I am also in a similar position. i can share how I have started, though I am also facing a lot of problems.
1. firstly, prepare a master data of employees & document all personnel files properly.
2. Take hold on attendance system.
3. Prepare all the formats like offer letter, appointment letter, salary structure etc.
4. Keep communicating with the employees regarding the problems they are facing & try to identify the best possible solution.
5. discuss with the management on what would be the appraisal system that you can follow.
Please let me know if I have missed on any thing & if you have any suggestion for me as well.
22nd February 2013 From India, Mumbai