Would you believe us if we tell you setting up an HR department is the most crucial part of starting a new business? Well, you should! While knowing how to start an HR department from scratch is not the easiest thing on earth to do, it can be if you have a proper checklist in place.

Starting an HR department during the early stage of your company gives you a unique opportunity of shaping your company culture just the way you want it to be. Recruiting dedicated HR personnel can be a great step toward that. But most startups tend to avoid doing that during their early stage, in order to cut cost. Which is understandable.

All in all, whether you’re an HR personnel tasked to create an HR department from the ground up or a business owner trying to define your company culture right from the beginning, this blog will surely help you.

Why Do You Need to Setup an HR Department

You might think that an HR department doesn’t contribute to your sales or services you provide, but actually, it does. If you don’t have an HR team and policy in place, then attracting better talent let alone retaining them would be nothing short of inordinate ambition.

Moreover, an HR department contributes to your business growth from behind. The HR team helps you appoint better employees. And who doesn’t know that better employees mean less project failure and more company growth?

A well-documented HR policy in place can ensure you have a solution for every organization’s problems that can arise. This would also be impossible to manage without an HR department.

An HR department also helps by making sure everything you are deciding on is compliant with the industry and government laws. Such as working hours, compensation policy, or overtime policy.

These are just a few of the many examples of how an HR team can boost up your sales or service quality. These are also the main reason why an HR department is not an add-on, but a necessity for a new business.

Pre-Requisites to Building Your HR Department

An HR department doesn’t just consist of HR personnel. Well-documented company policy, compensation policy, tax policy, hiring procedures, safety procedures, and many more combined makes an HR department what it is.

The HR team, with the help of these documents, deals with interviewing, onboarding, salary, employee performance evaluation, increment, and many more.

But all these tasks can be effortlessly managed through an automated HR management system, also known as an HRM software in short. HR Management software is widely used right now, and for a startup with a very small HR department, it can be just the lifesaver.

How to Start an HR Department From the Top

Starting an HR department is a lot of work and most people don’t know where to start while doing so. But you’re in luck, the following set of the checklist will guide you on how you can start an HR department for your business.

1. Determine Your Company Culture

Company culture is an important part of an enterprise. For example, let’s say you like to work independently, but your company mainly does projects that require teamwork all the time. This will surely not fit you, right?

Consistent company culture can define how everyone in the company should act and behave. This way employees know exactly what to expect when they join your company. Not all cultures are for everyone. The right company culture can make an employee happy, while the wrong one makes someone the opposite. So deciding a definite company culture is the first decision you have to make while building an HR department.

2. Create Specific Job Roles & Responsibilities

After defining your company culture, the next thing that you need to do is create specific job roles & responsibilities. When everyone knows just what their responsibilities are, they become much more efficient and work becomes organized.

3. Establish Organizational Hierarchy

No job can be completed without proper supervision. The company’s hierarchy points out who will report to who, and who’ll supervise who. You’ll also need to create different departments to get your job done and manage the employees efficiently. This is important while running any organization.

Though many modern organizations are adopting a flat model, means you don’t need an organizational chart. The importance of an organized hierarchy still can’t be ignored, especially for a new company.

4. Determine Hiring Policy

Your company is represented by your employees. It’s important exactly who you hire, why you hire, and how you hire. Ensure the following things while determining your hiring policy –

• Create a clear job description for every job role. It’ll help you find employees that match the skill-set you’re looking for.
• Hire employees based on their skills, but ensure they are culturally fit for your organizations.
• Create a job appointment letter that describes all the terms of employment so that you can avoid future disagreement.

5. Create a Compensation & Increment Policy

Compensation and increment is the biggest form of motivation for an employee, don’t you think? In order to retain the top talents, ensure your company provides fair compensation towards them. However, from an HR perspective, there are many more things to look at while managing payroll and increment. Let’s have a brief look at them –

• Analyze the average market pay and set a bar for how much you can spend on a certain job role. Don’t be shy to overspent a bit if you think you have got the perfect person for the role.
• Create a compensation structure that includes house rent, medical fee, transport, gratuity, and provident fund.
• Generate a salary circle to ensure the payroll process done on time.
• Create an increment policy based on performance evaluation.

6. Setting up an Employee Performance Indicator

We just talked about an increment policy based on performance. Let’s elaborate that a bit. How actually does that work? What you have to do is create a performance evaluation system that can use to evaluate each employee’s performance after a certain time period.

Performance evaluation systems should be based on clear and precise expectations from an employee that will help grow both the business and the employee. You should not just create a performance evaluation system for the sake of having one, as it can do the opposite of increasing the performance of your company.

7. Reward & Achievement Acknowledgement

Now you know the importance of having a performance evaluation system in place and give proper increment. If an employee is regularly over-performing than the bar you have set for him, a yearly increment is not enough reward for him.

A monthly or quarterly award for best employee, with a gift voucher and one-time monetary benefit, can do wonders for motivating employees. It can also start a healthy competition between the employees for performing better. The HR department needs to have a system in place to find out the employees that are consistently doing good and deserves a reward on behalf of the company.

8. Using HRM Software to Better Manage Resources

Let’s be honest managing a company’s HR department is never easy. Keeping track of all the employees and their performance is not possible in a manual way, let alone rate them using a performance indicator. However, in today’s digital world, it is not that difficult anymore. Using an efficient HRM tool can release you from most of the tiresome works. In addition, HRM solutions also help you make better decisions.

An HRM software can store all your employee information, track their performance based on completed tasks and activity. It can also help managing payroll, which is surely hectic to do manually. Attendance, leave management can also get really simple with the right HRM solution.

Apart from these, HRM software can help you get rid of time-consuming administrative works. Instead, you can focus on employee welfare, development, and training, creating a better work environment, building bridges between authority and employees, and such.

All in all, HRM software can help you manage many difficult tasks with ease and simplify the whole HR process. And in this regard, WP ERP HRM can be a great option for your HR management. You can just simply install it on your existing WordPress website and start using it in a minute. It’s easy to set up and manage from the dashboard. It has all the features of employee information management, payroll management, attendance management, task calendar, etc. You can find out more about why it is the best HRM software for your company in the link below. ⬇️

Nothing Beats an Organized Human Resource Management

Only organized & efficient resource management can help a company achieve its goals. The HR department has a big role to play in that. In order to ensure constant growth and employee satisfaction, the HR department should be created right from the start of a company.

In the current era, there is no better way to start building an HR department and its operation than using the right HRM software. It will make the whole process much more organized and you’ll get to avoid all the rookie mistakes.

Wrapping Up

The HR department is an essential part of any business. It is the driving force of a company’s operation. However, starting an HR department from scratch can be a very difficult process. After this guide, we hope it will be much easier for you to do that. And if you decide to use effective HRM software like WP ERP HRM in the process of building your HR department, then it will be much easier to do so.

But in case, you need a complete ERP solution, that will help you with Accounting, CRM, and Project Management along with your HR Management, then WP ERP might just be the software you’re looking for!