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Setting Up an HR Department: What the Experts Have to Say

Human Resources

Setting up an HR department can become increasingly urgent as a startup or business begins to grow. But what areas should business owners focus on? When does it become necessary to enlist outside expertise and resources?

A group of veteran Paychex human resources professionals offer these broad-based tips as the essential first steps in setting up an HR department for your small business:

Start with a comprehensive assessment

"Begin by assessing the state of your organization – infancy, growth, maturity, decline," advises HR consultant Janelle Rodriguez. "The assessment should also include the number of employees and the organization's short- and long-term goals as they relate to employee growth and retention, and the potential influx of employee-related issues and concerns."

Determine a cohesive order of development

"Building an HR department properly takes planning and time, as we know," says HR generalist Mary Anne T. Sendra. As part of your big-picture approach, she suggests focusing on the basics:

  • Researching employment laws and regulations to understand how they pertain to your business;
  • Ensuring compliance in these areas;
  • Putting job descriptions in place; and
  • Creating an employee handbook.

"It's important to have these goals in mind in the initial planning stage," Sendra adds.

Ensure compliance with applicable employment laws and regulations

As part of developing an HR department, says HR consultant Michael Bookman, be sure to conduct a review of applicable legal requirements.

"Employers should acquire legal counsel and/or an HR professional and/or an HCM outsourcing vendor to chart legally required actions, procedures, documents, training, etc. needed and applicable to their organization," he says. "For each phase of the employee life cycle (recruitment, hiring, training, discipline, etc.), lay out procedures that facilitate your compliance with the appropriate legal requirements."

Ask questions that center on business operations

The assessment of internal HR needs is best managed by asking a series of questions, according to HR Generalist Arlene Hamilton. Questions can be grouped into these topics:

  • Employment laws. What federal, state, and local laws and regulations affect our business? What resources do we have to stay up-to-date with these employment laws and regulations? If we're audited by the U.S. Department of Labor (DOL), are we comfortable with our employment practices? Do we have the knowledge, skills, and abilities to run an HR department or should we look for a knowledgeable third party to assist with the process?
  • Recruiting. Are our job descriptions up-to-date? Do we have standardized interviewing questions? What laws should we consider when developing procedures and questions for the interview process?
  • Employee classification. How do we presently classify our employees? Are we familiar with the DOL’s definition of exempt and non-exempt employees?
  • Employee relations. How do we manage and discipline our employees? Ensure there is a company standard. If we provide an employee handbook, how well do we adhere to our own policies? How are these policies communicated to employees? How do we handle claims of harassment or bullying in the workplace?

"There are many more areas of HR to take into consideration," Hamilton adds, "such as training and development, performance management, and so on. But the first thing a team should focus on is ensuring the company is in compliance with employment laws."

HR consultant Susan J. Draper offers additional topics worth considering:

  • Think about your time in terms of dollars. What will the return be if you hire someone on a full-time vs. a part-time basis? Do you need someone who has your level of experience or can you hire someone for less to take on some of the administrative burden?
  • As you hire people to assist you, ideally they would learn how to handle areas such as open enrollment and employee relations issues. If your business is planning to expand, you will need HR employees who have the interest and capability to take on more responsibility.
setting up an HR department

Create an HR plan and seek input

Following a thorough assessment, HR generalist Michelle White advises crafting an HR plan with realistic goals for the first 60, 90, and 120 days. "Be sure to share the goals with the company's leaders and make sure the goals support the overall business strategy."

As the plan takes shape, Rodriguez strongly suggests meeting with as many employees as possible "to get feedback, ideas, suggestions, concerns, and overall perception of what human resources should look like." After this, it's time to meet with senior leadership. "This puts the employees first and employees will see and appreciate that."

Finding support

As these experts note, there's much to consider when setting up an HR department. You may be looking to simplify HR administration and bolster your recruiting efforts; a proactive solution such as Paychex HR Solutions can help in these and other areas. A skilled HR professional as well as a team of specialists can assist with payroll, workplace safety, and insurance challenges. They also offer guidance customized to your company's needs at every stage of the employee life cycle, from recruiting to retirement.

This website contains articles posted for informational and educational value. Paychex is not responsible for information contained within any of these materials. Any opinions expressed within materials are not necessarily the opinion of, or supported by, Paychex. The information in these materials should not be considered legal or accounting advice, and it should not substitute for legal, accounting, and other professional advice where the facts and circumstances warrant.
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