DIY HR—Creating an HR Department From Scratch

So, you’ve decided you’re not ready for HR. You’re thinking that while it would be nice to have a full-time HR staff member (or, for that matter, an HR team), at this point in your company’s story, you’re just not ready. And what’s more, you’re confident you can figure out HR on your own. After all, you’re a do-it-yourselfer. You’ve done so many other things on your own—why not HR?

But did you know mastering HR best practices can make the difference between surviving in the business world and thriving in it? So, whether you’ve decided to wear the HR hat yourself or share HR duties with a handful of other people, you’ll need a good HR tool belt (and accompanying tools) to succeed at creating an HR department from scratch. And for that, you’ve come to the right place. Here you’ll learn not just how to DIY, but more importantly, how to DIW—Do it well. Let’s get started.

So, what do we mean when we say that HR drives business outcomes? Put simply, we mean that HR processes affect how hard your employees work, how well they perform, how happy they are in their work, and how loyal they are to you. And here’s how you do it..

Step One: Build a Strong Culture

You probably already have an understanding of just how important culture is to a business. A company without a strong culture is like a whale stranded in the Sahara desert (things will not end well), whereas a company with a strong culture is like a bear feasting in the fish-filled rivers of Alaska. Culture is one of the primary drivers of employee engagement, and highly engaged employees make doing business like swatting a salmon out of a shallow stream. But did you know HR is instrumental in the creation of culture through activities like smart recruiting, effective onboarding, proactive training, performance management, and benefits programs, among others?

Why this matters: Employee engagement is largely a byproduct of how your employees view your company—specifically your culture. Because if they don’t identify with who you are as a company—why you exist and what your purpose is—it’ll be hard for them to care about much else (other than perhaps how much you pay them). On the flip side, when your people believe in and align with your purpose, they are more engaged, perform better, and stay longer. And this process of alignment begins with HR!

Just how much does culture really matter? In 1992, Harvard professor John Kotter and co-author James Heskett studied businesses that made company culture a key aspect of their strategy and those that did not. What they found was that company culture is monumentally important. For companies that focused on culture:

• Revenues increased 4 times faster
• Job creation rates grew 7 times higher
• Stock prices increased 12 times faster
• Profits climbed 750 percent higher
• Net income grew 700 percent
• Customer satisfaction doubled

Step Two: Engage Your People

With the building blocks of culture in place, you are ready to fully engage your people. Once they believe in who you are as a company, they will be ready to be inspired and motivated to accomplish great things.

Why this matters: Engagement is the primary driver of improved performance, employee satisfaction, and retention. It’s as simple as that.

Consider these two stats:

• Engaged employees outperform disengaged employees by over 200 percent.

• Fully engaged employees return 120 percent of their salary (compared to 60 percent from disengaged employees).

It’s not exactly rocket science to say people who care will be more productive, but these striking numbers are a good reminder of just how important employee engagement is.

Step Three: Get the Most out of Your Talent

With a culture they believe in, and a desire to contribute all they can, your employees are ready to perform to the best of their ability and help the company reach its lofty goals.

Why this matters: Any company is only as good as the work of its people. And since performance and productivity are the leading drivers of organizational output, developing performance metrics is essential to growth. The best way to keep performance and productivity high is to make sure people know when they are doing a good job. And when adjustments are needed along the way, it’s important to catch and address them soon—before they become larger problems. Consider the results from a Deloitte study in 2015. They found three employee outlooks which correlated the most with high performance:

• “My coworkers are committed to doing quality work.”
• “The mission of our company inspires me.”
• “I have the chance to use my strengths every day.”

Of those three, the last one was found to be the most important. If you’re going to get the most out of your talent, it is essential that your people share these opinions. And if you don’t know whether they believe their coworkers are committed, or if the company mission inspires, or if they feel they use their strengths...well, you’ll probably want to.

How to Develop Good Performance Reviews

• Be frequent—Provide regular feedback on performance and expectations, and discuss any problems that need to be addressed. Schedule time for this feedback and make it a top priority (turn off all distractions so you can give your employee your full attention).
• Assess meaningfully—At least quarterly, have management formally evaluate their employees in a meaningful way that measures how valuable they are to the company. You don’t need to answer one hundred multiple choice questions—just answer simple open-ended questions like:
  • If they got a job offer elsewhere, what would I do?
  • How engaged are they at work?
  • What are some things they do well?
  • What could they improve?
• Use it—Use the answers from the above questions to guide decisions about promotions, raises, role models for future hiring, and who needs performance improvement.
• Ask coworkers—Focus peer feedback exclusively on what a coworker is doing well and what needs improvement. This will help you target what’s working well and what needs improvement without being distracted by useless feedback.

Step Four: Keep Your Best People

So, now that you’ve built a culture your people believe in and they’re motivated and doing their very best work, your next focus should be retention. After all, your company won’t be nearly as successful if you’re losing your most talented people left and right.

Why it matters: Losing employees can decrease company morale, stall company growth, and cost a lot of money.

That bears repeating: A lot of money.

It’s estimated that every time an employee leaves your company, it can cost somewhere from one-and-a-half to three times the departing employee’s salary to replace them. This is the total cost of finding, hiring, training, and the time it takes to get the new employee up to speed. In the United States alone, $11 billion in losses a year is attributed to turnover.

That’s to say nothing of the competitive advantages you may lose out on through turnover. If your turnover rates exceed that of your competitors, you have higher business costs. And how many times have you heard of talented people leaving one company only to go contribute to their competition?

Then there’s morale: It can be tough for people to continue to buy into the company’s mission and vision and think long-term when they see their friends leaving.

How to Create an Enjoyable Working Environment

In the spectrum of human motivation, basic physical and psychological needs come first. A pleasant yet unobtrusive working environment sets the stage for focused work.

• Match the workspace to your own unique culture—If one of your company values is to be environmentally responsible for example, make sure your workspace is energy efficient, participates in recycling programs, utilizes low-VOC materials, and more.
• Keep it comfortable—Did you know the ideal workspace temperature is 69°–71° F?
• Make it scenic—Bring in some plants, and give employees access to as much of the outside view as possible.
• Provide tools for collaboration—Provide your employees with dry-erase boards (and markers) to encourage collaboration and brainstorming.
• Keep it clean—Do everything you can to remove clutter and pollution (e.g. dust, old computer monitors, etc.) from the work environment.
• Be colorful—Fill the decor with colors that stimulate focus and productivity and that express your culture. Painting a wall is one of the cheapest ways to have a high impact on the workspace.

Step Five: Be Efficient

Developing efficient processes helps you focus on the business objectives that matter most, which allows you to master the right things and stand out in your industry. Through fast and efficient processes, companies can stay nimble and flexible—something every growing business needs.

Why it matters: While getting customers to buy into your product or service was your first hurdle as a business, mastering operational efficiency is what takes companies from successful to truly special. Operational inefficiency can kill your ability to innovate and grow as a business.

This is as important for HR as it is for any other facet of your business. If your HR processes are taking up too much time, you need to find ways to automate them. HR automation can reduce the cost of HR processes by an average of 60 percent.

Automation also allows employers to give individual employees the ability to solve issues themselves, freeing managers up to grow the business instead of putting out fires.

Whether it’s now or down the road, you will need an HR department at some point. But after considering all the ways HR can positively affect your business, if you are still determined to do it alone, there are three things you need to do right now to lay a foundation for the future.

Step One: Record Consolidation

Disorganized or cluttered record-keeping can slow down your entire organization, waste time and money, and even affect your company culture.. So it’s important to find a way to keep your records organized. The easiest way is through electronic record-keeping.

Step Two: Generate Reports

Once your records are consolidated and organized, you need to do something with them. Take employee data like their responsibilities, performance, skills, and preferences, and turn it into valuable insights. Those insights will be able to guide your business strategies and tactics. By generating reports, you will be able to make better decisions and reduce future risk to your business.

Step Three: Automate the Operational

As important as HR activities are, the operational or administrative activities of HR should not monopolize your time. If software can optimize a task, you could be using that saved time to focus on culture. This is where HR software comes into play. HR software can help you accomplish all three steps in building your foundation: it can consolidate records, generate reports, and automate the operational tasks.

HR drives business outcomes, but you don’t have the time or resources to spend all day doing HR things. Here are a few benefits of HR software worth considering now:

Benefits of HR Software

• Reduce clerical errors—Reduce error risk and protect your business from fines by organizing and automating your data.
• Monitor compliance—Track employee training, keep compliance documents (like signed harassment policies) in one organized location, and create accurate reports that help you stay compliant.
• Speed up hiring time—Use an applicant tracking system (ATS) to hire people faster, reduce recruiting costs, and strengthen your employer brand.
• Track time off—Save everyone time by putting an end to ceaseless questions about vacation days with automated time-off tracking.
• Onboard effectively—Make the first few weeks incredible for new employees and yourself by automating onboarding.
• Stay connected—Use mobile apps to quickly reference employee information, create portable workflows that allow decisions to move forward remotely, and keep all the moving parts of your company connected even when you’re on the move.
• Empower employees—Give your employees the ability to update relevant personal information, easily check benefits and other company information, and fulfill other assigned tasks.
• Gain insights—Quickly and easily create reports that will inform business decisions and improve business productivity.
• Create efficient approval processes—Put bottlenecks into the guillotine once and for all with the help of custom workflows.
• Go paperless—Use e-signatures to save lots of time (and trees).

Measure and manage performance—Create performance reviews that actually help your people improve.

HR is more than important—it’s crucial. When done right, it helps build a culture that attracts the right people to your company. It helps you leverage that culture to engage your people and keep them motivated in their day-to-day work. It helps your people reach their full potential, and it reduces distractions which might prevent them from doing so. It helps keep your people satisfied and loyal to you and your cause. So, whether you’re “ready” for HR or not, you need to use it! Don’t waste any more time—make an HR plan now. Find the right tools—including the right HR software—to help in the process and make sure you are setting your people up to succeed.