Starting an HR Department from Scratch: Where Should a Small Business Begin?

Hi V. Kini, we are a small manufacturing concern with a marketing and sales office. We want to set up an HR department. Where do we start? Please guide.

Thank you.

List of HR Activities for a Start-up

Employee Handbook (A document to be submitted to the new joinees)

- Short introduction of the company (2 pages max)
- Code of Conduct (3 pages)
- Attendance/punctuality
- Absence without notice
- Telephone and internet use
- Dress code
- Tobacco products
- Leave and holidays (2 pages)
- Performance Policy (1 page)
- Grievance Policy (1 page)
- Termination Policy (1 page)
- One-page document for new joinees checklist (documents to be submitted)

Recruitment Process (documented) and workforce planning (A standard document for management use)

- Manpower Requisition
- Standard Procedures of selection
- Hierarchy of selection
- Orientation and probation
- Work Hours/Shift timings, breaks
- Personnel Information

Induction Management (A standard document for management use)

- A chart of organization hierarchy
- A gist of HR Policies – attendance, leaves, performance, office conduct, and codes
- A gist of compensation and benefits
- A gist of performance review

Employee Records (Files with a set of documents for each employee)

- Interview details with correspondence
- Complete and latest CV of the employee
- Interview records
- A completed employee form including references
- Educational certificates and sheets
- Any other required documents
- Medical Reports
- Relocation details if any
- Work permits and related documents
- Employment-related letters

Performance Management

- Objective of the Performance Reviews
- Performance goals and criteria for reviews
- Performance Review Procedure
- Performance Reviews schedule
- Performance Reviews Hierarchy
- Performance Development meetings

Compensation and Benefit Management

- General Benefits offered to the employees
- Rewards – temporary and permanent
- Payroll

Training Management

- Need Assessment
- General Training
- Topical Training
- Skill enhancement
- Advancement of knowledge

Exit Process

- Hand over
- Exit Interview and forms
- Contact information

Setting Up an HR Department

To set up an HR department, first, you need to hire HR professionals who possess knowledge of HR processes and functions. You can establish different HR cells such as the Recruitment cell, Training & Development cell, and Employee Engagement cell. Initially, streamline all the related functions.

Educate your existing employees about the importance of the HR department for your organization. This will help them understand the need for the new department and encourage their cooperation.

Thanks,
Neha

Setting Up an HR Department: A Basic Framework

To set up an HR department, you need to design a basic framework which consists of the following:

• Manpower
- Appoint an HR officer with reasonable experience in general HR functions and an assistant to assist him to start with.

• Office Management
- You need to maintain records and registers. The basic registers to start with are:
1) Muster roll
2) Leave register
3) Wage register
4) Visit book
5) Leave application forms
6) Travel reimbursement forms
7) Bio-data forms to record employee details
8) Service record
9) Developing a filing system - subject-wise/employee-wise, etc.

• Basic Functions
1) Framing basic HR policy and rules
2) Punctuality and attendance
3) Updating leave record
4) Preparing holidays list
5) Conducting joining formalities
6) Monitoring probation and confirmation
7) Salary administration
8) Basic statutory compliances like P.F., E.S.I.C., Labour welfare fund, professional tax deductions, etc.
9) Minimum employee engagement activities
10) Full and final settlements.

Regards,
B. Saikumar
HR and Labor Law Advisor
Mumbai

First of all, I would like to know the size of the organization. Only then will it be easy to understand the need for HR professionals in the organization, as you are well aware of the different roles of HR.