How to Set Up a HR Department for a Small Business

Setting up a human resources (HR) department is one of the biggest obstacles in the road for a new business. Since you cannot do everything yourself 24 hours a day, it is inevitable that you will have to hire a few employees. During this period of exponential growth, you’ll need to protect your company legally and think about employee retention. To continue growing, every small business needs an HR department.

In order to start an HR department, one must create a staffing plan, organize a filing system, and officially select company policies.¹ This complicated process entails many steps and varies depending on the size and type of your establishment. You will want to consider the following factors when starting an HR department from the ground up.

Create a Staffing Plan:

·        Seasoned experts start hiring for new companies by creating job profiles. How many people do you need to hire and what is their role within the company? You should also think about what skills it takes for each person to be successful in their position.

·         Using the job profiles you wrote, build a hierarchical structure for the business. You may want to draw a pyramid shaped graph with each title using illustration software. There are also automated tools available online.

·         Include the various departments of the company in your business staffing plan. Depending on the type and scale of the business, you need to think about HR, marketing, sales, operations, product development, and others.

Organize a Filing System:

·         Most startups these days begin with a spreadsheet in Excel or Google Docs. At first, this can be a functional way to keep track of new candidates and current staff. However, companies with many employees typically use an applicant tracking system (ATS); a type of computer application.  

·         Keep track of the market value for each staff member with a salary structure document. To keep employees happy, you should be contrasting your wages with comparable positions in the industry. Review your salary structure document every six months.

·         After a while using spreadsheets to process every aspect of business gets lengthy and time consuming. There are many Internet applications created to help organize travel and expense tracking, time and attendance, and performance evaluation.

Select Company Policies:

·         With employees comes compensation and benefits, meaning you need to figure out what your enterprise can afford to offer. Even if small companies cannot give traditional benefits, they can still get creative with what they have to provide for compensation.

·         In order to develop a timetable for your business, you need to know when employees get time off. The responsible manager is clear about the policy for vacations, holidays, and    sick leave. Don’t forget to keep track of when people take time off and why.

·         To increase productivity, find a way to measure performance. The traditional way to do this is with yearly evaluations. More frequent performance evaluation meetings provide an incoming flow of feedback that keeps everyone up to date. 

By nature, human employees are unpredictable and your business will undoubtedly experience turnover. Since people have a set of expectations for their employer that are legally enforceable in court, you want to make sure that you cover all the basics when you make your first hires.

This HR checklist for new businesses does not encompass all of the legal peculiarities that go into a proper human resources department. The responsibilities handled by HR are so important that most organizations have an entire staff to manage the process.

Most people depend on their jobs to live well. Therefore, a good business owner and manager must have a staffing plan, keep their system organized, and have established company policies.


Company Bio

Recruiterbox provides applicant tracking software (ATS) for small business and multinational corporations. Their patented software program systemizes human resources for some of the biggest companies in the world. To learn more about Recruiterbox and try a free demo, visit