What are HR Consulting Firms?

HR consulting firms are available around the world and are designed to meet several needs unique to human resource services. Human resources (HR) consulting is typically divided into four primary areas: system implementation, recruitment, business process evaluation, and compensation management. HR consulting firms are typically used by large organizations that have a dedicated human resources department. In general, firms with fewer than 250 employees do not have the size required to necessitate the services of this type of firm.

The primary goal of all HR consulting firms is to fill a short-term gap in the services provided by the company’s internal human resources department. Consultants are typically certified human resources specialists with expertise in different aspects of this profession. When selecting any consulting firm, it is standard practice to request the resumes of the consultants that will be assigned to the project. Review the resumes carefully to determine the level of education and experience that each team member possesses.

System implementation is a large part of the work done by HR consulting firms. There are two types of systems used for HR: enterprise resource planning (ERP) or payroll/human resources system. ERP implantation requires a specific skill set, including expertise in configuration, system analysis, human resources and payroll legal requirements, and programming skills. A standalone payroll system also requires training in system implementation, but lacks the complexity of an ERP implementation.

Recruitment services can range from short-term labor needs to executive search committees. The overall need filled by this type of firm is to manage the job posting and application review process. Typically a recruitment firm will conduct the initial review and interview with potential candidates. A short list is then presented to the client, who will hold second- and third-level interviews with the recruiter. Upon selection of a successful candidate, the recruitment firm receives its payment for services rendered.

Business process evaluation is a growing area of business for HR consulting firms. In order to provide this service, the consultants must have a strong educational background in human resources and be familiar with all the local labor laws, reporting requirements, and other regulations. Experience in industry is also necessary to understand the gap between ideal solutions and practical needs.

Compensation management is the process of comparing the total compensation package provided by a firm to the industry, sector, and geographic location. Active compensation management is an integral part of staff retention and recruitment. The hidden costs of high staff turnover have a broad impact on company productivity and efficiency.