When Is It Essential for a Company to Have an HR Department? Let's Discuss!

When Should a Company Necessarily Have an HR Department?

When can a company do without an HR department? I am eager to learn about your views.

It is recession time, and I am seeing a few companies removing the entire HR department. Hence, I want to know how HR professionals view their roles in companies.

For an organization, every wing is important to grow positively in all directions and cost-effectively. As long as the number of employees is small (less than 100) and the manager is confident in handling recruitment, managing employees on the floor, communicating, and addressing grievances, there is no need for an HR department.

The Need for HR Intervention

To handle a larger number of employees, HR intervention is definitely a must. It serves as a bridge between corporate management and shop floor management, facilitating inside and outside communications, welfare, motivation, retention, and recruitment to promote and achieve positive results in the organization.

In many companies, HR is meant to "manage compliance" rather than "manage HR issues." How do you look at this phenomenon?

Let us look at the subject in two ways. First, as far as the HR department and functionary are concerned, it starts from the very conceptual stage of the company and continues until its liquidation or closure. The work done to register the company, recruitment, training, and so on, until the end, are all HR responsibilities.

Secondly, it now depends on the owner or top management to either perform the tasks themselves, hire additional personnel specifically for the job, or assign the task to an existing department or personnel. This decision will be influenced by the volume of work, the availability of professionals, and the company's willingness and ability to bear the associated costs.

It is indeed an interesting topic to delve into.

Regards, Mathur

You can do away with cooks, but can you do away with cooking? Whether your HR workload is shared between two people in two different departments like admin or PR, or you have an independent HR, the HR work will have to be done by someone. Whether it's the mother who cooks or the daughter who cooks, someone has to cook. If you truly want to have an efficient system, you must have an HR professional if your workforce exceeds 20. It is worth the money spent. If you can manage part-time staff, that's fine, but having a competent HR professional capable of handling all aspects of HR is imperative for an organization. It will be a long-term asset concerning PF, TDS, promotions, increments, discipline, retirement, and so on.

HR is Not an Add-On; It is a Fundamental Need

Regards,
Dr. Ram

I am talking about the HR Department and not HR as a function. True, someone has to cook, but do you always need to engage a cook?

With the attrition phenomenon, it is a delicate balance to identify when and how the HR department becomes an asset. As a Prof of HR, you might be able to share more on the business and quantifiable economic logic behind that statement/post. I would appreciate it if you share your views on the principles of organizational design as applied to the need for an HR department (not function).

Regards,
Nikhil

Very true... If you answer the question: WHEN NOT TO HAVE AN HR DEPARTMENT? I guess you will also answer when to have one. It is interesting and important to understand this, especially in the phases of recession.

Regards,
Nikhil

Let us remain objective while answering the question. The concept is neither old nor a myth. It's prevalent in many medium-scale enterprises in India and is pertinent due to the pressures of the business cycle.

Regards,
Nikhil

Avinash, it is less about your ability to set up a department and more about whether we need one or not. Your figure of 50 needs a bit more explanation. How did you come up with this number? It would be helpful to understand the economic reasoning behind it.

Interestingly, I have seen IT companies that had only 2 HR professionals for a workforce of over 2000! While the design principles may differ, it is crucial to know when to have a full-time HR department and when not to.

When Should a Company Necessarily Have an HR Department?

When a company is setting up all its policies and structuring its departments with new recruitments, and injecting all its processes to build the organization, then an HR department is needed.

When Can a Company Do Without an HR Department?

Yes, it is possible for a company to do without an HR department when all its tasks like payroll, recruitments, training and development activities, recreational activities, etc., are outsourced. When these outsourced team members are working for that particular organization without any hassles, then a company can do without an HR department.

How Do HR Professionals View Their Roles in Companies?

In recession times, HRs should use only one logic: 1+1=3. This means the HR should have overall practical knowledge of all the core areas in the HR system like payroll, recruitment, employee engagement activities, statutory issues, handling grievances, etc. This rule can help an HR professional demonstrate their importance in the organization so that they will not be removed. It is very important to represent the HR strategies so that the company will know the importance of HR.

Regards,
Ashwitha Naidu