6 Things to Keep in Mind When Building an HR Department

As a startup or small business you probably have a game plan for product development, market penetration, and marketing initiatives, but what’s your game plan for Human Relations? Here’s the ground-up HR game plan for startups and small businesses.
6 Things to Keep in Mind When Building an HR Department
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The best time to make HR a significant part of your business is before you need it. Rather than reacting to surprise HR emergencies, you should proactively create systems to avoid them and achieve long-term business success. 

As a small business or startup, these are the first HR responsibilities your small business or startup needs to tackle. 

  • Get legally compliant
  • Develop a strategy
  • Become scalable
  • Build strong processes
  • Acquire good tools
  • Create a success-driving culture

Get Legally Compliant

Day one as a ground-up HR team needs to be about legal compliance. Legal compliance is a primary function of HR and it should be treated that way. 

If you’re a brand new company, you’re probably excited about the billions of dollars you’ll be rolling in down the road. Just keep in mind that if you get sued or fined out of business, that’s never going to happen. 

"Day one as a ground-up HR team needs to be about legal compliance."

If FLSA, FMLA, and EEOC aren’t familiar terms yet, you’ve got some learning to do. 

A company’s relationship with its people has its fair share of legal requirements that you need to know and adhere to. It’s your job to make sure that the way your company hires, fires, and pays its employees is all legit.

Keep good records of the employment taxes that you’re responsible for, and have all of the employment documents on file and ready to go.

One quick note. As of January 1, 2020, the IRS has implemented a new W-4 form that to use for employee tax withholdings. Check out the IRS FAQ page or this SHRM article for more info.

So basically, HR has a lot more responsibility than just to keep the workforce happy. They also have to keep the company within the bounds of the law as an employer.

Develop a Strategy

HR is sometimes looked at as a maintenance-only business function. HR is seen as though their only job is to keep the company out of trouble and doesn’t contribute to overall progress.

HR should be a strategic business function with goals, plans, metrics, and ROI.

"HR should be a strategic business function with goals, plans, metrics, and ROI."

HR doesn’t win sales, and it doesn’t develop products, their people do. HR is the organization that helps those people be as productive as possible. That responsibility takes thought, foresight, and strategy. 

 

Your company can’t afford for you to take your job one day at a time. You have to help achieve company goals and prepare your company for when it’s five times its current size.

Become Scalable

The discussion on strategy brings us to scalability. If you have that strategic mindset, you need the growth mindset to go along with it. 

Companies always experience growing pains as they scale, especially if they’re growing very quickly. These growing pains affect all aspects of the company, but HR often takes the brunt of it. 

Your HR practices need to be able to grow with your workforce, and the first thing to audit for scalability is the tools you use.

If you want an HR tool that’ll give you headaches and waste time, look no further than the infamous spreadsheet.

Spreadsheets are the worst HR software for a lot of reasons, and scalability is a big one. As your business grows, your tools should be able to grow with it. Spreadsheets can’t do that.

Think about it this way. Spreadsheets are great at organizing data in two dimensions. The problem is that people and organizations are more than two-dimensional.

"As your business grows, your tools should be able to grow with it."

If you use spreadsheets, eventually you’ll have too many of them. This will lead to a disorganized system and conflicting information. 

An HR process is scalable if it’s no more confusing with 100 employees than it is with 10. Spreadsheets don’t allow for that, but there are tools that do as we’ll mention in a bit.

Build Strong Processes

Along the lines of process scalability is process strength. The best way to save time in any job where you repeat similar tasks is to have an effective process. 

HR has plenty of these tasks. HR professionals are constantly posting job openings, interviewing candidates, hiring employees, onboarding new hires, terminating employment, and approving time-off requests.

Those tasked with HR duties waste tons of time inefficiently completing repetitive tasks because they don’t have good processes in place.

A process is like a machine. If it’s efficient, it basically allows you to just worry about the input and the machine takes care of the rest. Not only does this save you time, but it also reduces errors.

Acquire Good Tools

A good HR tool takes everything we’ve mentioned and makes it faster and easier.

For example, EddyHR helps you stay compliant by giving you interview guides and helping you manage employee onboarding and its legalities.

It helps you work more strategically by providing basic employee reports to evaluate and use at your discretion.

"A good HR tool takes everything we’ve mentioned and makes it faster and easier."

Managing a workforce of 150 using EddyHR is very similar to managing a workforce of 15 using EddyHR making it very scalable. 

EddyHR has hiring, onboarding, time off, and time tracking systems that put your process machines on rocket fuel.

If you’re a new HR department, don’t go into this fight unarmed. Get a tool like EddyHR to empower you to manage and help your people efficiently.

Create a Success-Driving Culture

There are multiple similarities among highly successful companies, but one similarity is particularly interesting to HR. 

Successful companies all have strong and unique cultures and values. 

"Successful companies all have strong and unique cultures and values."

Examples:

Look at Cotopaxi, look at Stance, look at Google, Amazon, Apple, Nike, Qualtrics, Nordstrom… All of these companies are very different, but they all have a strong personality. 

Cotopaxi’s slogan is “Gear for Good.” Their mission is to help people experience the world while protecting the beauty of it.

Nike’s mission statement is to “bring inspiration and innovation to every athlete in the world” with the clarifying statement, “If you have a body, you are an athlete.”

Nordstrom has worked for more than 100 years to deliver the best possible shopping experience.

Why:

These statements solidify what the company exists to do. 

Companies with strong values don’t have to micromanage their employees because the values guide decision making on every level. It’s easier for them to hire people that fit because the company is sought after by those who resonate with the culture.

Culture is definitely something that helps you find employees that will align with your values and make unaided decisions, but it’s also more than that.

There are hundreds or thousands of sock manufacturers. So why is Stance such a big deal? Because socks were one of the most boring things in the world until Stance made it known that they “exist to celebrate personality.” 

Authentic culture and values set you apart from the competitors in your industry, and it’s something you should help solidify among your people from the get-go. Expect to refine your culture over time, but get started on it now so it’s spot on when the world is ready for you.

Conclusion

Your success plays a critical role in your company’s long-term success, so you have to get things started right. Not putting in the work to get things set up well will lead to a lot more work down the road when you have to fix what’s broken if it can be done at all.

Use the first months as a company’s new HR department to get legal, develop a strategy, build strong scalable processes, acquire good tools, and create a success-driving culture.

If you can nail this, you’ll be set up for long-term success in helping your people be do good work, and in aiding in achieving overall business goals.

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