Building an HR Function From Scratch

Growing companies usually build HR in the wrong order. They begin with engagement initiatives and culture work while contracts, records and pay decisions remain undocumented. When something goes wrong, there is nothing to stand on.

Stage 1: the floor

• Written employment contracts for every employee.
• A single, accurate employee record system.
• Documented leave, absence and working time rules.
• Payroll process with a defined approval and audit trail.
• A basic handbook covering conduct, grievance and disciplinary process.
• Confidentiality, data and equipment policies.

Stage 2: structure and roles

Next, document the organization as it actually operates: roles, reporting lines, decision rights and the responsibilities that currently sit with whoever volunteered. Job descriptions written at this stage should describe outcomes and decisions, not task lists.

Stage 3: performance and pay logic

• A simple objective setting cycle with quarterly check-ins.
• One rating scale with written definitions.
• Salary bands or at minimum a documented pay decision logic.
• A promotion standard that is stated before anyone is promoted.
• A documented underperformance process managers can follow.

Culture work built on undocumented pay decisions does not survive its first difficult year.

Stage 4: capability and development

Only now does structured development pay back. With roles and expectations defined, capability gaps become specific and training can be commissioned against them rather than against interest. This is also the point at which succession planning becomes meaningful, because critical roles can be identified.

Stage 5: analytics and workforce planning

1. 01Headcount, cost and attrition reported consistently.
2. 02Time to hire and quality of hire tracked for critical roles.
3. 03Internal movement and promotion rates visible to leadership.
4. 04Workforce scenarios attached to the business plan.

Built in this order, HR becomes a system managers can operate. Built in reverse, it becomes a series of initiatives that each require the HR team to be present for them to work.