1. Establish Organizational Design

Your company doesn’t need to have a comprehensive organization plan the day you open, but you do need to have a basic HR department plan for structure and operation. This plan will act as a guideline as your company expands and will help you develop your HR department.

2. Establish On-boarding and Recruiting Procedures

Even if your startup is small, you need to consider how to make hiring decisions. This includes where to post your job ads, how to determine who your target candidates are, and how to structure the onboarding process. Whether you’re hiring your first employee or your 50th, make sure you have the necessary paperwork ready for them. This includes the:

• Offer Letter

• Employee Information for Payroll

• I-9 Employment Verification

• Equity Paperwork

• Any Employment Agreements (non-compete, intellectual property, etc.)

3. Determine Compensation and Benefits

Pay structure: Determine a company pay structure that is competitive and fair based on an evaluation of your market. Learn how to create a competitive pay structure in a changing economy here.

Benefits: Some benefits are voluntary and some are required by law. Voluntary benefits include medical, dental, vision, life insurance, and retirement accounts such as a 401K or IRA. Mandatory benefits vary from state to state but can include workers’ compensation, unemployment insurance, and disability insurance. Learn more about competitive benefits here.

Payroll management system: There are dozens of different payroll management systems. Payroll errors can be expensive to fix—do your research to find the best management system to fit your startup’s needs.

4. Maintain Employee Relationships

Employee grievances can and do happen. Your best approach to any situation is having established policies in place to handle complaints. Prepare to address any employee concerns by outlining your business’s standard of conduct, creating a plan to address issues, and establishing a system for gathering employee feedback.

5. Develop Training Programs and Performance Management Methods

When you’re just starting up your new business, training employees and evaluating their performance may not be your top priority. An important part of setting up an HR department in a startup is making sure you are allowing employees to grow and develop their skills and providing them with appropriate feedback for improvement. This can be accomplished by keeping personnel files and establishing a performance evaluation process. Failure to train employees may result in poor performance and loss of employees and may damage your relevance in the industry if left unchecked.

6. Use a Human Resource Information System (HRIS)

There’s technology out there to help HR departments. Human Resource Information Systems can help you track employee time, recruit new employees, manage paychecks and benefits, automate administrative tasks, track compliance, keep records, and much more.

However, you should keep in mind that just because an HRIS has all these features doesn’t mean your company needs to spend the extra cash to purchase everything. Evaluate company size, payroll needs, industry, and budget to determine what tools you really need and what would be icing on the cake.

7. Prepare for Audits

Another key point to consider when detailing your HR policy is keeping in mind that you will be audited at some point. Before that happens, your HR department should establish areas to review and check for compliance, as well as ensure they meet manager and employee needs. Some of these areas may include:

Policy Information

• Recruitment

• Orientation and Training

• Company Policies

• Benefits

• Payroll

• Salary Structure

• Employee Relations

Documents

• Organizational Strategy

• Safety Plan

• Personnel Files

• Posters

• Performance Evaluations

• Organizational Strategy

8. Performance Management setup:

Assessing Performance:

• What structure will you provide for managers to assess and report performance?

• How will you record and track employee goals?

• How often will employee compensation be reviewed and updated?