HR consulting or Human Resources consulting is one of the primary components of management consulting but it has branched out into its own specialization due to the needs of businesses becoming more complex and specialised. There is a great deal of overlap between in the services provided by firms specializing in HR consulting, IT consulting, and management consulting.
The core fields around which most HR firms base their consulting methodologies are human capital, health and benefits, merger and acquisitions, communication, retirement, and outsourcing. Some business will use a firm to provide all of their HR services while others will use them as needed.
The Importance of Human Capital
Human capital is one of the four types of fixed capital. In terms of HR consulting, it refers to labour services, such as remuneration, employee rewards, employee incentive programs, talent acquisition, and talent management. Many companies find that it is more efficient and cost effective to outsource these core human resources to a firm that specializes in it.
This is also the case with health and benefits. These concerns are tied closely to human capital concerns but the industry treats them as a distinct unit due to the specializations involved and the sheer scope of the task. Providing health and benefits has become an unwieldy function for many large businesses.
HR Consulting Firms
Companies will generally hire HR consulting firms that provide merger and acquisition services on a per project basis, such as when the company is integrating another entire business. Even businesses that have their own HR departments will hire HR consulting firms for merger and acquisitions due to the complex logistics.
HR consulting firms offer communication services to all types of businesses, even those that possess their own HR departments. These services focus on assessing and improving employee attitudes, engagement, satisfaction, and other behaviours. Sometimes businesses will hire the consulting firm to assess the problem and improve their in-house HR department.
Like health and benefits, retirement is an aspect of human capital that has a distinct set of needs. The HR consulting firm will generally handle the retirement process and act as the liaison to the retired employee. Financial management is at the core of the services that the HR firm provides to the retired employee.
The outsourcing services provided by HR consulting firms allows a business to simplify the process of subcontracting. By leveraging the HR consulting firm, the business can subcontract a wide range of tasks and even whole departments with a very small organisational footprint.