Our Blog


In Human Resources Work , February 24, 2020

Why do Start–Up companies set up the HR Department? Is it really required? What are the mandatory requirements to set it up? These are the common questions any CEO will have in mind. Through this article, some of these doubts regarding the smooth functioning of the HR Department would be addressed.

The first question that springs to mind is the requirement of an HR Department at all since the employee count is quite less. It is essential to understand that since almost all businesses are people dependant, it is mandatory that a separate department handles their day to day and overall functioning. Disgruntled employees would prove to be costly in the long run. Plan well in advance, lest you run into issues and then ponder at what went wrong. Irrespective of the size of the company, employee policies and procedures should be put in place so that future hassles can be avoided.

Before thinking about how to set up the HR Department, the company needs to first be convinced about the efficacy of HR in the first place. Why is it required? Many businesses run without HR for long periods of time and seem to function smoothly without any breakdowns. But when the breakdown eventually happens, as is the norm for almost any business involving people, the costs and time spent to rectify and salvage the situation is far too much. It is then that companies rue the fact that they neglected this very basic, yet extremely important component of successful business – the people management component. Prevention is better the cure as the adage goes. Here too, if the policies and procedures required under the gambit of HR is put in place, many problems can be addressed before they even become problems as far the human resource component is concerned. It is then that the company can function smoothly without any teething problems.

Once the initial hiccup regarding the value of the HR Department is dealt with, the next big question that pops up is – how to do it? Where to begin? Such a task can be extremely daunting. But it can be dealt with if some tips are followed.

To start off, you need to have a clear definition of the mission and goals of the department. Secondly, you need to figure out whether you are looking to hire a HR person on your rolls or get an external agency to handle the complete portfolio.

Once this is finalized, you need to start putting the policies and procedures in place. Make sure they are industry benchmarked and are up-to-date. What worked before need not necessarily be of merit today. You would need to document each and every thing. It can be manual to start with; eventually to be replaced by an automated one over a period of time.

You need to have personnel files on all your employees. It has to be updated regularly. Have compliance and statutory documents in place. This is very important as you may run into trouble if not maintained.

Are you recruiting and selecting the right people? Are you aware of the talent and skills needed to move your organization forward? Do you know where to find these people? Are you recruiting in a cost effective manner? Are your managers trained in interviewing techniques? This is very important as wrong selects will lead to poor productivity and also disturb the existing system.

What kind of compensation plan do you have? Is it meeting the organization’s needs? Is it motivating your employees? Is it competitive and fair? How about your benefits? Is your total compensation attractive enough to retain existing people and be an incentive to new people? If you do not have proper compensation structure there will parity issues. This will affect the new recruit and also the existing one. This is one of the important areas in the HR Department.

A well laid Performance management system will have to be put in place. Performance of each and every employee is very important in terms of business, as well as overall performance of the company. This is one area which makes or breaks the company. It is also important as it will determine the employee’s growth in terms of compensation (hikes) and career elevation (Promotions).

Training is another important area. Are the skills of managers and employees helping the company in reality or are they just becoming a liability? Is there any mechanism whereby the company has an internal training facility to impart necessary training on a need basis? Or do you have to go to the outside every time you need someone with a specialization?

Are supervisors effectively managing their employees? This is a very important area and should be observed periodically. It has to be planned out annually and also on a need basis. This is one very important area as it might take the environment of the company to the next level or can escalate deterioration.

Put a very good plan on Employee Relationship. Each individual is different as are his wants /needs – both personally and professionally. An effective Employee Relation program can find the middle ground that would be mutually beneficial. It has to be addressed meticulously and there should be some mechanism to do it. It is better to prioritize this area, as issues of employees have to taken up on priority basis.

For a healthy and dynamic work culture, these pointers could prove to be a starting point. Of course, there are many more issues and considerations that need to be handled by the HR Department.  But the areas mentioned above could be used as a checklist in the initial stages.


– Words –

Ravishankar S Aiyar


Aavishkaar Consulting