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What is Human Resources Consulting?

By Charity Delich
Updated Mar 02, 2024
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Human resources consulting is a type of advisory or counseling service that businesses and corporations use to improve the leadership’s relationship with employees. One way of looking at this sort of consulting is to describe it as a means of optimizing “human capital.” In this context, human capital refers to the economic advantages that employees bring to a company by virtue of the training, experience, and skills that they possess. Most companies seek the services of a human resources consulting firm at some point in order to help them realize the competitive advantages that can be gained by enhancing their human capital and by making their human resource processes more effective. These sorts of services are particularly popular in moments of corporate transition, growth, and merger, when executives want an outside opinion about how internal processes and policies could be made more effective.

Improving Employee Resources and Satisfaction

One of the biggest goals of human resources consulting, sometimes simply called “HR consulting,” is to give corporate leaders concrete ideas about how to improve the overall happiness or wellbeing of employees. Most companies have internal HR departments that oversee things like benefits, payroll, and general employee activities. In large companies and in divisions that have been around for a long time, though, HR staff may no longer be getting a complete or accurate idea about how their policies are actually impacting the employees on a personal level. Dedicated consulting firms can often fill this gap.

Consultants commonly assist with developing systems to manage and reward current employees, and frequently also set up rubrics to objectively evaluate employee satisfaction. They can also help companies select cost-effective employee healthcare plans and benefit programs, and can offer advice on how to manage employees in a merger and acquisition situation. Additionally, consultants can evaluate which business functions should remain in-house and which business functions can be effectively outsourced.

Recruiting Talent

Making sure that companies have the right hiring processes in place is another big part of the job in most cases. Consultants can look at how jobs are advertised, how the interview process is carried out, and how offers are made and make broad suggestions about how to add more diversity or attract people with different educational backgrounds or expertise. Getting the right people in the right jobs is often a big part of corporate success, and also usually leads to better retention and improved on-the-job satisfaction.

Internal Management

In many cases, consultants can also train managers and other leaders in how to better engage with their subordinates. Sometimes the relationship between the consultancy firm and the company can be longstanding, and consultants might be embedded into different divisions for weeks or months at a time — but not always. In some cases, consultants work at a much greater distance, and evaluate things more or less on paper only. These services are typically a lot less expensive, but are more limited, too.

Many HR consulting firms have developed proprietary software and support tools for use on more “remote” jobs. These can assist companies on a long-term basis with managing their human resource functions. Companies should usually educate themselves on what types of tools are available and how those tools can enhance their human resource operations before deciding whether to adopt them.

How Consultant Firms are Hired

Companies are usually wise if they define the scope of the project they want accomplished and identify what specific goals they want to achieve before reaching out to consulting firms. Different firms have different areas of expertise, and it is important to narrow down the purpose before seeking bids. Having a clearly defined purpose can also help prevent cost overruns.

It’s usually a good idea for executives to obtain several bids from different consulting firms. During this process, businesses should request and review the consultants' references and verify that they have worked on projects similar to the one at hand. Additionally, a company should ensure they have a chance to interview the individual or individuals who will actually be assigned. Depending on the scope of the project, a firm might assign anywhere from just one consultant to ten or more. Meeting these people upfront can help leaders ascertain whether or not there’s a good fit.

What it Takes to Work as a Consultant

HR consulting firms employ individuals with a variety of backgrounds and experience. Entry-level positions in the field generally involve working as an analyst. This type of position typically requires an undergraduate degree in a subject such as statistics, risk management, business, or finance. Individuals seeking a more senior position will usually need at least some prior experience working in human resources or a consulting field. Advanced degrees are also advantageous, and firms are more likely to hire individuals that possess a master’s degree in business administration (MBA) or a related field.

Practical Adult Insights is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
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