For startups, when to hire your first HR person can be tricky question. Many startups have a tight budget, so it’s easy to delay recruiting a HR hire and instead focus scarce resources on sales, marketing, or other personnel. However, having an employee dedicated to HR tasks is important. HR is not only for compliance, payroll, or recruiting/ outboard purposes, but they also help build and maintain a corporate culture, layout employee expectations within a company, and help develop and engage employees.
In this article, we will outline some tips when considering to hire your first HR person.
1) Decide the right time to hire
Startups grow in different paces. For some companies, growth is slower, and so you may not need to hire an HR position right away. Before you decide to hire, you have to decide what tasks you would want to delegate to human resources or if you can handle the responsibility on your own. 41% of startup owners choose to handle HR tasks themselves, which can take about 18 hours a month and jumps to 40 hours a month if you are doing payroll! Founders can easily become overwhelmed with the challenges of running the technicalities of the business and managing employees. If HR tasks begin taking up too much time for the founder (or whichever employee has been tasked with HR responsibilities), this is when an organization should begin looking for someone to manage these HR tasks.
Depending on the stage, you may only need to hire an HR employee for compliance, payroll, and who has a basic knowledge of HR systems and processes. If you’re part of fast-growing company, you might want someone who has a broader experience and can help the managers in more strategic role in the company. The typical size when companies decide to hire an HR person is when they have between 10-50 employees. This is about the size when the founders are becoming less involved in the hiring/off-boarding process and want to delegate some administrative tasks to stay committed to growth.
2) Know the challenges you want HR to focus on
When running a startup, there is a good chance that you and your employees are going to have a lot of “firsts”- an employee’s first startup, their first big role, and in some cases their first job. There can be a lot of ambiguity in a start-up. There are can also be a tendency for employees to work long hours in a startup, which can lead to burnout. Moreover, there may be many cultural changes within an organization, particularly during times of hyper-growth. Before hiring an HR person, understand what your company needs at this moment, what your company roadmap looks like in the next 6 months, and want responsibilities you want the HR person to own – for example, do you want more of a recruiter because you are planning to hire 20 employees this month or a HR generalist to help manage payroll and performance reviews?
While you may want your first HR employee to do everything from mitigating employee burnout, having important conversations with employees to relieving some administrative duties for the executive team, your HR employee can start to burnout if duties and responsibilities are not clear.
3) Invest in HR software to relieve some administrative hassle
Human capital is a big cost for companies, including startups. If you are unsure whether you need a designated HR person, you may consider investing in HR software (of course, this decisions will depend on the HR task you want to solve). HR software systems can help companies keep organized and streamline administrative tasks. For example, there are PEO (professional employer organization) systems that help manage compliance. There are also smaller systems that automatically run payroll and maintain employee records and data. Having these types of systems in place helps companies streamline administrative activities and overall, it is a more cost-effective alternative than keeping track manually (time is money – use you and your employees’ time wisely!).
When picking HR systems (like HRIS systems or a performance management solution), remember that while these systems can help relieve administrative hassle, not all systems are made equally. In fact, 36% of HR professionals blame insufficient technology systems for their inability to automate and better organize onboarding programs, which further inhibit their ability to train managers with proper techniques. Even if your small business has a designated HR employee, HRIS or performance management systems can allow for less administrative hassle and streamline time-consuming administrative tasks. If you are unsure about which HR software is best for your company, feel free to reach out! We are happy to direct you to a system that can best fit your needs.
When did you know it was time to hire your first HR employee? – Let us know!
If you enjoyed this article, you should check out our other resources for small business:
Podcast- Hiring Your First HR Person
Podcast- What Struggles do Startups Face When It Comes to Managing People
Guidebook- Performance Management for Startups