As you add headcount and grow your team to more than 50 employees, the person handling HR in addition to their many other responsibilities is going to be stretched for time and also may not be trained to handle more sensitive matters – opening your company up to liability.

That’s why we created, “The Ultimate Guide to Creating an HR Department.” In this 3-part series, you’ll find quick actionable tips you can use right away to get started building your HR function.

In this guide, I will walk you through:

  • The Top 3 Areas an HR Department can Add Value
  • 3 Potential HR Solutions
  • How to Hire a Great HR Person in 5 Steps

Without further ado, let’s dive into how to create a great HR department.

3 Ways an HR Department can Add Value

The very phrase “Human Resources” or “HR” can create images of closed-door, tight-lipped departments who handle employee “punishment.” But HR is not just the disciplinarian.

HR is not just a cost center you have to have.

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A good HR department should be your company’s goal-setter, cheerleader and morale booster. The HR team should be able to get your employees to perform and add value to the bottom line of your business. HR is not just a cost center you have to have – HR should be a full-fledged business partner with a seat at the management table.

If you’re creating an HR department, you should have (at least) three areas that you need someone (or a team) to take over either completely or partially. Those areas are:

  • Payroll & Benefits Administration
  • Recruiting
  • Performance Management

1. Payroll & Benefits Administration

Your new HR employee(s) should handle all payroll and benefits administration nearly as soon as they come onboard. HR people, especially those designated with a PHR/SPHR or SHRM-CP/SCP license, are trained in confidentiality and should be well-versed in handling sensitive documents like these.

Your head of HR should have a seat at the management table.

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In fact, a good HR person should be able to improve your processes and also resolve any compliance or other concerns – be it by implementing a process or having experience with various payroll systems. They also should be able to give you advice on compensation plans, bonus/incentive plans and provide counsel on an employee’s salary in order to keep your business competitive for talent.

2. Recruiting

You probably already know that recruiting is the time-vortex for business owners. It creates usually 10+ hours of work per week to recruit for a replacement or new hire. That’s 10+ hours that most leadership teams don’t have. This is in addition to the cost, which could run you between $250-$1,000+ per week – depending on a) the level of recruiting (i.e., whether the job is a senior level role or junior level), and b) how many qualified candidates are out there. You can’t forget the cost of turnover also, which ranges around 10 percent or more of the former employee’s base salary.

Recruiting, especially if your business has it as an ongoing process, is a major reason to consider hiring a part time or full time HR manager.

An HR person can handle all of the heavy lifting of recruiting, including:

  • Writing accurate job descriptions that reflect the requirements of the role
  • Advertising the jobs/roles and sourcing potential candidates
  • Sifting through applicant resumes
  • Handling phone screens
  • Recommending who moves to an in-person interview and scheduling the interviews
  • Suggesting interview questions, including structured and/ or behavioral questions, for management and other interviewers
  • Providing counsel in selecting the job candidate
  • Creating offer letters and employment agreements
  • Onboarding new hires, including creating an employee handbook and other training documents

It’s also notable that having a recruitment software, like Greenhouse, can take a lot of manual, organizational work off an HR manager’s plate, from resume organization to scheduling phone screens and interviews.

HR can help you get an employee performance system in place.

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3. Performance Management

From goal-setting to performance reviews, a good HR department or person can be a huge asset in getting a performance management system in place at your business and holding people accountable to that system. Performance management isn’t just performance reviews – it’s a full system where an HR person should be able to take your team through:

  • Setting goals
  • Training managers on how to monitor employees and encourage and receive their feedback
  • Creating review forms and guidelines for scoring employees
  • Documenting reviews and performance improvement plans
  • Determining with management when a raise/promotion makes sense

HR also can help make sure all of these documents are legally compliant and air-tight in case a termination (aka firing someone) needs to happen because of performance or behavior.

Other Areas HR Can Take Over/Add Value

While the three areas above are where an HR team can immediately make an impact, many HR departments also can add a lot of value in:

  • Employee engagement and employee morale-boosting initiatives
  • HR documentation, such as handbooks, job descriptions, termination documents and other HR documents custom to your company (like offer letters and employment contracts)
  • Providing counsel around legal issues and employee management
  • Providing mediation services for resolving employee grievances

HR is the “voice of the employee” for management – important for keeping your team happy where they work.

Click here to read part two of the Ultimate Guide to Creating an HR Department.

About the author

Christy Hopkins

Christy Hopkins

Christy Hopkins, PHR, is a Human Resources consultant and writer at Fit Small Business. Her areas of expertise include recruiting, performance management, organizational change, and implementing HR systems. In addition to writing for Fit Small Business, Christy maintains an HR consulting and recruiting firm that boasts over 30 small business clients across the United States.

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