Is It Time for HR? A Founder’s Guide to Fractional and Permanent Support

Running a small business often feels like juggling flaming torches while riding a unicycle. Growth is exciting, but with every new hire comes another layer of complexity: contracts to draft, policies to update, managers needing support, and the occasional tricky employee situation. At first, it’s tempting to keep HR informal - a few templates here, a bit of common sense there. But at some point, the people side of the business starts demanding more than ad‑hoc fixes.

The question is: when does that tipping point arrive? Should you bring in fractional HR support to steady the ship, or is it time to invest in a permanent in‑house People Lead?

In this piece, we’ll explore the signals that tell you it’s time to bring HR into the fold, the advantages of starting with fractional support, and the moment when a permanent People Lead becomes not just helpful, but essential. By the end, you’ll have a clear roadmap for making the right HR decision at the right stage of your business journey.

Early Warning Signs: When HR Becomes More Than Admin

For many SMEs, HR starts informally, a few templates downloaded online, contracts pulled together by the founder, and policies borrowed from a friend’s business. That works for a while, but there are clear signals that the DIY approach is reaching its limits:

• Founder time drain: Leaders spending more hours on people issues than on growth or strategy.

• Employee relations complexity: Grievances, performance concerns, or interpersonal conflicts that can’t be solved with common sense alone.

• Compliance risks: Gaps in contracts, outdated policies, or missed health & safety obligations.

• Culture strain: Informal practices no longer scale, leading to disengagement or inconsistent management.

• Manager overwhelm: Line managers struggling without guidance, resulting in inconsistent decisions and rising stress.

These are the moments when HR stops being a back‑office task and becomes a strategic necessity.

Fractional HR Support: The Flexible First Step

When the warning signs appear but the business isn’t yet ready for a full‑time People Lead, fractional HR support can bridge the gap. It’s a way to bring in expertise without committing to a permanent salary.

• Scalable hours: SMEs can dial support up or down depending on growth and budget.

• Strategic input: Fractional HR leaders help set up systems, policies, and culture foundations that last.

• Cost‑effective: Access to senior expertise without the overhead of a permanent hire.

• Embedded partnership: Unlike consultants who swoop in and out, fractional HR often works as part of the team.

• Practical examples: Policy refreshes, manager coaching, HR system setup, or guiding founders through complex employee relations.

Fractional support is particularly valuable for SMEs in the 10–50 employee range, where issues are too complex for ad‑hoc fixes but not yet demanding a full‑time People Lead.

Permanent In-House HR: When a Dedicated People Lead Becomes Essential

Fractional support can carry an SME a long way, but there comes a point where the demands of a growing workforce require someone fully embedded in the business. Typically, this tipping point arrives somewhere between 50–100 employees, though the exact number depends on your growth trajectory and industry.

• Continuity and presence: A permanent People Lead is available day‑to‑day, ensuring consistency in decisions and support.

• Culture building: As teams expand, culture can’t be left to chance. An in‑house HR leader actively shapes values, engagement, and wellbeing.

• Employee support: Staff need a trusted point of contact for everything from onboarding to career development.

• Strategic alignment: HR becomes a voice at the leadership table, influencing business priorities and long‑term planning.

• Risk of waiting too long: Without dedicated HR, SMEs often slip into reactive firefighting. Policies lag behind, managers burn out, and employee trust erodes.

Bringing HR in‑house isn’t just about managing compliance; it’s about embedding people strategy into the heart of the business. Done at the right time, it transforms HR from a support function into a driver of growth.

Decision Factors: Choosing the Right HR Model for Your SME

There’s no one‑size‑fits‑all answer to when HR should move from fractional to permanent. The right choice depends on a mix of business realities and leadership priorities. Here are the key factors to consider:

• Growth stage: Rapid scaling often demands more embedded HR sooner, while steady growth can lean on fractional support longer.

• Workforce complexity: Multiple locations, diverse teams, or regulated industries increase the need for consistent, in‑house HR leadership.

• Leadership bandwidth: If founders or managers are spending more time on people issues than strategy, it’s a sign HR needs to step in.

• Culture ambitions: SMEs aiming to build a strong, distinctive culture benefit from a permanent People Lead who can nurture it daily.

• Budget and flexibility: Fractional HR offers cost‑effective expertise, but permanent HR becomes a strategic investment once the business can sustain it.

Closing Thoughts

For SMEs, the right time to bring in HR isn’t about hitting a magic headcount; it’s about recognising when people challenges start to slow growth, strain culture, or stretch leadership too thin. Fractional support offers a flexible bridge, while a permanent People Lead embeds HR strategy at the heart of the business. The key is timing: making the move before issues escalate ensures your people, and

business, thrive.

If you’re weighing up whether fractional or permanent HR is the right fit for your stage of growth, I’d love to explore it with you. Seed & Scale HR partners with SMEs to make confident, timely decisions about their people strategy. Let’s connect and talk about where you are now, and where you want to go next.