Most successful large companies enjoy the benefits of an efficient human resources (HR) team behind the scenes, but small businesses may view this as a luxury that they can’t afford. Absentee HR departments can seem like a cost-saving measure, but in reality, companies will feel their absence heavily. That’s why many opt to create their own HR department from the ground up.
This article will explore the reasons companies choose to invest in HR in the first place, as well as some steps for getting started. It will also discuss a different HR approach that can benefit companies significantly.
Why Start An HR Department?
HR departments are strategic imperatives that are foundational to nearly every aspect of a business’s success, from building an efficient workplace culture to staying in compliance with government labor regulations. There are many pitfalls for organizations without a dedicated HR department.
- Legal issues: Companies without their own HR department could be at risk of violating their jurisdiction’s employment regulations. These can vary from one geographic area to another, making it paramount to stay abreast of the rules. A dedicated HR team can handle issues involving discrimination or harassment before they become major problems affecting the entire company.
- Higher turnover rates: It’s normal for companies to experience some employee turnover, but an inadequate HR environment can aggravate this. If there are steps companies can take to prevent a skilled employee’s departure, they have to know what those are. HR departments can do the legwork of learning why employees leave.
- Poor hiring process: Unqualified staff act as a drain on the entire company’s productivity, preventing others from doing their job as well as they could. An HR department that takes ownership of the hiring and onboarding process can work wonders.
Companies that create their own HR departments can address these challenges early on. These departments can also use their expertise to create a work culture that aligns with the goals of management. For example, HR teams can make training materials that emphasize the company’s values and ethics. Over time, this reduces the risk of interoffice rivalries, unhealthy interaction, and other serious problems.
Human beings are a company’s most valuable “resource.” Knowledgeable employees — people who know the product and the customer and everything in between — are the linchpin of any organization’s success. The role of human resources isn’t to make employees happy, but to help them thrive professionally. Satisfaction with one’s work brings its own form of happiness with no further intervention.
Talent Development and Professional Growth
Employees often want more than a mere “gig.” They’re looking for a business environment where they can put down roots and make a dignified career for themselves. That career will compensate them both financially and mentally, in the sense of personal fulfillment. This is one of the most neglected but crucial elements of an HR team’s line of work.
A good HR team understands the company’s employees thoroughly. They learn their strengths and weaknesses through performance evaluations, skills assessment tools, personality tests, and feedback from colleagues, managers, and direct reports. That helps management in countless ways, for example, by:
- Picking out employees who have leadership potential for future development.
- Recognizing outstanding performance. Rewarding people who deserve it shows management is watching and can raise the morale of the entire workforce.
- Developing customized career development plans for each employee. This helps workers fulfill their potential and increases their loyalty to the company because they know management cares about their future success.
This dedicated attention enhances the task performance and effectiveness of the organization. For instance, HR teams that take note of employees’ individual skill sets can advise management about creating balanced work teams based on them, in which each worker fulfills their designated role to the best of their ability.
Payment and Benefits Administration
Businesses need to offer compensation that is competitive in attracting and retaining employees but won’t cost the company too much. This includes salaries or hourly rates throughout the organization’s hierarchy that are set appropriately for each employee’s level of responsibilities and according to what is paid for corresponding roles within the industry and geographic region. HR teams also use their expertise to develop enticing benefits packages for employees that include healthcare, retirement plans, and health and wellness programs.
Having HR professionals set and administer payment and benefits helps to ensure these functions are performed to high standards. This frees up time for upper-level management to focus on other strategic priorities for which they have more professional expertise. And a salary and benefits package that offers both work-life balance and financial security can give a company a strong competitive edge in securing top industry talent.
How Companies Can Start Their Own HR Departments
While it’s understandable for companies to want to start their own HR departments from scratch, it’s not a simple task. It takes a great deal of careful planning and also an in-depth review of their local labor regulations and requirements. The process should begin with an audit of the organization’s HR needs, beginning with:
- A review of current HR procedures. Even without a dedicated HR department, the company must still perform these functions somehow. How is it handling employee onboarding? What training initiatives are on offer? These and other factors need careful consideration before proceeding further.
- Articulating what the HR department’s objectives would be. The company already has its own goals and projections, both in terms of its financial health and employee management. A newly formed HR department must align with these goals and help advance them.
- Deciding upon the HR department’s organization. The company must decide who will run the HR department and how HR employees will perform their work. There should be a clear hierarchy and chain of command to follow to avoid confusion.
Labor regulations are another serious consideration. This involves planning employment contracts, codifying work hours, and ensuring that the company’s workplace safety procedures are enforced. Failure can open the company up to serious legal penalties, so this is a crucial role to fulfill.
For instance, the incoming HR team must organize employee records and create a system to archive them. This will be necessary for formulating future contracts and making payroll decisions. Labor laws regarding work hours differ from one area to another, so staying compliant can easily become a full-time job.
Some companies will want to invest in HR software packages to help them get started. This software can aid them with applicant tracking, managing employee records, and distributing benefits packages. However, it could be difficult to learn how to use these platforms without professional guidance.
Defining the Company Culture
Culture is a vital but often neglected aspect of business operations. It not only determines how employees conduct their work, but how they think about it. Culture influences the overall attitude and atmosphere of the workplace, making it either a heavenly place to work or the polar opposite.
Companies can’t afford to get their culture wrong. They must be intentional about its formation and cultivation, starting with the instructions given to HR. The organization’s HR team must define the company culture with precision since it will be primarily responsible for its maintenance.
HR employees will lead by example. That means companies forming an HR team at least partially from existing employees need to select people who embody the organization’s values. They can form the nucleus of the future HR department, tending to its growth and establishing its priorities for the future. The new HR team can do this by:
- Creating a “vision statement” that articulates the organization’s culture. It should explain the company’s goals, promote ideal attitudes among employees, and clarify where the company intends to be in five years or longer.
- Monitoring existing employees who reflect the company culture and moving them into positions of prominence. By acting as examples to others, they can promote the company’s intended culture.
- Creating hiring and training materials that communicate the company’s culture to potential new hires. Doing this helps filter out employees who wouldn’t be a good fit. Hiring only employees with values that align with the company’s will have long-term benefits for office health.
The Advantage of Outsourcing Human Resources
If all this sounds complicated and time-consuming, that’s because it is. Companies that lack their own HR department and want to create one would be better served by outsourcing. That involves collaborating with a company that specializes in employee administration, such as Resourcing Edge.
Working with Resourcing Edge means partnering with a company that has decades of HR experience. Resourcing Edge can aid management teams with their:
- Recruiting drives
- Labor compliance requirements
- Benefits administration
- Payroll administration
- Employee relations management
This is usually a more cost-effective solution than beginning an HR team from scratch. Partnering with Resourcing Edge allows companies to hit the ground running on their HR solution, allowing them to resume their focus on their primary business activities.
There’s no reason for small businesses to let the complexities of HR management hold them back. Contact Resourcing Edge now and start the journey toward an efficient HR solution.
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