10 Guidelines for Setting up an HR Function or Department in Your Startup Business

There are plenty of articles/posts on why the HR function is or can be critical in a Startup Environment. As an HR & OD (Organizational Design/Development) Consultancy, we at HIREghana specialize in HR Setups for Startups.

So kindly allow me to provide a ‘summarized advice’ here, so I can create some awareness of what things you need to think about and possible implement.

I use the term ‘summarized advice’ because all these topics could be several articles on their own right and I trust you can google them for more information and a deeper understanding.

1. Start with Organizational Capacity and Design (and Development).

Usually, Human Resources as a function focus on what the skills are and level of experience needed and the number of employees needed.

But, before you go that far, it might be good to think about your startup’s current and future structures.

Organizational Capacity Assessment is obviously the result of your organizational capacity, a  process that helps an organization to assess their operational capacity, its strengths and all organizational areas that need improvement. These are areas like:

  • Human Resources: what are the skills and level of experience needed and how many employees do we need?
  • Material and Physical items: e.g. computers, furniture, warehouse, raw materials, etc.
  • Financial: how much money is available, predicted and actual cash flow, possible Lines of Credit, etc.
  • Knowledge/Information: e.g. data collected, how they are organized, stored and retrieved.
  • Assets: physical assets owned by the organization, possible licenses and patents, etc.

Sometimes, people refer to it as Organizational Capability and because capacity and capability are so closely related, for the moment, just ‘assume’ that they are the same.

That exercise, is closely related and should be ‘performed’ in parallel with your startup’s organizational design and development.

Organization Development is an effort

  • planned,
  • organization-wide, and
  • managed from the top, to
  • increase organization effectiveness and health through
  • planned interventions in the organizations ‘processes,’ using behavioral-science knowledge (e.g. applied sociology, organizational analysis, etc.). This definition comes from the book: “Organization Development: Strategies and Models” by Richard Beckhard (1969).
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According to the OD Network (a US OD Professional Association), OD interventions tend to be inclusive methodologies and approaches to strategic planning, organizational design, leadership development, change management, performance management, coaching, diversity, team building and work/life balance.

Organizational Design is the process and the outcome of shaping an organizational structure, to align it with the purpose of the business and the context in which the organization exists. A lot of people view Organizational design as an organizational development intervention. The discussion on what OD stands for, is still open and the jury is ‘still out to lunch’.

I do not want to delve on more into this topic, but I hope that I did create the awareness and curiosity in you to search further into these concepts.

That these will help you define and decide on what are the skills and level of experience needed at a particular growth phase of your Startup and how many employees do you need; even what functions to outsource – e.g. web design, payroll, etc.

2. Job Descriptions and Job Roles

This is really ...muddy waters. Unfortunately, people refer to Job Adverts as JDs (Job Descriptions). If you decide that these two are the same (let’s assume so), then you need a clear description on what that role is about, what it entails, what are the required skills, the expected duties and how/what will be the assessment method for the performance of any particular role.

A JD is usually 1-2 pages long; a proper Role Description is 10-30 pages (on the average, we usually write Role Descriptions of 10-15 pages).

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A Role Description it is also used for the Development/ Career Planning of every employee.

Let me give you an example. Suppose that you hire someone today with super PhP skills and that language becomes obsolete in 5 years. What will you do? Will you fire an excellent programmer?

A JD focus on ‘today’s requirement’ for a skilled PhP developer. A Role Description will have that requirement but also real ‘skill’ behind it: the employee’s ability/strength to learn (ideally) on his/her own. Also, Role Descriptions get updated periodically since any organization is a living evolving entity, so change is unavoidable.

3. Setup of HR Compensation

People need to get paid, it has to be in a legal manner (so, you will have to pay – for example – their SSNIT contributions in a timely manner), and possibly have health insurance, etc.

You need to define clear compensation packages and the mechanics that enable compensation. This exercise might give you a more realistic budget for your startup.

Employee-occurred expenses (e.g. travelling costs or taking out a client for lunch) should be part of your compensation setup; possibly bonus payments too (at least the amounts).

By the way, somebody has to be able to run your payroll.

4. HR Policies Framework

You will need to setup a variety of HR policies, e.g. absenteeism, time-tracking, employee evaluation/performance management.

Performance Management can be very complex and it is not about bonuses or a pay-rise but about how an employee at a given role performs.

You also need to think and slowly put in place an Employee Reward Management system. Reward it’s not just about monetary compensations.

Make sure that your HR Policies do produce an excellent Employee Handbook and a good induction process for new employees.

5. KPIs & HR Analytics.

You will need KPI-metrics for Employee Performance and monitoring of HR Processes.

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HR Analytics might not be so critical as an early stage in your organization, but you need to start collecting them (and obviously, they need to be defined first) at a certain point in time so that they can make sense in the future.

6. Employee Safety & Health

The Health and Safety of your employees is an HR issue. You can’t hire employees and force them to work in any kind of a dangerous or hazardous environment; especially if you are an agricultural, biotech or transport/logistics startup.

7. Automation – the IT stuff

You really need to think whether you have a true need for an HRIS or even a simple employee-portal.

8. Social Media

Strongly suggest that before your first employee comes to work, you have a clear – however primitive – Social Media policy.

9. HR Maturity

HR Maturity is a huge topic, possibly for another article.

10. Recruitment Strategy

Finally, having though of an HR Maturity Framework, you now need a Recruitment Strategy.

In Conclusion

These 10 items are just guidelines – it’s up to you to decide what make sense for you at a given point in time and at the current maturity level of your startup organization at that given point in time.

I could have written another 10, but that is not the point of this article.

So, kindly think about all these instead of rushing to get the assistance of a ‘hiring/trigger’-happy Recruitment Consultant. Wrong hiring decisions are very costly.

Thank you and Good Luck.

Your feedback/ comments/ remarks/ suggestions via your email message to  Startups@HIREgh.com

© 2017 Irene Gloria Addison

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