Recruitment Challenges for Small Businesses and How Fractional HR Can Help

Hiring remains one of the biggest barriers to growth for small businesses. For small companies, the stakes are high because every hire represents a bigger percentage of their workforce, and mis-hires or delays can stall growth, cost money, bury the team with additional work, and delay progress.

The Society for Human Resource Management (SHRM) current State of the Workplace report shows that employers are facing two emerging critical challenges in today’s market:

1)      too few qualified applicants, and

2)      intense competition from larger firms that can pay more and offer broader benefits.

Recruitment is also no longer just about filling seats. Gallup’s State of the Global Workplace 2024 found that only about one-third of employees in North America report being engaged at work. Engagement levels are tightly linked to manager support and onboarding quality (Gallup, 2024). When new hires do not feel supported, they are far more likely to leave within their first year. That cycle is expensive. For a business with only 20 or 30 employees, losing even one hire can derail momentum.

Fractional HR offers a practical solution. Instead of hiring a full-time HR executive, small businesses can access senior-level HR leadership on a part-time or project basis. Industry research highlights a growing adoption of fractional executive models, with companies citing both cost savings and faster access to expertise as key advantages (Forbes, 2024). The model is straightforward: you buy the expertise you need, when you need it. This also means that when you don't need it – you're not paying for it. When it comes to hiring, it also means that you get the people you need, when you need them, without having to worry about the cost of recruiters or in-house HR before you’re ready for it.

Fractional HR can help in four critical areas:

1)      Pipeline building: By refining job descriptions, using niche sourcing channels, and strengthening employer brand messaging, fractional HR improves applicant flow where small businesses often struggle.

2)      Offer competitiveness and speed: SHRM’s 2023 hiring trends report noted that small businesses frequently lose candidates because their processes are too slow or compensation is not competitive. Fractional HR brings tested frameworks for faster, more attractive offers.

3)      Retention-focused onboarding: Gallup’s research shows engagement is won or lost early. Fractional HR creates onboarding and first-90-day systems that keep new hires engaged and productive.

4)      Strategic prioritization: Instead of reactive hiring, fractional HR works with leadership to identify which roles matter most for revenue and growth.

For CEOs, the message is simple. Fractional HR provides the expertise to compete with larger firms without carrying the cost of a permanent executive. In 2025, when talent is scarce and hiring mistakes are costly, fractional HR is not optional. It is a competitive advantage.

If you are ready to strengthen your recruitment strategy and attract the right talent, contact Move HR today.