HR Setup - what all processes stepwise should be done to start up an HR setup in a start-up firm?

Hi, I want to start up an HR department in a start-up company. Since the number of employees is very few, I just want to know what processes should be followed step by step to establish an HR setup in a start-up firm. Waiting for the reply.

Thanks and Regards

Dear,

I would like to share a few inputs on setting up an HR department in a startup organization. I have 4 years of experience in HR, including 1 year in a startup company.

I would appreciate it if you could provide your contact number or email address, or you can drop me an email.

I hope I can assist you with this.

Regards.

Sure, here is the corrected version of your text:

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Firstly, do not go for consultancies. Your company is a startup company. It is better you start only a few required HR frameworks in it. As and when you guys settle down and expand, you can outsource your activities. In the beginning, you can focus on the following:

- Leave policy (including the number of leaves allowed and to whom, leave absence notification)
- Some training programs related to their domain
- Some team engagement activities
- Induction programs
- Performance measurement and KRAs

In the beginning, these should be sufficient.

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I have corrected the spelling, grammar, and punctuation errors in your text. I have also adjusted the paragraph formatting for better readability. Let me know if you need any more help.

HR Department is a very important branch in any organization. It should be designed in such a way to transact the business activities in a transparent way, most probably in the start-up companies. The HR Department should be set up in the first instance in the following ways:

1. In the first instance, please prepare to organize a Management Information System (MIS) with a view to maintain regularity and maintenance of all the employee database in a systematic way to find out the details of the employees at a glance at one given point of place.

2. Create an Establishment section with qualified and experienced staff members to look after the personnel/service matters of the employees in a systematic manner.

3. Take action to prepare a Service Manual indicating the different categories of employees working in the firm, with the requisite qualifications and experience taking into account the needs of the firm and utilization of the staff members both technical and non-technical, and supporting staff.

4. A systematic Recruitment Policy is to be adopted for selection and recruitment of qualified staff to meet the requirements of the manpower utility. A transparent Recruitment Policy may be designed and adopted for the administrative convenience of the firm. Prescription of the requisite qualifications for various types of posts is necessary to have a uniform policy in recruitment of the staff, both technical and non-technical.

5. Induction program is very important for the expertise of the staff, both technical and non-technical. Senior Members of the staff may be given the task of the Induction Program.

6. If necessary, Training and Development of the staff may be taken up for the betterment of the company activities.

7. Performance Appraisal is the backbone of any company to find out the performance of the employees from time to time and to make the employees suit the needs of the firm. A decent Performance Appraisal System is to be designed and adopted.

8. Create well-organized service rules for the employees of the Company, duly indicating the procedures of appointment, training and development, probation, Confirmation, Disciplinary measures, etc., for the sake of the Company.

9. Leave rules of the Company have to be framed. This may be adopted on par with other related Companies or Government departments or according to Labor rules.

10. Statutory Rules relating to PF, Gratuity, ESI, Professional Tax, Income Tax are to be applied as per the relevant rules of the concerned Departments, as these rules are mandatory for any firm.

11. Service welfare is the promotional activity of the employees of any firm. Employees' welfare is an important activity for any Management. Rules may be framed for giving certain benefits to the employees viz., Medical attendance, study leaves, Festival advances, etc.

The first thing that you do is define the boundaries of your department. I suggest you start with basic services such as recruitment, benefits administration, labor relations - the transactional administrative HR functions before you explore progressive HR facets. It is also important that you create as early as now a Human Resource Information Systems (HRIS) as this will arm you with critical HR info that you need in delivering most of the HR functions. The important thing is that you are well aware of the expectations of management with the creation of an HR department.

First, based on your requirements and the strength of the organization, you hire people to manage the HR needs of the organization.

Secondly, you prepare manuals (e.g., induction, HR manual) and policies (HR policy, T&D policy). Thirdly, you prepare a good HRIS system to provide accurate data for many HR activities and processes.

Fourthly, for all routine HR activities like time office, employee database management, pre & post joining formalities, and performance appraisal, streamline all HR functions in a row, engage people, and use suitable systems and techniques.

Fifthly, you plan whether any HR services should be outsourced or managed by a third party, or if specialized individuals are needed for specific areas. This decision can be based on your organizational requirements. (For example, many firms outsource security, canteen facilities, pest control, or housekeeping staff.)

Lastly, prepare operating procedures and a periodic checklist for daily or important activities. Also, create a checklist for all statutory requirements (applicable labor legislations, concerned authorities and persons, returns data management and due dates, compliance procedures, and maintaining advisors or service providers).

After organizing all these steps or in a convenient sequence, evaluate the results, conduct audits, and team meetings. Strive to improve processes and operations. Best of luck to you. Remember, in the initial days, you may need to work a little harder. Mistakes may happen, but rectify them promptly to avoid additional costs. Starting an HR department can provide valuable experience and knowledge of overall HR practices and organizational needs. Make the most of this opportunity, just like a win-win strategy where you gain knowledge and experience, and in return, provide excellent services and adopt suitable HR practices. Feel free to reach out whenever you need my suggestions. God's mercy will be with you. 😊

Hi,

This is what a basic HR setup is required to be.

Recruitment: Hiring the right people for the right job - Have your EXACT job demands and skill requirements outlined, and then analyze the SOURCE through which you can hire from. A start-up company might have a lower salary offering, and hence hiring experienced people from reputable firms can always be a challenge. Additionally, individuals from LARGE COMPANIES may only be able to perform specialized tasks and may lack in-depth knowledge of a comprehensive process (based on my hiring experience for a start-up).

Compensation: It may not be the best in the business, but you should have a systematic and structured pay package that can include variable pay and bonus payment at the end of the completion of 1 year in the organization, etc. This would also solidify employee commitment for at least 1 year, as individuals may push themselves for their bonuses even if the start-up company is less challenging or engaging. You can also provide SHIFT ALLOWANCES and structure the salary offering into an attractive proposition for employees, making it less daunting for them to accept less appealing hour jobs.

Training and Development: Establish a training program through Management and request a FLOW CHART on the basic processes. Initially, after hiring and onboarding new employees, task the new hires with researching and making presentations on various areas and technologies involved in the workflow. This approach would be cost-effective and a self-learning procedure, enabling you to compile a compendium of WORKING KNOWLEDGE. The presentations can also contribute towards their CONFIRMATION/PROMOTION. Implement the training and development through the employees as it would motivate them to learn more, stay updated with the latest business trends, and make them more competitive too.

Welfare: As an HR professional in a growing organization, it is essential to spend time with employees to understand their NEEDS and WANTS. List them out and be open to suggestions and feedback, with the assurance that not every suggestion can be implemented, but the best efforts will be made to address employee concerns. Employees will exhibit loyalty to the company if they feel cared for and their input is valued. In addition to basic accident insurance/ ESI, consider offering additional LEAVES as necessitated by serious cases with support in the form of half pay, etc. This is just one example of how welfare measures can be implemented.

Employee Engagement: Incorporate less expensive engagements such as ethnic wear, regional festival celebrations, team games, etc., into the MONTHLY/FORTNIGHTLY agenda to keep employees engaged and maintain a vibrant and energetic work environment.

Separation: Like any other process, establish a SEPARATION policy that can accommodate immediate separations (Termination for disciplinary issues) or routine separations arising from mutual agreement. Always have a contingency plan for every type of work through JOB ROTATION or CROSS TRAINING to prevent excessive dependency on any individual at any given time. Forecast and continue hiring or ENGAGE PROSPECTIVE HIRES for potential vacancies well in advance of any separations.

HR POLICIES: Tailor policies based on the business type and work culture in your region to safeguard business interests and enable employees to reach their full potential. Formulate policies in a manner that does not intimidate employees, as PEOPLE CANNOT BE CREATIVE IN A WORK ENVIRONMENT THAT PROMOTES FEAR. Empathize with your employees and consider yourself as a business owner while crafting policies, always anticipating how a policy could backfire if slightly deviated from at any point in time. This forms the basis on which the aforementioned titles operate. Policies can be adjusted as needed to enhance a specific HR function.

Seek assistance from professional organizations if necessary, as start-up companies initially require only basic setups that can be easily managed. Consider utilizing PAYROLL agencies if dealing with numbers and legal compliances in WASA (Wage and Salary Administration) poses a challenge.

Hope this is helpful.

Hi,
At the scratch level of the organization, HR plays a vital role and should take forward according to the objective of the organization. You may start in that manner also
• First we should constraint on statutory compliance i.e. various licenses, PF, ESI etc.
• Develop organization chart
• Formulate various policies and procedures i.e. Credentialing, Recruitment, Performance appraisal, disciplinary & grievance handling etc.
• Manpower planning & resourcing
• Formulation of Job profiling and KRA of new joining
• Develop MIS for Management which could make transparency with the management.
• Develop New Employees orientation programme
• Develop the training & Development on the job as well as behavioral
Regards
Balkishan Sharma

Hi Sreowshi,

Well said, Jean. I definitely appreciate the way Jean put across his thoughts. More or less setting up an HRD is like creating a human being (Mythologically, Lord Brahma does that) giving eyes to see, hands to work, a nose to smell... The reason for my comparison is that only when all organs in a human body are well-placed can a human being make his life 100% successful. Here, organs in an HR point of view are policies, flexibilities, and benefits. As you mentioned that yours is a small organization, I hope you will have the utmost freedom to define your processes and policies that can motivate your employees towards improved productivity. Here are my few inputs:

Recruitment: I believe "hire for attitude and train for skill" is the best approach in recruitment. Never hire people based on recommendations; during the initial screening, recognize the fitment of individuals in the role and assess their flexibility to extend their supporting hours.

Compensation: Do not overpay or underpay; check the current market brackets with other organizations at your standards.

Induction: Prepare informative presentations about your organization's mission, vision, leave policies, group medical policies, and all other benefits and facilities. Since the organization is small and growing, we cannot expect a separate session for PPT presentations. After new employees complete joining formalities (documentation collection, creating an employee code, and company ID), forward these presentations and ask employees to review them and ask questions if any. This is the best way to handle the induction session when there are only a few new joinings.

Policies: Be prepared with leave policies, dress code, code of conduct, floor discipline, holiday lists for the year, event calendar on a monthly basis, internet usage policy, information security, company telephone usage policy, and appraisal policy.

Statutory: ESI, PT, and PF – I suggest initially hiring consultants to handle these. Many individuals working in ESI and PF offices can work as consultants. Since these compliances are related to the government, consultants can handle any issues without additional burden on HRD.

Events/Employee Engagement: Discuss with management about organizing team outings on a regular basis (once every 3 months). These outings should include fun-filled team activities and games to help employees get refreshed and know each other better.

Team Meetings: These meetings should not be formal; instead, walk around the floor and ask employees about workplace issues where HR can help. Address these issues openly to make employees feel secure and supported. Always leave room for open discussions at the end of the meetings.

Exit: Minimize discussions on this topic. Deal with exits on a case-by-case basis in private conversations with employees to avoid demotivating others. Mention the notice period from the appointment letters and focus on formalities during exit discussions.

HR is a vast area. If I claim to have covered the entire functionality of HR, I am mistaken. Feel free to reach me at mvram444@gmail.com for further discussions. Always refer to CITE HR for any clarifications.

I wish you all the best in your assignment. If you are from Hyderabad, please inform me so I can arrange HR sessions for your employees for free.

PS: I am not running any consultancy or working for one; I share my knowledge out of personal interest.

Thanks to all CITE HR members for sharing their knowledge.

Cheers,

Rama Mohan (Raam)

Hi,

I have done the same work a few years back. My suggestion is to go step by step and pick basic processes that are required to carry out day-to-day business under the scope of HR, e.g., leave policy, attendance policy, recruitment procedure, salary practices, induction policy, office etiquettes, general code of conduct, etc.

Once the basic structure of HR is constructed, then you can move on to the next level for HR initiatives based on the nature of work carried out in your organization.