5 steps to set up an HR team for your small business from scratch

  • Last Updated : August 23, 2023
  • 3 Min Read
How small businesses can set up their First HR team

As a small business owner, setting up HR operations may not be top on your priority list. However, as you scale up your operations and employee count, you may run into compliance and employee engagement issues that'll keep your business from growing. Assembling a team to take care of your HR operations and employees can allow you to focus on improving your product and catering to customer needs.

If you are a small business owner looking to establish an HR team, here are five steps to help you get started:

  1. Lay out your goals

Before building your HR team, it's important to have a clear idea of what you wish to achieve with this team. This will help you understand what to look for in HR candidates. For most small businesses, the HR department is primarily required to streamline HR operations, keep employees engaged, and maintain compliance. If that is the case for your business, you should start looking for an HR generalist who can take care of activities like onboarding, employee relations, and compliance management. If you are specifically looking to build an HR team that will hire individuals who are consistent with your organizational needs, you'll want to look for an HR recruiter.

  1. Define your company culture

A well-defined company culture determines how your employees, partners, customers, and the public perceive your brand. Your HR team will be the guardians of your company culture. They'll make sure employees are managed in a way that aligns with your company's values. As you set up your HR team, have a clear idea of what your organization stands for and what differentiates it from other businesses.

  1. Establish employee policies

Once you define your company culture, collaborate with your new HR team and use it as a foundation to set up your workplace practices and policies. To start, you can build your attendance, leave, and payroll policies. Decide on employee work hours, sick, casual, and earned leaves, pay schedules, tax deduction policies, and overtime pay. You'll also want to determine your compensation and benefits policies.

Here's a complete guide on how to get compensation and benefits right.  Remember to draft a clear strategy for performance management and decide how often employee performance will be reviewed and the criteria for salary hikes and bonuses.

  1. Set up your HR operations

After the workplace policies are in place, you can work with your team to decide how you'll accomplish everyday HR operations. Performing them manually can be complicated, especially if your employees are working from different locations or have flexible schedules. It's best to select comprehensive HR software from day one to keep your data secure and centralized. HR software automates all HR operations, meaning your HR team and employees can do away with spreadsheets and focus on strategic, rather than administrative, tasks.

Zoho People, our HR Software, is easy-to-use, cost-effective, and comes with a multitude of features that help small businesses take their HR management strategies to the next level. Learn more about Zoho People. 

  1. Keep compliance in mind

Getting HR compliance right is the key to saving your business from unnecessary lawsuits and penalties. Your HR team should secure all HR documents and data for audit purposes. It's important to draft policies that explain the role of each HR professional when it comes to managing HR compliance. You can also help them stay on top of HR laws and regulations by providing subscriptions to HR publications. Automating HR operations with HR software can make compliance easier, as it reduces human error and keeps data secure in a single, cloud-based system.  

Establishing a great HR team

Forming a dedicated lean HR team is a valuable step for any small business. With this addition, you can focus on other important tasks while your HR team supports your small business's greatest asset, its employees.

Also Read:6 types of HR documents every small business needs.

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  • tarika

    Content Specialist at Zoho People

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