Startup Tandem Inc.
As a new small business owner, you may not have in-house HR. Our previous posts covered what an HR consultant does and why, how, and when to hire one. We did the research on what you should expect to pay, so you don’t have to.
This blog will discuss what to pay an HR consultant, broken down into several factors influencing the price, including types of services, location, frequency of assistance, expertise, and trust. We’ll also walk you through how to spot what you want and how to negotiate the price you deserve to pay.
Compared to other types of Consultants
Tax consultants charge around $200 per hour. Web designers charge around $30 to $80 per hour, with $75 being the average. So, overall we see business consultants have an hourly cost range of about $30 to $200 per hour. HR consultants charge between $95 to $190 per hour, with $140 being the average.
Compared to the Type of Services within HR
Not all HR consultants do the same things. Some do everything, while others specialize in one thing, for example, writing employee handbooks. Specialized services can range from requiring assistance with recruiting and hiring efforts or strategic integration of HR programs, processes, policies, or practices.
Compared to other Locations
HR consultants often factor in how their rates compare to local and regional practices. It is important to consider their location’s cost of living and the overhead costs of their company. Where they are might also mean they are more connected to other HR professionals, banks, businesses, etc. The highest paying states are Nevada, DC, Delaware, Alaska, Washington, New York, VIrginia, and Rhode Island. Some states have more jobs available than others and some states have a higher concentration of worthy candidates than others (i.e. less concentrated means less competition).
Remote work has eliminated must of our comparisons of location and also overhead costs. The most important thing to consider is regional employment law. Ideally, look for someone from a strict state like California or New York. Or – even better – look for someone in your businesses’ state. This includes where you are incorporated AND where your employees live AND where you have facilities AND where your headquarters is located. So, even if you’re incorporated in Delaware, you will want your HR person to be knowledgeable about California if you have employees who live in California.
Frequency of Use
Hourly consultants may request a minimum number of hours (ranging from about 2-5). Some consultants may have a daily or half-day rate/fee. For the aforementioned options, the consultant may request out-of-pocket expenses, like travel and lodging or site visits. These charges and their reimbursement are often more subject to negotiation than the basic rate/fee, so don’t be shy to ask questions.
A project rate or fee to handle longer-term assignments such as writing an employee handbook or developing a performance management and appraisal process. The consultant may establish a list of deliverables or milestones for a long-term project and bill the client when a milestone has been reached instead of waiting to be paid when the project is completed. These terms are usually outlined in the written contract describing deliverables and pay arrangements, including the ability of the client or consultant to alter the terms of the contract if necessary. A retainer is an upfront fee the client pays to reserve a specific date or contract. Retainers may also be used in conjunction with any of the above pay arrangements (SHRM, 2000).
Based on Experience
Experience and track record will need to be taken into account. A brand-new consultant may charge closer to $50 or $75 per hour. With 20 years of experience, they may charge $150 or even $200 per hour. When you are hiring, be sure to hone in on this one. Make sure the relevant experience is there. You may even ask for references or look for reviews on the internet.
Trust
Hiring an HR consultant is a great way to handle your employment relations matter. They are professionals on this topic, and you can trust them to do their work well. Still, it is extremely important to interview them several times to know that you can trust their consistency. Consider referrals from friends who are also small business owners or at the very least, consider reviews. They could be a tremendous help for many things like hiring new employees, planning and executing training, and performance management.
Companies such as Startup Tandem offer outsourced HR solutions for startups and small businesses in various industries all over the country. Learn more about Startup Tandem and the Tandem Culture and give them a call for a free quote on services.
References
SHRM. (2000). How should an HR consultant charge for services? SHRM Resources and Tools. Retrieved October 20, 2022, from https://www.shrm.org/resourcesandtools/pages/default.aspx
Zippia. (2022, September 9). Human resources lead demographics and statistics [2022]: Number of human resources leads in the US. Retrieved October 21, 2022, from https://www.zippia.com/human-resources-lead-jobs/demographics/