How-to Set up your HR Department – 10 tips for Startups, SMEs and others

Irene Gloria Addison

This is an update on an article originally written 8+ months ago.  Still there are plenty of articles/posts on why the HR function is or can be critical in a Startup or SME Environment. As an HR & OD (=Organizational Design/ Development) Consultancy, we (HIREghana) specialize in HR Setups for Startups and SMEs. So kindly allow me to provide a ‘summarized advice’ here, so I can create some awareness of what things you need to think about and possibly implement.

Although this article is written with Startups and SMEs in mind, all the advice / tips apply to all size and types of organizations.

I use the term ‘summarized advice’ because all these topics could be several articles on their own right and I trust you can google them for more information and a deeper understanding.

 

  1. Start with Organizational Capacity and Design (and Development).

Usually, Human Resources as a function focus on what are the skills and level of experience needed and how many employees are needed.

But, before you go that far, it might be good to think about your organization’s current and future structures.

Organizational Capacity Assessment is obviously the result of your Organizational Capacity, a process that helps an organization to assess their operational capacity, its strengths and all organizational areas that need improvement. These are areas like:

  1. Human Resources: what are the skills and level of experience needed and how many employees do we need?
  2. Material and Physical items: e.g. computers, furniture, warehouse, raw materials, etc.
  3. Financial: how much money is available, predicted and actual cash flow, possible Lines of Credit, etc.
  4. Knowledge/ Information: e.g. data collected, how they are organized, stored and retrieved.
  5. Assets: physical assets owned by the organization, possible licenses and patents, etc. That includes also the inventory and unique identification of every asset |(i.e. full asset management).

Sometimes, people refer to it as Organizational Capability and because capacity and capability are so closely related, for the moment, just ‘assume’ that they are the same.

 

That exercise, is closely related and should be ‘performed’ in parallel with your startup’s organizational design and development.

Organization Development is an effort

  1. planned,
  2. organization-wide, and
  3. managed from the top, to
  4. increase organization effectiveness and health through
  5. planned interventions in the organizations “processes,”

using behavioral-science knowledge” (e.g. applied sociology, organizational analysis, etc.). This definition comes from the classic book: “Organization Development: Strategies and Models” by Richard Beckhard (1969).

According to the OD Network (a US OD Professional Association), OD interventions tend to be inclusive methodologies and approaches to strategic planning, organization design, leadership development, change management, performance management, coaching, diversity, team building, and work/ life balance.

 

Organization Design is the process and the outcome of shaping an organizational structure, to align it with the purpose of the business and the context in which the organization exists. A lot of people view Organizational Design as an organizational development intervention. The discussion on what OD stands for, is still open and the jury is ‘still out to lunch’.

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I do not want to delve on more into this topic, but I hope that I did create the awareness and curiosity in you to search further into these concepts.

These ‘concepts’ / ‘notions’ will help you define and decide on what are the skills and level of experience needed at a particular growth- phase of your organization and how many employees do you need; even what functions to outsource – e.g. web design, payroll, etc.

 

  1. Job Descriptions and & Job Roles

This is really muddy waters. Unfortunately, people refer to Job Adverts as JDs (Job Descriptions). If you decide that these two are the same (let’s assume so), then you need a clear description on what a given Job Role is about: what it entails, what are the required skills, the expected duties and how / what will be the assessment method for the performance of any particular role.

A JD is usually 1-2 pages long; a proper Role Description is 10-30 pages (on the average, we usually write Role Descriptions of 10-15 pages).

A Role Description it is also used for the Development / Career Planning of every employee; actually, it is a must / the foundation for Career Planning.

Let me give you an ‘example’/ another way of ‘seeing’. Suppose that you hire today someone with superb Javascript & PHP skills and that these languages become obsolete in 5 years. What will you do? Will you fire an excellent programmer?

A JD focus on ‘today’s requirement’ for a skilled PHP developer. A Role Description will have that requirement but also the real ‘skill’ behind it: the employee’s ability/ strength to learn (ideally) on his / her own. Also, Role Descriptions get updated periodically since any organization is a living evolving entity, so change is unavoidable.

 

  1. Setup of HR Compensation

People need to get paid, it has to be in a legal manner (so, you will have to pay -for example- their SSNIT contributions in a timely manner), and possibly have health insurance, etc.

You will need to define clear compensation packages and the mechanics that enable compensation. This exercise might give you a more realistic budget for your Startup or SME.

Employee- occurred expenses (e.g. travelling costs or taking out a client for lunch) should be part of your Compensation setup; possibly bonus payments too (at least the amounts).

Btw, somebody has to be able to run your payroll.

 

  1. HR Policies Framework

You will need to setup a variety of HR policies, e.g. absenteeism, time- tracking, employee evaluation / performance management.

Performance Management can be very complex and it is not about bonuses or a pay-rise but about how an employee at a given role performs.

You also need to think and slowly put in place an Employee Reward Management system. Reward it’s not just about monetary compensations.

Make sure that your HR Policies do produce an excellent Employee Handbook and a good induction process for new employees.

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  1. KPIs & HR Analytics.

You will need KPI- metrics for Employee Performance and monitoring of all HR Processes.

HR Analytics might not be so critical as an early stage in your organization, but you need to start collecting them (and obviously, they need to be defined first) at a certain point in time so that they can make sense in the future.

Don’t overdo it. Humans are not machines and they are definitely not data- driven (at least not their …‘motivationware’); so make sure that you have enough historical data (ideally you need 2+ years’ worth of data before y9u can make sense of them and interpreter them properly.

 

  1. Employee Safety & Health

The Health and Safety of your employees is an HR issue. You can’t hire employees and force them to work in any kind of a dangerous or hazardous environment; especially if you are an agricultural, biotech, manufacturing, a or transport / logistics organization.

 

  1. Automation – the IT staff.

You really need to think whether you have a true need for an HRIS or even a simple employee- portal.

 

  1. Social Media.

Strongly suggest that before your 1st employee comes to work, you have a clear – however primitive- Social Media policy. You can’t blame people for misbehaving on Social Media because you lack such a clearly written and communicated policy.

 

  1. HR Maturity

HR Maturity is a huge topic -possibly for another article.

But, you can start googling it.

 

  1. Recruitment Strategy

Finally -having thought of an HR Maturity Framework, you now need a Recruitment Strategy.

My objective view on it, is that if you are a Startup or an SME, it might be cheaper for you to work with a good Recruitment Agency- it might save you both costs and the damage of hiring the wrong employee.

 

In Conclusion
These 10 items are just guidelines – it’s up to you to decide what make sense for your organization at a given point in time and at the ‘current maturity level of your organization at that given point in time.

I could have written another 10 or even 20+ items, but that is not the point of this article.

So, kindly please think about all these instead or rushing to get the assistance of a ‘hiring/ trigger’-happy Recruitment Consultant. Wrong hiring decisions are costly – a lot more costly that you think of.

 

Thank you and Good Luck,

Irene

About the Author: Irene Gloria Addison is the owner of HIREghana [Human Intelligence Recruitment], a Leader Ghanaian Recruitment Agency and also a HRM & Organizational Development Consultancy, based in Accra. 

Irene welcomes your feedback/ comments/ remarks/ suggestions via your email message to Press [at ] HIREgh.com. HIREghana can be reached at +233 50 228 5155 or +233 266 555 907

Our website is http://www.hiregh.com

© 2017 Irene Gloria Addison and © 2017 Human Intelligence Recruitment

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