How to Become a HR Consultant

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Throughout my first year in business, one thing was clearer than ever — more and more Heads of People are either interested in, or turning to, a career as a consultant.

2024 being my first year of taking that same plunge, it was no surprise that it was a topic of supreme interest from an audience I engage with frequently. Given this, I wanted to use my down time after completing that first year to explore my journey, and explain as much as possible about how my first year went, to help shed light on this process for others considering the same move.

I’m going to break this down into a few key sections, exploring as far back as the months leading up to my move from full time in-house to full time consulting, how I ramped up, found my clients, and even how much I made compared to my last in-house role.

So, let’s start from the start, (what feels like) a long time ago in a (professional) galaxy far, far away… 🌌

Preparing to Become a Consultant

Most advice you would read about shifting to full time consulting suggests that you ease into it — that is not my story.

Let me start by saying that I’ve always had entrepreneurial ambitions, but never really felt like I knew what that should be in pursuit of. In the absence of coding skills, I assumed that I would pursue something that was in my field, as opposed to the oft romanticised ‘tech founder arc’. 

Truth be told, I’d actually “started” a business for all of 2-seconds much earlier in my career, even registering a name, website and having business cards printed. But I never pursued it with any real seriousness, and my first, very rudimentary lesson, is that no one will use your services if you don’t tell them about it.

Many in-house People Operations roles later, we fast forward to October 2023, where I was the Senior Director of People Experience at Oyster HR. After two-years tenure, we were in the middle of executing our second layoff in less than a year (after a preceding 12 months of growing like crazy) 😮‍💨— such were the times.

The broader People team was facing significant reconfiguration and I was faced with the position of choosing whether to stay in the same, albeit smaller role (facing very little prospect of growth) — or — pull the pin, take the severance and go all in on being a consultant — whatever that was.

How did I make the decision? Firstly, I’ve always been a big fan of ‘career discomfort’. My logic has long been that if I’m comfortable, I’m probably not growing. And I like to grow. Staying in the same role with little professional development, a smaller team and remit, and more of a ‘maintenance vibe’ did not excite me. On the contrary, having zero security of income, defining what a consultant did, and working it out on the fly, quite honestly, scared the shit out of me. 

So that was the path I chose.

That all sounds very sexy, but let me back up a little bit by covering something else that I think is a really critical requirement to making a decision like this. The financial circumstances. It’s one thing to preach cool sounding platitudes for solopreneurship, but in reality, I never would have made this decision if I didn’t think I could survive a year of precisely zero income.

My financial circumstances going into this decision were as follows. I had approximately three months severance from my employer (nice, but also it was October 2023, and not much traditionally happens during that time of year), so my severance really just got me to the other side of Christmas. My partner and I had always been diligent savers, and we’d also always had an emergency fund that covered something like 6 months worth of our combined income. That plus some other savings meant that I could realistically take this gamble knowing full well that if I tightened my belt and still earned zero, I could just go get a job in 12 months time.

This was an investment, and I treated it as such.

Any investment is inherently risky. It could go to zero and that money just bought you a year of exploration and experimentation. Or, it could pay back in multiples of what you invested. 

In the rest of this piece, we’ll explore how my investment was able to pay back for me.

Choosing a Niche

For those unfamiliar with what I do, I help startups with their compensation strategies. A question I’m commonly asked is how I decided to do that, when my background has been generalist People roles.

Firstly, I’ve almost always ‘run’ the compensation practices at the companies I’ve worked for. I’ve also had the chance to partner with more specialised compensation functions in the larger companies I’ve worked. So I’d been exposed to, worked with or been responsible for everything to do with compensation throughout my career. 

I felt I had the skills, what made me think people would pay for it?

What really crystallised compensation as a place I wanted to focus, was my last role. During my tenure, my team built a world class compensation function that was not only solving a truly challenging problem (how to compensate 650 people across 70 countries 🤯) but did so in incredibly progressive and people-centric ways. Very different to the more traditional experience I’d had to date, and one that I felt was becoming increasingly more relevant.

That experience gave me a great platform to speak about what we’d done to countless other startups, and what was clear from that experience was that many startup Heads of People were grappling with how to do compensation for their people in one country, let alone the complexity of 70. 

So I knew I could do it, and without even ‘selling’, my experience was being sought out —  that indicated to me that it was a saleable skill.

I also felt (and still feel) that compensation is an area undergoing significant change.

• Pay transparency is big and only getting bigger.

• Compensation technology is evolving rapidly (both in comp management as well as comp insights, such as live benchmarking).

• Younger generations entering the workforce want and expect open discourse on pay from their employer.

• The list goes on…

People teams are facing all this, while juggling a thousand other priorities, all while facing defunding.

Lastly, I just enjoyed compensation. It’s an area that is deeply analytical and commercial, often being the largest line item on the balance sheet. But it’s also deeply emotive, and touches every individual in the company in entirely different ways.

It feels a little cliched, but when I was thinking about why I chose this niche, the concept of ‘Ikigai’ very much seemed to line up with my experience.

Based on all these things, I decided to pursue this service area as a niche within the ‘People’ profession.

How did I know that people would pay me for the work I wanted to do? I didn’t. But I knew people struggled with comp, and so I market tested by a) talking often about the thing I do, and b) seeing whether people would pay me for it.

I used the period between my time at Oyster ending and Christmas (~2 months), to speak to as many people as possible about what I wanted to do. 

• Did it make sense? 

• Was it compelling? 

• Were my services actually needed? 

• Would you pay me for it? 

Everything. This was a point in time where having a network really paid dividends. Even if you’re not considering a move to consulting now, I recommend building your network. You never know when you might need it.

This crowd sourced approach also helped me discover and read more about product marketing, which in turn helped me niche down from just ✨compensation✨to something far more specific (startup compensation, comprising 👉comp philosophy, job levels, salary bands). I’ll go into this in more detail in a section about pricing and packaging. Speaking with lots of people is helpful for a lot of reasons, but these insights also helped me improve my website, they helped me improve my messaging, and, they helped me improve my pricing and packaging (which I’ll talk more about later).

How to Market Yourself to People Professionals

When I set out to market myself to my ideal client, I already knew two fundamental truths from my time essentially as that person.

1. Heads of People are flooded with sales emails and sold to — all the damn time. So they’re closed off to cold or spammy marketing tactics.

2. When they’re ready to buy, they buy from people/brands they know and trust. So you need to put in the effort to get in front of them and be seen as giving value. 

These were the guiding principles I set out in how I marketed myself.

Typically, I sell to Heads of People. The single most important channel to reach Heads of People and build trust is LinkedIn, so I knew I had to be active there.

When I set out to ‘do LinkedIn’, I knew I had to be posting at least daily. Given my LinkedIn efforts to date were amateur at best, I needed to develop a system that would turn my LinkedIn game from scrolling, to selling. To do this I opted to take a digital course with probably the most recognisable LinkedIn influencer, Justin Welsh. I completed the LinkedIn OS course and it gave me all the fundamentals I needed to better understand how to use LinkedIn for the purpose I had in mind. I helped challenge a lot of assumptions I had about building awareness and trust with my target audience, and is easily one of the key reasons for my success.

While I started building a presence on LinkedIn, I focused on a second key area: Brand.

I knew having a brand was important. Lots of HR people ‘do consulting’, but many of them seem amateur or use it as an easy segue between jobs. I didn’t want to be simply ‘Matt McFarlane consulting’ I had to set myself apart and be recognisable. Plus, my partner is a brand designer, and the power of a brand had been instilled in me for some time.

I worked with my partner to build everything from my brand identity to helping with messaging, style guide and templates. To say it was helpful is an understatement, for two key reasons. First, is that it’s a massive helper when you’re starting out and trying to create professional looking documents like proposals, and it gives you a paint by numbers approach to making something that doesn’t look like the amateur-hour stuff that comes from Canva or Microsoft Office templates.

Second, is that it was recognisable. It stood out, and continues to be something I receive excellent feedback on. This process helped give me clarity around how to bring my brand to bear, and more importantly, how to apply it consistently across all the mediums, from proposals, to website, to LinkedIn content, even invoices. It just projects a sense of maturity and capability I otherwise wouldn’t have had.

How I Packaged and Priced my Services

“You’re worth what people are prepared to pay you” is a fundamental lesson I learned this year. But that amount can be wildly different things to different people and clients.

In my experience, the People field is one that notoriously undervalues itself long before it puts a figure in front of a client. We often battle ourselves internally on the value we bring, only to have a client try to knock it down further. I felt this a lot this year, questioning myself many times on whether an invoice I just sent, would be paid or challenged. Guess what: not one of them was ever challenged or even queried.

People professionals also ‘do everything’. One thing I knew early on is I didn’t want to be a swiss army knife, I wanted to create highly targeted, straight forward, repeatable and effective solutions that I could communicate clearly and that spoke to a distinct challenge that my ideal customer was trying to solve.

Let’s talk about pricing first, because I needed to grapple with this before the packaging thing was solved.

Early on, I was conscious about picking a number to charge clients, testing it and then being really defensive of that figure to ensure I wasn’t devaluing myself. I wanted to position myself as premium (because I think what I do is in short supply), but not so expensive that a company could just go to a more reputable consultancy like the big-four.

Pricing

I focused firstly on picking an hourly rate.

Like any consultant, here’s how I initially set out to price my work:

1. My base salary in my last role was ~230,000 AUD.

2. I didn’t want to earn less than that, so I chose $250,000 as my target salary.

3. I added costs like Superannuation (Australian pension), software, hardware, accounting support, subscriptions etc. I expected to incur over the year.

4. I added a profit margin for my business.

5. I determined how many hours I had in a year (2080) and deducted leave (sick/PTO) as well as un-billable time (based on a 70% utilisation rate, which is a common consulting ratio where 30% of my time is on admin/selling). 

6. All of this left me with 1136 hours in a year by which I had to earn that salary + cost + profit.

7. Dividing my revenue goal by the hours in a year gave me my hourly rate, which also formed the basis for determining my fixed-project pricing.

Landing on a figure this way is nice, but two questions become apparent to me. 1) Will people pay it? 2) Is it comparable to others offering similar services?

In attempting to answer the latter question, one thing I noticed early on in my pricing journey was the clear absence of benchmarking data in the consulting space. An early side-project I undertook was building Libre, a consultant benchmarking resource, to help myself and others see what might be the right price to charge. It’s still active and free to use for those interested, and gave me good insights into helping me position my pricing, as well as being a fun little side project.

Unfortunately there is no way to answer the first question of whether people will pay it, without going through the process of putting a figure in front of clients and seeing what they say. In 2024 I delivered about 18 proposals, and lost many of them, primarily due to price. This was something I got comfortable with accepting. In fact, being prepared to lose work on the basis of price is something that is deeply uncomfortable (I still want to lower my price to win/give people what they want) but I realise that in doing so I end up delivering great quality work that isn’t valued by me or the client. I had to become comfortable losing work, and as of the end of 2024, lost $330,000+ worth of work primarily on the basis of price. While it’s uncomfortable being rejected, I deliberately chose to be a premium service, part of that is knowing not everyone is prepared to outlay the price it costs to work with me, for the value I create in return.

Service Models

Most consultants I’ve spoken with tend to work on an hourly retainer. I had the opportunity this year to test a bunch of service models and see how they worked for me. I tried: hourly, fixed price/scope, and retained — with fixed price/scope ultimately being my favourite.

Hourly is what it sounds like. I work on a task, however many hours it takes to deliver it is what I charge. I primarily only ended up using this model as an overflow to fixed scope projects facing scope creep, or where there were small bits of follow on work. It was also a way for me to test a coaching/advisory type model too, which is something I’m going to explore more of in 2025. I ultimately shied away from using this model too often as, in my opinion, it punishes me for working efficiently (I get paid less), or punishes the client if I work slowly (they get charged more). Good for little spots of work, but not much else.

Retained is where I charge a fixed price for up to a set amount of hours or outcomes, on an ongoing basis. If the client doesn’t use all the time, I still get paid, and if they use extra, it’s an hourly rate on top. This kind of work can be great when the client knows they need ‘compensation support’ but doesn’t always know what that looks like. It guarantees them a capability up to a certain limit, in a timeframe they need it in. This model can be good when the work is hard to define and ongoing in nature, plus it provides consistent income which can be nice for those who don’t want to have to keep guessing where their pay will come from month to month. For the few retained engagements I had, they often felt a little too much like I was an employee, as well as being a bit reactive in nature, and that wasn’t a relationship I wanted.

Fixed price/scope was really what I found myself enjoying the most, but it’s not the easiest model to work with for a few reasons. To work effectively, you have to know precisely what you’re giving to your client, and what the end outcomes will be. For example:

• What is the main deliverable and what are all the steps along the way that are required to get us there?

• Can you determine the approximate amount of hours you think it’s going to take you to deliver it, so that you’re sure you’re not underpaying yourself? 

  • And any time you can deliver that work in less hours, means more profit for you. 

• Can you clearly identify when something is out of scope, so you can let the client know? 

Out of scope was easily the most challenging piece. Say for example you’re proposing a set of salary bands and you’ve delivered some analysis on the impact of it, if the client is looking for something more advanced and more nuanced, that is an out of scope addition and charged at an hourly rate. This was uncomfortable to get used to, especially when I’ve come from being in house, where I’ve traditionally just said yes in order to achieve an outcome, without always having to consider the cost of me doing that extra work.

But ultimately, this was a space I enjoyed myself the most, and often meant I could work with the client towards clearly defined outcomes, and in a manner I was confident and familiar. The image below shows you what my primary services covered for the fixed scope offering.

How I Won Clients and How Much Money I Made

Part of being someone that is known and trusted as a leader in the niche consulting space I chose, was focusing on two key areas when it came to building awareness: LinkedIn and my network. I already spoke about LinkedIn, but a second space I spent a lot of time and attention was my network — in the form of making new connections and being in front of people as much as possible.

An area of focus for me in building awareness, was giving (small amounts of) value away for free. My focus was doing that with insightful LinkedIn posts, I also started a newsletter and podcast, and I developed a set of free resources that I could use as lead magnets. Here’s what that looks like in numbers:

FNDN Marketing:

• 330+ LinkedIn posts

• 6x Podcasts recorded

• 6x Newsletters published

• 6x Digital resources launched (4x free, 2x paid)

  • 1,081 - the number of times they were downloaded

I also invested a lot of time getting in front of my network through other avenues — here’s what that looked like in 2024.

Partner Marketing:

• 3x Podcasts

• 7x Webinars

• 13x In-Person events

• 2x Articles

All of this was designed to do two key things. 

1. Raise awareness across the largest surface area of my ideal client.

2. Build deep trust with as many of those people as possible.

So, How Did I Get My First Customer?

I was fortunate to start two customers around a similar time. One came to me as a referral from an incredible friend in my network, the other came to me via a relationship I had built through my LinkedIn content. To see where my work ultimately ended up coming from, I tracked everything in my CRM, and here’s where it landed.

Interestingly, while LinkedIn (social media) was by and far the biggest lead generator, the majority of my actual income was derived from work that initiated out of my network (referral).

How Much Money Did I Make in My First Year?

If you follow me on LinkedIn, you’ll know I’m a big advocate of pay transparency, so I decided to go all out in this article and detail the kind of money I made in my first year of business. Despite still being something that is extremely uncomfortable for me to do due to years of dogmatic taboo.

To put the following numbers into context, I live in Australia, and when I finished my role at Oyster as the Senior Director of People Experience, I was earning a base salary of approximately $230,000 (pre-tax). I share this because it’s helpful to contrast against what I earned in this role, and also because people in that role are too often underpaid, so hopefully if you’re a Head of People in Australia you know what to aim for.

Anyway, no more beating around the bush. In 2024, I earned $432,336 in revenue.

Never in my wildest dreams did I think that would be something I would achieve, let alone in my first year of business. I recognise I’ve done a lot, and I absolutely think I earned this, but it still wasn’t something I expected to achieve.

Now let’s look at this month by month.

As you can see, and wholly unsurprisingly, my first couple of months earned very little, as I kicked things off and started to really bang the drum about FNDN and the services I was delivering. But thanks to the strategy I took, things very quickly escalated, with a massive July-October before a nice little wind down into the December break.

But this is just profit and expenses, we also pay plenty of tax here in Australia, so let me break that down too.

You already know what my last in-house role earned, but after tax that figure was approximately $140,000 (yep, $92,000 in tax 😭). As a sole trader though, I had expenses (~$80k) and paid Goods and Services Tax (GST, a form of sales tax) and income tax on what remained. All up, this netted out to about $200,000 after all of these taxes and expenses etc. Meaning that I earned a solid $60,000 more from my first year consulting than I did in my highest ever paying in-house role.

If that’s not incentive enough for you to consider consulting, then I don’t know what is.

What a journey. I covered a lot here, and hopefully it’s incredibly helpful, but there are a million other things that don’t really fit under these key areas (without making this a 10,000 word essay), so here’s a rapid fire of some other tips I suggest if you’re thinking about becoming a consultant.

Tips:

The hardest things about being a consultant:

• The isolation, you have no team. I had a partner who had been through it before, but otherwise, I recommend having someone you can go through the journey with, such as a network of other founders/consultants.

• If you’re like me, you’ve probably come from a role where you lead a team of people. Guess what, you don’t have that anymore — everything rests on your shoulders. But then again, that is also a huge motivator to get stuff done.

• Knowing when to say no to work because I didn’t have capacity. I haven’t yet broken the mindset that more work will come, and everything thats in the pipeline always feels like it’s all there will ever be. This pressures you to say yes when maybe you shouldn’t.

The best things about being a consultant:

• My first invoice was like $2,000 but it felt like a million dollars. Way more impactful than a salary.

• The flexibility is unparalleled. You can do what you want when you want. Work where you want (usually). It’s great.

• I mentioned not having a team, and I missed that dearly during this journey, but being back ‘on the tools’ has also been so enjoyable. I’d really missed doing the actual work instead of leading a team that was primarily doing it.

• Accomplishing all of this for myself was so rewarding.

Get some inspiration around you.

• You will constantly need inspiration and motivation if you’re doing this alone. Find the things that jazz you up and build a routine where you’re constantly reminding yourself both why you’re doing it, and putting it into perspective for what you’re hoping to achieve.

• Some influencers I found really helpful in my first year to inspire and teach me about all the things I was building:

  • Hannah Larsson - her newsletters are great and very practical.

  • Justin Welsh - can be generic, but often motivating.

  • Noah Kagan - actually his YouTube was the most inspirational, talking to millionaires and billionaires is wildly motivational for me.

  • Others in your network — just find people who can inspire you and motivate you to keep grinding. Because that’s what it will feel like a lot of the time.

Find your community:

• Network prolifically, even if it’s with people doing what you do (but not solely them, unless you sell to them also).

• Some others that work:

  • Humaneer - mostly in-house People professionals.

  • Fractional People People - mostly Fractional People Consultants.

  • Werkling - mostly Australian consultants.

All in all, 2024 was one of the most transformative years of my career so far. I’m writing this during my summer break, relaxing and reflecting, and looking forward to the exciting things I have planned for 2025.

Of course, if you have questions about becoming a People consultant, sing out, I’m always happy to share what I’ve learned along the way.

Reach out to me at [email protected] or on LinkedIn.