Forming a new start-up and taking it from inception to a fully formed company is a big undertaking. A key part of any start-up’s success is knowing that it’s just as important to work on your business as it is to work in your business.
The fun parts of building a start-up—creating a new product or service, doing market research, and perfecting a prototype—can’t happen without the most foundational, albeit sometimes more dry, parts of the business, like HR.
A functioning HR strategy is essential for both the company and the employees in both the present and the future. It establishes important procedures, policies, and perspectives and gives the business a framework with which to grow.
If you’re in the development stages of a new start-up, here’s what you need to know about creating your HR department from the ground up and a checklist that can guide the way.
Every company needs HR, but what each company needs from their HR department may change depending on how developed and established the company is, the kind of business it is, how many employees work there, etc.
For a start-up, HR should provide the basic foundational and organizational management needed to scale both people-wise and market-wise. This includes establishing official processes and documentation for the company, molding a company culture, managing employee success and satisfaction, performance evaluation, and mitigating risk.
HR in a start-up should hit the ground running from the first day on, as a lot of foundational work needs to happen to set the business up for success. While each of these roles and tasks may look a bit different from start-up to start-up, these are the following responsibilities that a human resources department should take on in a new start-up:
As you start to bring on more employees, your dedicated HR department or HR manager should be focused on managing every aspect of these people. Starting with the perspective of a “people manager” can be helpful as you establish roles and put policies in place.
HR should begin to develop a hiring plan for bringing on new employees—what roles are needed, how they’ll recruit, etc.—and a repeatable hiring process that they can follow with each new potential candidate to create uniformity.
Piggybacking off the hiring process, HR teams should also develop a repeatable onboarding process for new employees, including things like orientation, documentation, and progress tracking.
A critical, more technical aspect of human resource management for a start-up should be classifying personnel into the proper categories, including employees, contractors, full-time, part-time, exempt, and non-exempt.
While benefits and perks may not be something every start-up offers, it can be an excellent way to attract top talent. Finding a payroll provider can also minimize internal workload and ensure continuity as things begin to scale and change with the business.
Creating company documentation through an employee handbook that discusses policies, benefits, mission statements, values, etc., is of great value to a start-up.
Go ahead and check out our employee handbook template as well as this article!
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HR policies serve multiple purposes within an early-stage business, from making the job better for employees to helping the company avoid risk. While most people immediately think of HR when it comes to hiring and firing, the department serves a much broader organizational purpose.
HR is essential because it creates plans, company policies, systems, and processes to handle immediate business needs while mitigating long-term risk within the work environment, reducing retention, and improving employee engagement.
Immediate needs often include hiring new employees, payroll and management, and developing company culture around values. As businesses grow and scale, they naturally assume more risk, but HR can help minimize this risk by creating watertight employment contracts and keeping a close eye on all things related to employees or the organizational structure.
HR is also important because it improves the overall employee experience. This comes from a repeatable hiring and onboarding process, established company culture and fleshed-out handbook, and simply the role of the soundboard to hear employee complaints, questions, and recommendations.
On a more zoomed-in level, good HR makes employees more productive because they feel valued and cared for. This, in turn, boosts the company’s reputation and helps them continue to attract high-level talent.
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We’ve discussed the importance of HR’s roles in a start-up, but within these roles are seven major activities that HR is responsible for in the early days of business development.
If you’re getting your business off of the ground, here’s an HR checklist of seven items to be sure to incorporate into the department to ensure everything is off to a good start.
As a small business startup, you won’t need a fully fleshed-out organizational structure in place before you start hiring anyone or are truly open for business. Still, a basic company document outlining the business structure will help you as you eventually scale and have to think about things like outsourcing, employee planning, or even succession plans down the line.
Don’t fall into the very easy trap of relying on a disorganized HR system. With strategic moves at the beginning, you can set yourself up for success. This foundational structure document will designate a clear path you’ll be able to follow as you grow.
Before you bring on employees, you need to know how you’re going to do just that. Everything from recruiting—whether online through LinkedIn, at college job fairs, or simply by posting new openings on job boards—to interviewing, hiring decision-making, and onboarding is critical before even your first hire.
Be sure to have an offer letter template ready, relevant agreements and clauses such as non-compete and confidentiality, and equity paperwork. You’ll also need to gather essential employee data such as social security numbers and addresses for your own HR purposes.
Traditional HR is most concerned with maintaining compliance with all health, safety, and employer regulations. You’re responsible for following local and federal labor laws, tax codes, and health/safety requirements and keeping up-to-date documentation for all of it.
One area of compliance is health/safety requirements, such as an emergency action plan, safe working surfaces, first aid supplies, and sufficient exit routes.
Another key area is maintaining proper employment policies, such as workplace harassment policies and equal employment opportunity policies.
Attracting talent and incentivizing them to stay is key in a new business if you want the best of the best to join your business. The best way to do that is typically with competitive employee benefits and compensation packages.
New hires will want to know how their salary structure looks like (base and commission, salary, hourly, etc.) and will expect competitive payment rates within the industry. They’ll also want an attractive policy around holidays, vacation, and sick days, as well as health and retirement benefits for them and their families.
In addition to all of this, you should also have an HR plan in place to process payroll regularly, so new hires know when and how they can expect their payments.
Outside of paperwork and the more traditional, technical aspects of HR, the department’s most important role is managing the relationship with employees and ensuring employee satisfaction.
When an employee has a grievance (and yes, this day will come), you should have a management system or policy in place that will help you make the right decisions. A policy that outlines acceptable business conduct is a good basic guide. Then, you’ll need to formalize a system for gathering this feedback and documenting it, as well as addressing issues as they arise.
This makes it much easier to respond appropriately if issues arise, but it also protects your company from liability.
Training and development aren’t as central in the beginning stages of a startup as it is later on, and performance issues may be few and far between with such a small staff. But starting to strategize about these HR components early on will make it easier as time goes on and your business begins to take shape.
By the time your first business anniversary rolls around, you should be ready to go with performance review metrics that you’ll use to measure each employee’s time with the company. Ideally, you should also have the means to increase their pay if their performance review merits it.
As far as training and development goes, start thinking about how you could help your employees grow their skills and progress in the company. Trade shows, conferences, and online training are all excellent ideas to consider for later training and development.
Managing all of these aspects of an HR department adds up quickly. While you can certainly try to manage it all independently, using a Human Resources Information System (HRIS), like we at flair, is the easiest way to streamline all of your tasks and keep everything in one place.
Our HR software will relieve you of tedious tasks and help retrieve precious time in order to focus on more important matters at hand.
With this one system, you can automate basic admin tasks, recruit and onboard new employees, track time and pay them, and manage company-wide benefits with ease. Today, you can find tons of cloud-based options that offer more flexible access and security that moves where you move, great for remote start-ups.
Before selecting your HRIS, first identify which needs you would like your system to fulfill, what systems you already have in place, and what data you need to keep track of. Then, keep these considerations in mind as you search.
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As you can see, a lot more goes into HR than hiring and firing. It’s these seven tasks (and then some). While it’s easy to get intimidated when it’s all laid out before you, take it step-by-step and start with the most immediate and essential needs first.
Use these key tips as you develop your HR department to ensure you’re doing it right, leading to a productive and satisfied workforce and company:
The truth is that a business is nothing without its workers. If workers aren’t happy and don’t feel valued, they won’t be productive or motivated to do their best. Creating a supportive and healthy company culture is the lifeblood of a successful start-up.
If you don’t know what you stand for, how can you expect employees to follow suit? Know your company values and ethics, and outline them clearly.
You don’t need to start by hiring assistants. Start with your C-suite, then bring on an HR manager, followed by directors and VPs, managers, associates, and then assistants. It’s simpler this way.
Everyone wants to feel like they have a future with a company, so make growth and progress central to your company culture.
Don’t overcomplicate things with unnecessary policies you don’t really need where you’re currently at. Keep it simple, and assess, add, and edit as needed.
It’s easy to get bogged down by specifics and processes that HR departments utilize to manage the company and employees, forgetting about the people that make up the very business.
HR is what keeps a startup on track on all the technical, employment, and compliance aspects as it grows and develops into a thriving business.
Our software manages the majority of the initial administrative workload and frees up the executives and founding members to spend more time working in the business rather than on it.
Don’t let your business get ahead of you. Make developing an HR department one of the first things you do as your startup starts to gain traction and let it pave your way to success.
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