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At What Point Does Your Company Need an HR Department?

How do you know when your business is ready for HR?
Andrew Deen has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He implements lean methodology and currently writing a book about scaling up business. Twitter @AndrewDeen14
Andrew Deen has been a consultant for startups in almost every industry from retail to medical devices and everything in between. He implements lean methodology and currently writing a book about scaling up business. Twitter @AndrewDeen14

When you first start your business, you’re usually every department: executive, customer service, QA, and much, much more. It’s a lot of hard work to be an entrepreneur, and it can take a while before you start seeing the results of your efforts.

Once you hire your first employees, however, the dynamic changes. It’s very exciting to bring on new team members: it means that your business is growing and you can no longer keep up with the demands of running a small business on your own. However, it also brings its own share of problems: you lose a lot of the control you had, and you have to ensure that everyone is working well together.

At a certain point, you start to wonder if it’s time to bring Human Resources into the mix. Many entrepreneurs squirm at the idea of adding an HR department, thinking it feels too “corporate” and unnecessary for a small team. While a business of just a few people might not need HR yet, it is a necessary department for any business that grows beyond this point, like it or not. However, there’s no standard number of employees for when an HR staffer is recommended. So how do you know when you (and your business) are ready?

The Benefits of HR

HR is a necessity eventually. There are so many benefits to having at least one person in this department, even if it seems like something you need, rather than want. Here are just a few reasons you WANT an HR department.

  • HR makes hiring easier—less time spent vetting candidates who are not qualified.
  • HR takes care of the paperwork—reducing your time spent on the logistics of onboarding, benefits, etc.
  • HR provides support for your employees, and serves as a neutral third party for complaints and disputes, allowing for a fairer workplace.
  • HR helps your organization comply with employment laws and other regulations.
  • HR helps you stay organized.
  • HR can implement standards and policies to give everyone consistent guidelines and expectations.
  • HR can boost morale by giving employees a place to go when they have an issue.

When Should You Hire a Staffer?

First of all, you don’t have to hire an entire HR team right off the bat. You can start with just one or two people and grow from there—a standard operating procedure for building out any team. Many companies start thinking about hiring for an HR position once they’ve reached about 30-50 employees, and are considering hiring more. However, you might want to consider getting some help even if you’re below that threshold. If you’ve got too much on your plate as the founder, think about how many of the tasks you perform are HR-related. How much time could you save by delegating those tasks to someone else? Think about your company—is it getting big enough that squabbles are happening and bridges are being burned? Finally, of course, you need to be able to afford hiring someone at a fair rate. If you don’t need someone full time, you can always outsource to a consultant until you reach that point.

A Catalyst for Growth

Because HR takes away a lot of the headaches off a founder’s plate, it opens your company up to a new opportunity for growth. You’ll have fewer liabilities, and you’ll finally have an opportunity to implement policies that will impact your business long term. Don’t think of hiring an HR staffer as “going corporate”. Think of it as the next chapter in your business’s success story!

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