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How Do I Set Up A New Human Resource Department?

If you were given the task of setting up a new Human Resource Department in a small company where would you begin? Such a task would be extremely daunting, but not impossible, if you follow a few tips. To begin, you need to answer some basic questions: • • • Why do you want to set one up? What’s changed to make you or the organization believe that an HR department is needed now? What do you want the HR department to do? How will this function contribute to the success and bottom-line of the organization? Will it add value?

In other words, before you begin the task, you need to have a clear definition of the mission and goals of the department and secondly, what role you will play as “head” of the HR function. Once you have clear direction, there are some key “audit” issues that you need to focus on. 1. Do you have personnel files on all your employees? Are they current? Do you have all the legally required documentation? Do you have items in the files that don’t belong there? 2. Do you have policies and procedures? Are they up-to-date? Are they followed? 3. Do you have an employee handbook? Do you have the right language in it? Have you inadvertently created a contract between you and your employees? 4. Do you have policies dealing with sexual harassment, workers’ compensation, safety, benefits, discipline, etc.? 5. Are you in compliance with state regulations? 6. Do you have a working knowledge of the law? Do you have all the required postings, forms, and documentation required by the respective governmental agencies? Are all the managers aware of their legal responsibilities and liabilities? 7. Are you recruiting and selecting the right people? Are you aware of the talent and skills needed to move your organization forward? Do you know where to find these people? Are you recruiting in a cost effective manner? Are your managers trained in interviewing techniques?

It is a big task. What about your training? Are manager’s and employee’s skills current? Is training a “way-of-life”? Are you growing your people or do you have to go to the outside every time you need someone with a specialization? Are supervisors effectively managing their employees? 12. whether through networking with peers. but one that is critical to the organization. that "department" -. one person should be able to develop and administer the function. there are variations to this theme. high workers’ compensation rates. But in most small companies an Office Manager can suffice. grievances. When Is An HR Department Necessary? How many employees should a company have before there is a need for an HR Department? As companies grow. . missed deliveries. and with the plethora of software for HR today. and poor productivity)? 11. 30 years experience has shown that until the company has at least 50 employees. In fact. Between outsourcing such things as payroll and the initial writing of an employee handbook. What’s it like working at your company? Are people productive and motivated? Are you looking at the indicators of a productive and motivated workforce (absenteeism.really a function -. tardiness.8.can consist of or be handled by one person. How about your benefits? Are you getting the best coverage for your people at a price the employees and the organization can afford? Is your total compensation attractive enough to retain existing people and be an incentive to new people? 10. or outside expertise. turnover. there is a need to administer the HR function. Are managers and employees kept informed? Do they know what’s going on? Is the grapevine the main source of communication? What are the sources of communication? As you begin the process. there may well be a need to have an HR administrator or recruiter. poor quality. other organizations. Of course. In some companies where recruiting has been a major activity. but that doesn't necessitate an HR Department. get some professional help. What kind of compensation plan do you have? Is it meeting the organization’s needs? Is it motivating your employees? Is it competitive and fair? 9.

market) 3) Employee relations (i. and performance appraisals. changes in benefits. you should have an Application for Employment form or resume. offers) 2) Compensation (i. social security. One person should be responsible for new employee orientation. In order to inform new employees of their benefits and the policies of the company. . disciplinary procedures. and others.e. Are all the basic policies included? These can be thought of as grouped into conditions of employment. performance management. background checks. employee recognition) 4) Mandated benefits (i. worker's compensation. Then.e. Major changes may call for training such as in harassment a few years back. consistency. Who takes care of payroll? There used to be an ongoing fight between HR and accounting as to who gets payroll. determine the compliance issues which pertain to your company. Changes in policies. and disciplinary processes. the following things should kept in mind. If a handbook already exists. Minimally. The most basic of these have to do with wages and hours of work. labor agreements. methods.e. 1) Recruitment and selection (i. job descriptions. So make sure of this point to have a clear picture on this. HR has an information function that you should think through. determine whether or not you need to have an employee handbook or other formal policies and procedures manual to cover everything from establishing the company as an atwill employer to benefits. be certain that it is in compliance with state regulations and that the policies and the way they are written are in the best interests of the company. gathering all the papers into coherent personnel files. if no files exist. HR becomes a kind of passthrough in the information cycle. classification of employees. After that. selection tools. leaves of absence including maternity leaves. even changes in laws must be communicated to all employees. .STEPS TO ESTABLISH HR DEPT The first step is to determine what the expectations are of the manager who realized the necessity of HR function. Therefore. benefits..e. Is there a balance between stated corporate and employee rights and obligations? Take a look at existing employee files or. harassment. any insurance forms that the employee may have signed. ) . you will very simply have to be the expert in benefits and policies of the company. To summarize the steps to set up an HR DEPT .

personnel files.e. management reporting) Once you have carefully evaluated each of these areas.e.e. management development. flexible benefits. new employee orientation. With a good grasp on this plan.e. confidential records. other forms) 8) Training and development (i. compliance) 7) Recordkeeping (i. time off benefits. HRIS. This will help you map out exactly what you need to do and how it impacts the bottom line.e. employee assistance programs. leadership. technical and safety.5) Optional group benefits (i. policies and procedures. retirement plans. you are ready to put together your strategic human resources business plan. handbook. announcements. career planning) 9) Employee communications (i. tuition reimbursement.e. insurance. plus when you will need to do it. staff development. you are ready to sell it to management . perks) 6) Payroll (i. newsletter. internal vs. external options. electronic communication) 10) Internal communications (i. recognition programs.