What Is a Fractional VP of HR? (And How It Differs From Outsourced HR and a PEO)
Picture a founder with 70 people. Payroll runs through a provider. An outsourced HR line answers the policy questions. The benefits are bundled through a third party. On paper, HR is handled.
Then a manager fumbles a harassment complaint, two senior people resign in a month, and a comp structure nobody actually designed starts losing offers. "Handled" turns out to mean nobody owns the hard calls.
That gap is what fractional HR fills, so let me answer the real question first. What is fractional HR? It is senior people leadership, bought by the slice instead of by the week.
What is fractional HR, exactly?
Fractional HR means retaining an experienced HR leader for part of their time rather than a full-time seat. A fractional VP of HR sits at the leadership level, owns the people strategy, and makes the judgment calls... one or two days a week instead of five.
It is not a cheaper coordinator with a bigger title. It is the same seniority you would get from a full-time VP of HR, metered to what a growing company actually needs.
The model fits how Canadian business is shaped. Small businesses make up 98.2% of all employer businesses and employ close to half of the private-sector labour force (ISED, 2025). Most of those companies are too big to run on instinct and too small to carry a six-figure HR executive. Fractional is built for that exact middle.
How is fractional HR different from outsourced HR?
Outsourced HR is a function you rent. Policy templates, a help desk, compliance paperwork, sometimes payroll. It is horizontal and transactional, and it answers "what is the rule" very well.
What it does not answer is "what should we do about the top performer who is also our biggest flight risk," or "is this pay band going to blow up the moment we promote someone." Those are strategy, not paperwork.
Fractional HR is vertical and strategic. It owns decisions, not just answers. The cleanest analogy I can give: outsourced HR is the bookkeeper who files the return, and a fractional VP of HR is closer to the CFO who decides where the money goes.
How is a fractional VP of HR different from a PEO?
A PEO, or professional employer organization, is largely a US model built on co-employment. The PEO becomes an employer of record for payroll, remits the taxes, and pools you into group benefits. In Canada the near cousins are payroll providers, HR-outsourcing firms, and employer-of-record services.
That is genuinely useful plumbing. But a PEO's incentive is to standardize you so it can serve a thousand clients the same way. It does not set your people strategy, and it is not in the room for the judgment calls.
I go deeper on this in Fractional HR vs a PEO: Who Actually Owns Your People Strategy?. The short version: a PEO owns the plumbing, a fractional VP of HR owns the judgment, and the two can sit side by side without stepping on each other.
Who is a fractional VP of HR actually for?
The sweet spot is Ontario companies with 20 to 500 employees. Big enough that people problems are now business problems, not yet big enough to justify a full-time executive.
Compliance is the quiet trigger, and it arrives earlier than owners expect. Ontario's Human Rights Code applies from your first employee, with no small-employer exemption (Human Rights Code, 1990). The Occupational Health and Safety Act requires written, posted workplace harassment and violence policies once you regularly employ more than five workers, and a duty to investigate incidents and complaints under section 32.0.7 (OHSA, 1990). The Pay Equity Act reaches private-sector employers at 10 or more employees (Pay Equity Act, 1990). None of that waits until you can afford a VP.
I am Ashley Wesley, a Fractional VP of Sales and HR based in Guelph, Ontario, and this is the work: fractional leadership of the people function, selection so you hire the right person rather than the one who interviews well, and retained search when a key seat has to be filled right. If you want the leadership-level view of the role, read Fractional HR vs a Full-Time CHRO: When Does Each Make Sense?.
And it is worth it beyond staying out of trouble. A meta-analysis of high-performance work practices found they have an economically meaningful effect on organizational performance (Combs et al., 2006), and that is a leadership output, not a filing one.
Here is the thing nobody tells a founder: you can have HR fully "covered" and still have no one accountable for your people. A fractional VP of HR in Ontario exists precisely to put a name next to the hard calls.
In short
Fractional HR is senior people leadership bought part-time. Outsourced HR rents you a function and answers the rules. A PEO rents you payroll, benefits, and admin through co-employment. A fractional VP of HR owns your people strategy and the judgment calls, usually one or two days a week, and is built for Ontario SMBs with 20 to 500 employees.
Key takeaways
Fractional HR gives you VP-level seniority metered to part-time, not a junior coordinator with a bigger title.
Outsourced HR is horizontal and transactional. A fractional VP of HR is vertical and strategic, owning decisions rather than answering questions.
A PEO owns payroll, benefits, and admin through co-employment. It does not set your people strategy.
Ontario compliance starts early: the Human Rights Code from employee one, OHSA harassment policies past five workers, Pay Equity at ten.
Small businesses are 98.2% of employer businesses and employ nearly half the private-sector labour force (ISED, 2025), which is the exact middle fractional serves.
Frequently asked questions
Is fractional HR the same as outsourced HR?
No. Outsourced HR is a rented function for policies, compliance paperwork, and sometimes payroll. Fractional HR is a senior leader who owns the people strategy and the hard decisions part-time.
Does a fractional VP of HR replace a PEO?
Not necessarily. A PEO or payroll provider can keep running the administrative plumbing while a fractional VP of HR owns the strategy and judgment. They often work together.
How many employees should we have before fractional HR makes sense?
There is no hard number, but Ontario companies between 20 and 500 employees are the typical fit, especially once compliance duties under the Human Rights Code and OHSA are already live.
Is a fractional VP of HR expensive?
It is sized to part-time use, so you pay for seniority without carrying a full executive salary. The comparison that matters is cost versus the risk and turnover of leaving people decisions unowned.
References
Combs, J., Liu, Y., Hall, A., & Ketchen, D. (2006). How much do high-performance work practices matter? A meta-analysis of their effects on organizational performance. Personnel Psychology, 59(3), 501-528. https://doi.org/10.1111/j.1744-6570.2006.00045.x
Human Rights Code, R.S.O. 1990, c. H.19. https://www.ontario.ca/laws/statute/90h19
Innovation, Science and Economic Development Canada. (2025). Key small business statistics 2025. Government of Canada. https://ised-isde.canada.ca/site/sme-research-statistics/en/node/439
Occupational Health and Safety Act, R.S.O. 1990, c. O.1. https://www.ontario.ca/laws/statute/90o01
Pay Equity Act, R.S.O. 1990, c. P.7. https://www.ontario.ca/laws/statute/90p07
Disclaimer: This article provides general HR and business information, not legal advice. Employment law turns on the specific facts and changes over time. Before acting on anything here, confirm it with an Ontario employment lawyer.
Work with Ashley
Ashley Wesley (MA, CHRL, CIM), Fractional VP of Sales and HR, Guelph, Ontario. Fractional HR leadership, selection, and retained search for Ontario companies with 20 to 500 employees. Start at ashleywesley.com.
