HR departments are virtually non-existent in many startup companies. Most of the time, the owner doubles up as the general manager and the HR manager. Most owners only set up an HR department when the number of employees gets too high for them to manage besides running the business.
In contrast, the HR department is as relevant as any other department in the startup and should be part of the organization from the very start. Its importance spreads to more than writing disciplinary letters and processing payroll for your staff. Below are the reasons why an HR presence is vital from the start of the company.
Human resource management
It is always said that the ‘People’ P in the 7 Ps of marketing is the most important element in a business. There is a reason behind it. Your employees virtually run every aspect of the startup from production to sales. Therefore, they are as important as the machinery and the products that you sell at the market.
An HR department makes it easier to manage human capital at the organization. It brings a structured way of developing company culture, developing workplace rules, and offering guidance to the employees. You may not have the time to follow up these important aspects of your company as the owner or may lack the knowledge to do it effectively. However, a team led by an HR professional will do it effectively with the results seen in productivity and the discipline of the employees.
Training and development
A human resource department conducts an audit of the workforce skills versus the needs of the organization with the view of determining which skills are lacking. As a startup, it is easier to train the existing staff to handle specific tasks or improve their productivity than hiring new workers who are more qualified as they will add to the cost of salaries. Training and development also enhance employee satisfaction and improves employee retention.
You need a dedicated department to be able to monitor the workings of your organization and determine what is lacking as the business grows. Instituting an HR department at the start gives it enough time to grow with the business and provide the skills required as the business grows.
Conflict resolution
Conflicts in the workplace are inevitable. This is because employees come from diverse backgrounds, have different ideas, and their personalities differ from one another. As the business owner, you are not best placed to resolve conflicts among the employees. You may lack the required skill on conflict resolution, or you may make a partisan judgment. Moreover, it is always good for employees to have a higher authority they can seek an audience with if they do not get satisfied with the decisions at a lower level.
An HR department should be headed by staff members specially trained to handle employee relations and conflict resolution. Remember, enhanced cohesiveness among workers improves collaboration, innovation, and productivity.
Sustained business
Every startup should have succession planning in mind from the very start. As the company grows, new positions become available as per the needs of the organization. Instead of hiring new staff to take the positions of leadership every time a new post becomes available, the company is better off nurturing the available talent to take up the leadership positions. The existing staff members know about running of the business, its weaknesses, and strengths. Therefore, the company will not spend much time and pay heavily to have them oriented into the company.
Nurturing talent should start as soon as the company begins. The HR department is able to recognize individual capabilities of your employees and positions where the best fit. As these opportunities become available, the right people will be given the right jobs. Therefore, having an HR department from the start is actually good for future leadership and management of the company.
Regulatory compliance
There are tons of rules that govern employment contracts and employee-employer relationships. These regulations touch on everything that touches on employee welfare from minimum wage, overtime pay, occupational health, conflict resolution, leaves, promotions, discipline, to firing. Contravening any of these rules always comes with hefty penalties to the business.
If you are not an HR professional, there is a high chance that you may contravene one of the many rules that apply to your organization. For example, you may think you are hiring independent contractors only for you to be sued for remuneration and benefits given to employed workers. An HR department ensures that all the laid down regulations are followed to the letter. Moreover, it applies best HR practices to ensure all matters concerning the employees are completed within the set deadlines. This keeps your business on the right side of the law.
Budget control
Many business owners think that avoiding the HR department at startup is a way to control spending. On the contrary, having an HR department can help control spending in a number of ways.
First, the HR department negotiates the best rates and benefits with new employees thereby offering salaries that are within the capability of your startup. One way they control employee pay is by using a paystub generator which acts as a guide to ensure your company is paying fair rates. Second, the department analyzes employment trends and salary scales on different job classes in the industry. This ensures that you do not overpay your employees and that the wages remain competitive enough to attract quality talent.
Third, the HR department helps in the creation of different positions in the company. With its assistance, you avoid duplicating roles or creating too many management positions without a real impact on efficiency and productivity. It helps identify tasks that can be merged and determines when certain positions are required in the company.
The importance of HR presence in a startup cannot be overlooked. It puts in place structures and procedures that form the basis for future management of human capital and leadership, salary scales, company culture and hiring among other elements. With employees being an asset in the running and growth of the startup, the proper management of the workforce has a direct effect on the probability of meeting set corporate goals.