Posted by Dave • March 1, 2021 (Last modified June 14, 2022) • 11 min read
Starting an HR department is a difficult task for anyone. When you’re a small, nimble organization, it’s fine to have informal human resources processes. If an employee needs a day off, they can just ask their manager. If a new project pops up, it can be assigned to any qualified team member.
However, that approach isn’t sustainable as your organization grows. You’ll need to create specific HR policies and procedures for the benefit of both your organization and workforce. But where do you start? A dedicated HR professional can certainly build the department from the ground up but perhaps you’re not ready to make that hire yet.
In that case, the task of creating the right HR processes falls on the leadership team. We know this can be a major undertaking so we’re here to help with our step-by-step checklist for starting an HR department. We’ll cover all the documents you need to create, policies you need to set, and the different software that can help you manage it all.
If you are starting an HR department, request a live demo today of Trakstar’s different platforms that will keep you streamlined from the very start.
Let’s kick things off by reviewing the different HR documents you’ll need. We’ll cover why each is important and what they should include.
The first step in building an HR department is to define responsibilities, tasks, and long-term goals for every employee. Job profiles outline exactly what employees are expected to focus on and achieve based on their skills and experience.
Ask managers to create job profiles for each position on their team. It can be beneficial to involve the employee in this exercise so they can share how they will contribute to broader team and organizational goals.
Be sure your job profiles are as clear as possible. Employees are motivated and engaged when they know where they should devote their time and energy during the workday.
Once job profiles are complete, use those documents to fill in your organizational chart or “org chart” for short. An org chart is a graphical representation of the reporting structure for your workforce. It shows the positions that make up each department and the manager each employee reports to.
Some smaller organizations and startups favor the “flat organizational structure” over a traditional hierarchical structure. Using a flat structure, every employee is on an equal level and reports directly to the CEO/business owner. A hierarchical structure is most common but don’t feel like you need to create multiple departments and levels if you have a small, collaborative team.
Create a spreadsheet or similar document that lists every employees’ salary and/or pay rate. The purpose of this HR document is to ensure employees are paid fairly based on their level within the organization and professional background.
While you should always strive for equal pay for employees who hold similar positions, exact compensation can be influenced by someone’s professional experience, skillset, job performance, and length of employment with your organization. If you have multiple locations or a remote workforce, you’ll also want to make sure an employee’s compensation accounts for the cost of living in their area.
We recommend researching market rates for the different positions on your staff (again, account for experience and location). Ensuring every employee is properly compensated maximizes productivity and engagement while reducing turnover.
If you’re serious about establishing HR functions in your organization, it’s likely because you have ambitions to grow. That means you should define a plan for the roles you want to add to your staff in the foreseeable future. Determine which positions are the highest priority so you can properly allocate resources and create a timeline for bringing on the right people at the right times.
A hiring strategy also consists of the steps your team will follow when it comes time to fill an open role. Include a job profile/description, who the hiring manager will be, the team members who will participate in interviews, and any skills assessments you’ll ask candidates to complete. Hiring can be time-consuming and complicated so the more planning you do, the better prepared you’ll be to find great candidates.
HR departments are increasingly offering unique benefits to supplement compensation. In addition to standard benefits like health insurance and retirement savings, modern employees are seeking work-from-home options, commuting reimbursements, and wellness benefits, to name a few examples.
It may not be feasible to offer all those benefits but it’s worth considering what extra perks you can provide and documenting how employees can take advantage of them. Define the maximum amount employees can spend on something like home office or wellness benefits and the process for getting reimbursed.
IMPORTANT: Some employee benefits are legally mandated. As an employer, you’re likely already aware of such requirements but review federal, state, and local employment laws to ensure you’re compliant.
Growing organizations need an HR policy and process for providing employees with time off. Make sure you establish what holidays will be observed and how employees can request sick days, vacation time, and paternity/medical leave.
There are different approaches for giving employees time off. Some organizations require employees to allocate PTO days while others simply allow them to take days off as needed, provided it’s reasonable. It’s also beneficial to have a system that automates time-off requests and tracks the number of days each employee has taken.
IMPORTANT: Similar to benefits, there are specific employment laws for time off. Paternity/medical leave is often required by The Family and Medical Leave Act (FMLA) and many states and localities have their own laws for sick days and vacation time.
Every employee must contribute to the collective success of the organization. Be sure to establish an HR process for evaluating performance and delivering feedback that helps individual employees improve.
Ask managers to set long-term goals for each direct report based on the details included in their job profile. Consider requiring monthly, bimonthly, or weekly check-ins where managers share feedback with employees based on the progress they’ve made toward their objectives.
Use the feedback shared in performance check-ins to build toward formal quarterly or annual performance reviews. Create forms that managers use to evaluate each employee on their primary objectives and the other competencies that demonstrate success in their role. Then have managers meet with direct reports to discuss the results and set new goals for the foreseeable future.
You should always strive to provide employees with all the tools and resources needed to do their jobs. However, there may be times when they spend their own money on behalf of the organization so you need an HR policy for expense reimbursement. Define instructions for creating expense reports and an approval process that results in employees getting reimbursed through payroll.
Consider what expenses employees are likely to incur and set limits for how much they can spend. For example, if your employees travel, create a policy that outlines limits for meals, transportation, and lodging. If your employees work from home, consider reimbursements for internet or office equipment.
Formalizing business operations also requires teaching employees how to effectively do their jobs. Some employees will already have the skills and knowledge needed for their role but will have to learn organizational-specific processes. In other cases, new employees will need end-to-end job training.
Organizational growth should also mean new career opportunities for your employees. Ask managers to meet with direct reports to discuss their professional aspirations. Have them create a plan that helps the employee acquire the skills and experience needed for career advancement. Professional development plans should be revisited during performance reviews to determine if the employee is making progress toward their personal goals.
As you bring new people onto your staff, you’ll want an HR process that helps them hit the ground running soon after joining. People have so many questions when starting a new job and a formal onboarding plan provides them all the information they need to prepare for success.
Create an onboarding checklist that outlines everything needed to welcome a new hire. Here are a few examples of what it should include:
Additionally, new employees should participate in a series of meetings with their manager to discuss expectations and have their questions answered (at the end of their first day, first week, first month, etc). The bulk of onboarding occurs during the new hire’s first week but can go on for a few months so they have ample opportunity to ask questions as they settle in.
Growing organizations need to define the type of culture they want their employees to experience. If you don’t, an atmosphere will form organically that could make work unpleasant for some employees.
However, culture is intangible and isn’t something that is complete after it’s put down on paper like the other documents outlined so far. Rather, culture requires buy-in from every employee and needs to be continuously monitored by HR and leadership.
Start by listing the specific values you want employees to experience and live by as they go about their jobs. Include descriptions and examples with each so they’re more than just buzzwords. Share them with your employees and welcome their feedback.
Once your culture is in place, use engagement surveys to find out how employees are feeling about their work experiences. Allow them to respond anonymously so you can truly measure if your organization has established its intended culture and values.
You’ll also need to create an employee handbook that outlines every policy your employees need to follow while doing their jobs. Some of the documents included in the previous sections will need to be included (e.g. benefits, time off, performance reviews, expense reimbursement, and organizational values).
Here are other policies to include that don’t require extensive consideration:
Provide every new hire with the employee handbook as part of the onboarding process. Ask them to familiarize themselves with its contents and sign a document confirming they’re aware of every policy.
Once you have your HR documents created and policies down on paper, you’ll need the right software to manage your workforce. You likely already have a payroll solution and Human Resources Information System (HRIS) for employee contact information. Let’s review the other software you’ll need to implement as your organization grows and the HR department falls into place.
A modern hiring solution streamlines a multi-stage recruiting process. As you execute your long-term hiring roadmap, you’ll be able to manage each step in the hiring process, attract applicants from different sources, and invite the right team members to participate in interviews.
Using a performance management system, you can set and track goals for every employee. Managers can monitor the progress they make and deliver regular feedback that helps them continuously improve and succeed.
Performance management software also helps you conduct effective organizational-wide performance reviews. You can personalize evaluation forms for teams and individual employees and track the status of each person’s evaluation.
With employee training software, you can provide your team access to a variety of educational content that teaches them the skills and knowledge needed to excel. You can assign required orientation and role-specific training that helps new employees learn the right processes and procedures.
You can also create optional training courses that help employees acquire new skills. Providing professional development content prepares employees for more responsibility and increases job satisfaction.
As you establish your culture, you can use employee engagement surveys to measure job satisfaction. Send pre-built monthly surveys that cover different topics and generate reports to analyze the results.
You can also create surveys as needed to ask your employees about topics relevant to your organization. Surveys are the best way to hear from every team member and identify trends related to engagement.
Trakstar is designed to help you support your new-formed HR department. Manage your hiring efforts, measure employee performance, create accessible training content, and send engagement surveys—all in one easy-to-use solution.