When should a growing company first establish an HR department?

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The HR Question: It’s something that all start-up and expansion-stage companies have to deal with. Founders and CEOs may recognise how central a healthy company culture and recruiting strategy are to growth and success, but when it comes to establishing human resources policies and procedures their eyes tend to glaze over quicker than you can say “compliance”.

Every growing business needs an office manager and the sooner you hire one the better.  The best office managers have people skills – and are organised to a fault.  So a good office manager can reduced the administrative burden of HR, keeping staff paperwork in check while handling general HR requests until a full time HR person is needed.  There are also a number of online hr software applications available which will help this process (psst…check out Staff Squared!).

Outsourcing HR to a third party person or HR service provider has its benefits as well as drawbacks, as does distributing HR responsibilities in-house, but both may be stopgap measures rather than long-term solutions.  Eventually, you’ll have to face the HR question head-on.  The longer you wait, the more likely you’re missing opportunities and digging yourself into a hole.

When should a growing company first establish a HR department? What should it look for in its first HR hire?

A number of business owners are perfectionists, and the odd bit of “control freakery”occurs.  This is fine, it’s how they managed to get to the point of having employees which lead to HR becoming an issue at all.

The most important thing for a founder to do is to fire thyself.  An excellent CEO will recognise how valuable his or her time is, and will fire themselves from any roles that are not generating long term value for their business.  It’s also important that a CEO has distance from the business in order to think.

The decision of when to establish a HR department is so dependent on how people-centric your business is and how HR savvy the team you already have in place is.  There isn’t a magic number of employees that necessitates the need for a dedicated HR department although some as a general rule of thumb say 50 employees is the magic number.

In terms of what to look for – demonstrated competence in all areas of HR; the desire to roll-up his or her sleeves and do whatever is required in a growing organisation; someone who will have credibility with senior leaders and staff; someone who can have fun; and chemistry/cultural fit with the leadership team.  Yes it’s a big ask to find somebody with all of these qualities, but it’s one of the most important hires you will make so it’s essential you find the right person.

No pressure then 🙂

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