The Beginner's Guide to Becoming an HR Consultant (According to the Pros)
By Will Erstad on 07/19/2018
Do you get inspired by taking on new challenges? Or do you love the satisfaction of guiding others through some of their stickiest problems to solve? It’s an awesome feeling to be able to give a fresh perspective and use your expertise to help and guide others—so why not make a career of it?
Fortunately for human resources (HR) professionals, becoming an HR consultant is a clear path into a role that will allow you to do just that. It could be the perfect new direction you’ve been seeking for your career.
But before you quit your day job, there’s a lot to know about getting started in human resources consulting. We enlisted HR experts to weigh in on what you need to consider before making the switch. Hear their insight and learn more about what to expect from a career as an HR consultant.
But first, what does an HR consultant do?
Put simply, HR consultants are professionals hired from outside of a business or organization who are tasked with solving or meeting a human resources-related need. Often they are hired to provide high-level solutions and recommendations to management teams.
You might be wondering why companies would bring in HR consultants. There are two common reasons for this. The first is that some small businesses simply don’t have the internal HR support or expertise needed to take on significant projects such as implementing a new benefits package or creating a new employee handbook. In these situations, companies may seek out an outside professional for guidance.
The other scenario is that larger companies may opt to enlist an HR consultant with the hopes of getting an outside perspective on a particular project or challenge. The consultant can then focus on addressing actual problems without getting wrapped up in internal organizational politics or other issues that may make objective decision-making challenging.
Becoming an HR consultant: Things to consider
If you’re intrigued at the idea of branching out into the world of human resources consulting, there are some things you should think about before making your final decision. Keep reading for expert insight on some questions you should consider.
Do I have the experience and education to succeed?
Organizations hire external HR consultants to cover gaps in expertise they may be lacking internally. Expertise is the operative word here—you’ll need to have a strong knowledge base to earn consideration for the work.
Typically, HR consultants have several years of experience in the field and at least a Bachelor’s degree, with many employers preferring candidates with a Master’s degree. It’s important to do an honest self-evaluation before jumping into the field. Review your resume and experience and ask yourself, “If this were a stranger’s resume, would I trust this person to make important decisions about my business?”
Matthew Burr, owner of Burr Consulting, LLC, says his nine years of human resources experience prior to starting a consulting business has been invaluable.
“I worked in very challenging environments in my career and had to make high-level decisions for dynamic organizations, bankrupt companies and union and non-union businesses across multiple industries,” Burr explains. “That experience is the only way I [have become] successful as a consultant.”
HR generalist vs. HR specialist
One important factor to consider is whether your consultancy will focus on a specialized niche of the human resources field or take on a more generalized route. There’s no right and wrong answer here—it simply depends on your personal experience and preference. It may be an obvious choice to specialize if it reflects your prior experience, but a generalist approach could broaden your potential client base.
“I think most HR consultants tend to take on ‘HR generalist’ work and outsource specialties beyond their scope of practice,” says Laura Sankovich of The Human Resource. “When I started my consulting business, I did not have a niche. I was networking—trying to get the word out and convincing local business owners about why they needed HR support as an investment.”
This being said, the decision on whether to specialize or not doesn’t have to be black-and-white. Many consultants can provide general HR support and advice but also have one or two focus areas where they possess more in-depth knowledge. This blended approach may come out of necessity—expertise focused on a small niche is great to have, but it doesn’t always align with what the market is seeking.
Do I have a sound business plan?
It might sound obvious, but plenty of independent HR consulting firms fail in part because they lack a well-researched business plan. As the old military adage goes, “Prior planning prevents poor performance,” so take the time to really think it out before making the jump.
At a minimum, consider the following:
- What is my target market?
- How will I position myself? Do I have a unique selling point?
- Are there enough potential clients in my current area to maintain a steady business? If not, what are my plans for working with non-local clients?
- What are my overhead costs (office space, supplies, travel, taxes, etc.)?
- Do I know how much to charge for my services? Does this figure compare well with competitors?
- How will I attract clients? How long can I sustain my work if I face a lull in business?
Advice for aspiring HR consultants
There’s wisdom in listening to the advice of people who’ve been there before. Consider this expert advice from established HR consultants who were once in your shoes.
Get your financial house in order
Being your own boss is great, but it’s also much more challenging to get your finances in order.
“I think consultants in any business tend to forget they need to pay their own taxes,” Sankovich says. “As an employee, you certainly pay taxes, but your employer is paying the other side of that, too. As a consultant, you have to pay both.”
She goes on to suggest putting money aside upfront to pay quarterly tax estimates. While it can be difficult, it certainly beats being caught off-guard with a hefty tax bill you hadn’t planned for. She also recommends making an appointment with a CPA to get a proper financial plan in place.
Be ready for early hiccups
Every business owner in the world has high expectations for success, but reality often falls short of expectations. It’s not uncommon for new businesses to get off to a slow start. But whether or not this causes lasting issues can come down to how well-prepared you are for it.
“Don't assume you’re going to make money in two months,” Burr says. “I didn't generate real income for two years. Learn how to quote jobs and know what you are worth.”
Networking isn’t optional
Successful consultants need a steady pipeline of work to remain viable, and one of the best ways to maintain that pipeline is to put a constant emphasis on networking. One option that may prove fruitful is to develop relationships with other HR consultants or service providers who have expertise in areas you’re not as well-versed in. This creates an opportunity for a mutually beneficial relationship where you provide referrals and vice versa.
Additionally, don’t underestimate the potential value of referrals from former clients. Sankovich, whose firm works primarily with small- to medium-sized businesses, says some of her best experiences have come from referred clients.
“There's nothing better than someone else pitching your capabilities to a potential client,” Sankovich says. “Even when that client is facing a problem that needs solving, we’re starting that new relationship with foundation of trust established by the referral.”
Be ready for anything
Businesses, particularly small businesses, don’t typically hire an expensive outside consultant until they know for sure they need help. This can result in you stepping into some pretty shocking scenarios.
“Even after you think you've seen it all, you’ll get a call or email with some situation you’ve never considered,” Sankovich says. “After 15 years as a consultant, there are still new situations that arise, so it’s never boring—that’s for sure.”
While out-of-left-field requests and unexpected client scenarios may be challenging, finding satisfactory ways to answer or solve these issues is part of the appeal of being an HR consultant.
“Whether it's creating a process for the organization to mitigate future risk or helping resolve an employee situation that has gone badly, it’s very gratifying to lead the problem-solving effort so the organization can resume focus on its core business,” Sankovich shares.
Is becoming an HR consultant in your future?
Setting out on your own to launch an HR consulting business is a big step that needs careful consideration and planning. Whether you decide to take the plunge or go the conventional route of climbing the corporate ladder, one thing that can always benefit you is education. A Bachelor’s degree in Human Resources and Organizational Leadership is an excellent first step for anyone looking to get their start in this field. But if you're already established as a HR professional and have your heart set on HR consulting, you may want to consider taking the next educational step—a Master's Degree in Human Resources Management.