If you are able to reach a reasonable agreement with the consultant or firm it’s finally time to hire them. To effectively onboard the consultant, provide complete access to documents, data, processes, and tools required for their analysis. They will likely need a ton of data and context to do their best work. Schedule meetings with subject matter experts from HR and business teams. Share organizational context and history. Define the frequency of check-ins and reviews. Provide logistical support like workspace and technology access to help them work seamlessly.
#6 – Conduct Assessments
In the assessment phase, the consultant will study policies, conduct HR audits, analyze metrics, survey employees, and gather data relevant to the problems that have been identified. HR consultants will evaluate the effectiveness of current HR programs against industry benchmarks. They will identify the root causes of problems and pinpoint process gaps through thorough diagnostics during this step.
#7 – Recommend Solutions
Once a comprehensive assessment is complete, the consultant will provide strategic recommendations and solutions tailored to the organization’s needs. For example, they may suggest changes to compensation structure, training programs, recruitment methodology, technology tools, or workflows based on insights gathered. The proposed interventions will be designed to align with the business’s objectives.
#8 – Implement Changes
Working closely with internal HR teams, the consultant will now execute the solutions they have recommended (if they are needed for execution as well as planning). This may involve revamping policies, rolling out new tech platforms, training employees on new processes, or providing advisory support during transitions. The consultant will ensure smooth execution with minimal business disruption.
#9 – Track Results
In the final step, the impact of the HR consultant’s work should be measurable through relevant metrics. Compare pre and post-consulting project data on turnover, hiring efficiency, job satisfaction, productivity, turnover, and other KPIs to quantify improvements. Conduct employee surveys and interviews to determine qualitative changes in experience. Tie outcomes to business goals. Continuously track results to ensure changes are sustainable.
Does Your Business Really Need HR Consulting?
While many companies have in-house HR teams, there are several scenarios where hiring an external HR consultant makes sense. As organizations grow rapidly, they may face high turnover, the need to revamp policies and processes, or may go through major transitions like mergers and acquisitions. In these scenarios, an HR consultant would provide invaluable expertise.
They bring an objective, experienced perspective to diagnose issues, identify non-compliance risks, and implement best practices tailored to the organization’s needs. Effective consultants act as strategic partners, not just tactical problem-solvers. When hiring an HR consultant, look for deep subject matter expertise, extensive HR experience across industries, change management skills, and credentials.
The best consultants combine empathy with methodical analysis to develop data-driven solutions. Though not a year-round necessity for all companies, partnering with HR consultants during times of transformation or capability gaps provides access to specialized skills and enables organizations to maximize the potential of their workforce.