Why HR Professionals are Leaving the Corporate World to Launch Independent Firms

By Adam Walters | 09/08/2023 | 5 min read

It's not every day that HR software saves a life. For Kazdon, Inc., it happened in dramatic fashion in early May 2023.

"An employee of one of our clients had a mental break. He was working at a 15-story construction facility, had a gun and was making threatening statements toward himself and his family," said Holly Acosta, Chief People Officer and co-founder with husband David Acosta of the Austin, TX-based payroll and HR services firm. Kazdon’s employer client called the company’s EAP (Employee Assistance Program) hotline, desperately seeking information.

“Because so much of its workforce had gone remote, our client could not easily access its own, in-house software. But in onboarding them as a new client, we had created cloud-based personnel files for each and every employee. Within minutes, we were able to give police this employee’s emergency contact information and his exact location, plus provide information on the last medical certificate he had submitted and contact both his wife and his doctor. With our team’s help, police were able to find him and quickly deescalate a crisis situation, secure his weapon and get him to a hospital.”

All of that, Acosta says, was made possible with API integrations afforded Kazdon by IRIS Software Group’s cloud-based, customizable payroll, HCM and HR software platform.

Fortunately, not every day brings quite that level of emergency. But HR can prove a constant, high-pressure work environment that has scores of professionals jettisoning the corporate world in favor of starting their own HR firms designed to service small and mid-sized businesses. Though the goal comes with challenges, it also promises vast potential.

According to multiple surveys and studies, job cuts in HR are on the rise as larger corporations slow hiring and trim investments in once-hot areas like diversity and training. In tech alone, HR and recruiting roles account for 28 percent of all layoffs, according to training provider 365 Data Science. Postings for general HR jobs have dropped 23 percent over the past year, recruitment consulting firm, Textio, reports. Yet, as new and ever-changing employment-related legislation continues to intensify, the need for solid, up-to-the-minute HR expertise is, perhaps, more critical than ever, particularly for those smaller businesses. After all, they are the ones disproportionately at risk if hit with hefty non-compliance fines.

Rather than risk it with in-house staff who may lack the necessary informational resources, employers increasingly are turning to outsourcing much of their HR operations. And for savvy HR professionals looking to strike out on their own, or existing HCM and payroll service bureaus, the trend is a promising one for a multitude of reasons including:

Lack of Autonomy in Corporate HR Jobs

One of the primary reasons why HR professionals are leaving corporate HR jobs is the lack of autonomy. In most cases, HR professionals in corporate jobs are limited to a specific role or function, such as recruitment, benefits administration or performance management. They often work within a larger bureaucratic system, with little room to make strategic decisions or influence organizational change.

In contrast, HR professionals who start their own firms have complete autonomy over the services they provide and the clients they work with. They have the flexibility to tailor their services to the specific needs of their clients and can quickly adapt to changes in the market. This freedom can be a significant draw for HR professionals who are seeking more control over their careers and the ability to make a more significant impact on their clients.

Desire for a More Meaningful Career

Another factor driving the trend of HR professionals leaving corporate HR jobs is the desire for a more meaningful career. Many HR professionals feel that their work in corporate HR jobs is often transactional, focusing on administrative tasks rather than people-centric work. They want to work more directly with clients to address issues such as employee engagement, retention and talent development. As independents, HR consultants can provide customized services that help clients build a more engaged, productive, and happy workforce. This work can be incredibly fulfilling for HR professionals, who can see the tangible impact of their work on their clients' businesses and the lives of their employees.

Greater Work-Life Balance

Working in a corporate HR job can be demanding, with long hours, high stress levels and a lack of flexibility. Of course, being an entrepreneur brings similar challenges, particularly in the beginning as one is establishing a brand and building an initial clientele. But it ultimately affords greater control over schedules and the opportunity to create a work-life balance that better suits an entrepreneur’s family responsibilities, lifestyle, priorities and goals. It also allows more choice in the type of clientele they choose, assuring them the right to seek out customers who share their values and respectfully decline those who aren’t the best fit.

Growing Demand for HR Outsourcing

Demand is growing for expert, outsourced HR services. Small and mid-sized businesses often lack the resources to have a full-time HR department to assure that the employer makes good on all promises to employees, while remaining in full compliance with legal requirements and operating efficiently. While this may have necessitated a sizeable HR staff, multiple vendors and/or a high-dollar consultancy in the past, HR technology has evolved in a way that largely levels the playing field, affording even small companies access to the same expertise that large firms enjoy. Configurable, automated HR technology platforms, and HR and payroll service partners available from IRIS allow HR, HCM and payroll firms to offer employer clients a high level of service, no matter how many employees they have or where they are located.

Benefits for Clients

Launching an HR firm or adding HR services to your existing payroll / HCM firm promises an array of highly marketable benefits to prospective clients. Topping those benefits is access to HR expertise without the untenable cost of maintaining a full-time HR department, which necessitates salaries, benefits and raises. This access is particularly important for clients whose needs may fluctuate, including those who are undergoing growth, downsizing or who experience seasonal surges and dips in personnel. Help staying on top of legal compliance issues will always be a critical selling point. And assistance with developing strategic HR plans that align with their overall business goals including talent acquisition, retention, engagement and development undoubtedly will set your HR firm apart from competitors.