In the fast-paced world of startups, human resources (HR) often takes a backseat. Limited resources and the need to prioritize product development or funding can cause founders and CEOs to neglect establishing an HR department. However, neglecting HR can be detrimental to a startup’s success. HR plays a critical role in scaling a company effectively, managing legal and ethical challenges, and ensuring a positive employee experience. In this HR checklist, we will outline the top priorities startups should consider when building an HR department to drive small business growth.
HR for Startups: Is It Really Necessary?
The simple answer is yes. Despite the size of your company, HR matters. An HR department helps startups craft policies, plans, and processes to address short-term needs and mitigate long-term risks. It establishes an ethical framework, ensures compliance with employment laws, navigates policy changes, handles compensation and benefits administration, discovers ground truth about company culture, and sets growth goals. Therefore, establishing an HR department is crucial for the success and growth of startups.
HR Checklist for Startups: The Top 9 Priorities
1. Establish Your HR Department Structure
While your startup may not need a comprehensive HR organization plan from day one, having a basic structure and operation plan is essential. At a minimum, your department structure should include a strategic leader who will establish company policies and ensure compliance. Core HR functions such as compensation and incentives, employee communication plans, performance management, and HR policy development should be handled in-house, while auxiliary functions like payroll and benefits administration can be outsourced to third-party vendors.
2. Use a Human Resource Information System (HRIS)
Investing in HR software, specifically an all-in-one HRIS, is highly recommended for startups. An HRIS helps manage people analytics, performance management, onboarding, and more. It simplifies core HR functions, saves time and money, and ensures that different functionalities seamlessly integrate. For example, BambooHR’s software offers tools for employee time tracking, recruitment, payroll management, benefits administration, and much more, all in one platform.
3. Establish Onboarding and Recruiting Procedures
Even for small startups, having well-defined onboarding and recruiting procedures is crucial. This includes determining where to post job ads, identifying target candidates, and preparing necessary paperwork such as offer letters, payroll information, and employment agreements. A robust onboarding process sets employees up for success and helps establish expectations and objectives from day one.
4. Comply With Health and Safety Regulations
Ensuring a safe work environment that complies with federal and local health and safety regulations is paramount. Adhering to the Occupational Safety and Health Act (OSHAct) and developing policies for safety and behavior will provide legal protection for your company. It is essential to create an emergency action plan, identify emergency exits, provide medical supplies, and outline policies related to equal employment opportunity and sexual harassment.
5. Set Up Processes for Payroll and Benefits
Competitive compensation and benefits are key to attracting and retaining talent. Determine your pay structure, establish policies for vacation and sick time, retirement benefits, and choose a reliable payroll management system. Additionally, consider voluntary benefits such as medical, dental, vision, life insurance, as well as mandatory benefits required by state law.
6. Nurture Employee Relationships
Building an inclusive and diverse environment should be a priority for startups. While many startups lack dedicated Diversity, Equity, and Inclusion (DEI) positions, having HR support can help establish policies to address employee concerns and ensure a respectful workplace. Additionally, fostering employee engagement and satisfaction by providing opportunities for growth and open communication is vital.
7. Introduce Performance Management Processes
Training employees and evaluating their performance should not be overlooked. Giving employees the opportunity to develop their skills and providing constructive feedback is essential for growth. Establishing personnel files and implementing performance evaluation processes will help identify areas for improvement and retain top talent.
8. Prepare for Audits
Being audited is inevitable for any company. To prepare for audits, HR departments should review and ensure compliance in areas such as recruitment, orientation and training, benefits, payroll, salary structure, and employee relations. Maintaining accurate documentation, such as personnel files and performance evaluations, is crucial for successful audits.
9. Create an Action Plan
Developing a detailed action plan to implement the aforementioned priorities is crucial for management approval and alignment. Categorize projects by priority level and create a project timeline for each action. Additionally, create an employee handbook that outlines HR policies, benefits, commitments, equal opportunity, safety issues, and consequences for misconduct to ensure clarity and minimize employee confusion.
Bonus: 12 Best Practices for HR at Startups
- Create an intentional company culture that reflects your values and mission.
- Determine your core values and ensure HR aligns with them.
- Invest in developing and retaining top talent in leadership positions.
- Keep HR processes simple and aligned with the startup’s maturity.
- Hire experienced HR professionals who reflect your company culture.
- Ensure consistency in job descriptions, benefits, and policies that reflect company values.
- Focus on hiring and promoting great leaders who align with HR strategies.
- Consider the overall cost and benefits of internal HR departments versus HR software.
- Implement training programs to foster a culture of learning.
- Prioritize employee development and engagement over process optimization.
- Stay informed and involved in HR department processes.
- Promote trust and transparency through clear policies and actions.
By following this HR checklist and embracing best practices, startups can establish a solid HR foundation and drive small business growth. Remember, while HR may seem like a secondary concern, investing time and resources into HR early on will pay off in the long run.
FAQs
Q: Why is HR important for startups?
A: HR is essential for startups as it helps craft policies, ensure compliance, establish an ethical environment, handle compensation and benefits administration, and support employee growth. Investing in HR early on helps startups scale effectively and create a positive employee experience.
Q: What is the purpose of an HR department in startups?
A: The purpose of an HR department in startups is to handle all aspects of human resources, including policy development, compliance, recruitment and onboarding, performance management, employee relations, and employee engagement. It ensures startups have the necessary structure and support for growth and success.
Conclusion
Establishing an HR department is crucial for startups’ growth and success. By following the HR checklist and implementing best practices, startups can navigate legal and ethical challenges, ensure compliance, attract and retain top talent, and create a positive work environment. Prioritizing HR early on allows startups to build a solid foundation for future growth and success.