Question: We've decided that our startup needs a dedicated Human Resources department/person. Any suggestions on how to easily build a good one?
Answer: Suggestions? Absolutely. Easily? Well, not really.
Your best bet would be to hire a human resources professional with experience creating HR departments from scratch for companies such as yours. Another good alternative would be to hire a consultant to get you started. If, however, you feel up to the challenge yourself, read, read, read and read some more. NOLO puts out some great printed resources and I personally refer to their The Employer's Legal Handbook on a regular basis. IDG's Human Resources Kit for Dummies is also a great resource for all skill levels despite its somewhat amateur-sounding name.
Basically, there are a few key areas that an HR department should concern itself with at a startup. Here are a few suggestions for each.
- Recruiting. Devise your recruiting strategy. Are you going outsource your recruiting needs to contingency and retained search professionals, or are you going to attempt to keep your recruiting in-house? If you choose the latter, do you have the in-house resources needed to adequately secure the right people in today's highly-competitive labor market? You have many choices here and it's likely that you'll end up using a combination of them.
- Compensation/Benefits. What are you willing to offer to your employees? As a startup you are likely strapped for cash. Therefore you'll most likely need to provide a benefits-heavy package consisting of stock options, vacation, health benefits, and intangibles such as a relaxed work environment. (See Is Good Communication More Important to Employees Than Better Benefits? for more information.) Benchmark and see what the competition is doing. Although the labor market is tight and you'll probably need to pay more than you want to, you don't want to be in a situation where you are hurting your company's bottom line by over-compensating, under-compensating, or not attracting the right employees.
- Retention. Okay, you've got your employees, but now you have to keep them. What makes them happy? Environment? Challenge? Advancement? You better keep on top of this one from the get-go.
- Performance, Training & Development. Obviously, you want to maximize your human capital investment. People like feedback, so do performance reviews often. This is a win-win situation for both the employer and the employee. Of course, you'll need to either design a program, hire a consultant to design one, or buy one off the shelf to do this. Look into training programs for your employees. Sometimes spending a few bucks on training exponentially increases the value from the newly-trained employee, and it makes the employee happy too since he/she has now acquired a new skill.
- Administration. Great ideas are useless unless you can implement them in a practical manner. While this means that systems and policies/procedures must be created, it doesn't necessarily translate into big bureaucracy. Go for the basics first: payroll systems, employee files, attendance tracking, appropriate forms, and published employee policies. Once you have these building blocks in place, you can move onto more complex issues. So long as you are only creating procedures that have real meaning, the bureaucracy should be limited to the essentials, which is something that both employer and employee can appreciate.
- Legal Issues. Find yourself a good lawyer or employment law reference. Every aspect of Human Resources from hiring/firing to sexual harassment to promotion to payroll has potential legal ramifications these days. At the bare minimum you'll need to conform to federal, state, and local laws regarding hiring/firing, compensation, and workplace practices. Furthermore, you'll likely want to pursue proactive measures such as creating an employee handbook, sexual harassment policies, and interviewing guidelines. One method of tapping into such a potentially expensive but invaluable resource is to purchase business practices insurance. In order to reduce their potential for claims exposure, many insurance carriers include a free-to-the-employer employment practices legal advice service. In any case, preemptive legal advice is likely cheaper than the actual costs of litigation later on - not to mention the costs incurred by lost employee morale and damage to your company's reputation.
