HR Consulting Companies: Is Smaller or Larger Better?
The Human Resources consulting industry has a strong growth trend emerging. As is the case with any rapidly changing process, there are many advantages and disadvantages associated with the transition from what was a cottage business, to what is now a multibillion dollar industry.
Starting back in the 1980s, many entrepreneurial oriented individuals embarked upon a career of HR consulting. Qualified and energetic HR professionals gave up their careers with corporations, to go it alone and sell HR services. They targeted small, medium and large firms in need of expertise in areas such as benefits, compensation, organizational development, training and recruiting, and entered into agreements for project based services. There were some small boutique firms, but by and large, the industry was just emerging on the scene. Companies of all sizes began to realize that there was not only assistance out there, but also many compelling reasons to use the help. In the 90’s, the industry picked up more speed and entered a period of large growth. More and more HR professionals left their corporate HR jobs to become HR consultants. Businesses had a lot more choice and had options including individual sole proprietor consultants, small “boutique” firms, and now larger organizations that were entering the HR space.
Today, many of the sole proprietors have difficulty staying afloat and have joined smaller and large firms, or gone back to working for corporations. However, there are many boutique HR consulting firms and corporate giants that continued to enter the market. Companies have many choices when looking for a quality HR firm. The smaller firms have found a way to grab a large part of the market by focusing on the personal relationship, quality and delivery. In the HR world, the personal touch is of the greatest importance. The role of technology is to supplement, not replace, the personal and professional relationship.
Advantages of the Smaller Boutiques
Why should a company consider using a smaller HR consulting firm versus one of the larger organizations? Boutique firms can offer the same level of qualified expertise as the larger firms, but many times at a more cost effective price and with superior customer service due to the personal touch they offer. The end result to the client is a greater return on investment. With a smaller firm, every action is of great importance and gets constant attention. The relationship between the client and the HR firm is the primary focus. The client and provider are connected all the time. Communication is critical and guaranteed by the boutique firm. A boutique firm is more concerned about its reputation and counts on satisfied customers and referrals to help it grow. End results are everything to a smaller firm. A smaller firm also values its talent base of HR professionals more than a larger firm; they are considered their largest asset. To the HR consultant, working at a smaller firm is more gratifying, they feel like they can make a difference and they are treated as a “valued partner”, not simply an employee. Clients receive flexible customized solutions and not a one size fits all approach. Flexibility is much greater at smaller firms. Boutique firms are easier and more accessible for the busy HR professional to partner with. And generally, due to the lower overhead, smaller firms pricing structure is often more cost effective than the giant international firms. Finally, the boutique firms know the local market more than the larger firms. This market knowledge can be harnessed to the advantage of the client company.
Predictions indicate that the HR consulting industry trends will continue with rapid growth. The larger firms attempt to set the standards for the industry, but for all the reasons listed the smaller boutique firms will continue to control much of the local market share.
For assistance with any or all of your human resource needs, HR Affiliates provides solutions that fit any company.