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As a small business, when is the right time to hire your first HR person? And how do you know what kind of HR person you need?

There comes a time when a small business becomes big enough to hire its own HR person, which is an exciting time in the growth of an organisation. You can receive a great deal of value from this person who can become a sounding board and trusted advisor to support both you and your team. 

However before taking this step, it’s critical that you understand exactly what an HR person does and does not do. Just like finance or sales or marketing, there are lots of different functions within HR. Getting this wrong is the number-one pitfall I’ve seen for small businesses expanding into HR. Here I’ll explain how to define your HR needs to craft the right role, and how to support your new HR person so they are set up for success. 

Just like finance or sales or marketing, there are lots of different functions within HR.’

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5 Typical Stages in Developing HR

First let’s take a look at the way small businesses usually expand their HR function as they grow. This journey typically falls into five stages

Stage 1: HR Duties

When a small business first identifies that it needs extra HR support, it generally gives additional duties to someone in finance, or to the payroll person or office manager. You might say, ‘hey, we need you to handle the recruitment and employment record-keeping and personnel files’. In other words, administrative work relating to people. 

Stage 2: HR Administrator

At some point, your finance person or your office manager will say, ‘this is getting too big, I can’t do this in addition to the rest of my job’.

That’s often when the business decides to expand and the HR duties become a standalone role, though it’s still within the finance team. Or it could be that the role of office manager is created, if you don’t have one already. They are given responsibility for tasks such as:

  • recruitment
  • induction
  • personnel files
  • administration
  • record keeping 

The HR administrator or office manager will take on general office-management duties, like supplying the kitchens, bathrooms and the stationery cupboard, and organising the social club and the Christmas party. Again these are really administrative tasks.

Stage 3: HR Professional

In the next stage you might say, ‘we now need someone that’s dedicated and professional and has experience and qualifications in human resources’. This is the moment when you usually see the HR duties split into two roles, which can be risky. I’ll get into some of the common mistakes below, but for now let’s say that one becomes a professional HR role, and the other becomes an office-management or payroll role.

Usually a business will start with a part-time HR professional unless it’s going to expand rapidly. The part-time role might exist for a number of years before the business adds a second part-time HR person, or moves the HR function to a full-time role. 

A part-time HR professional is usually adequate for businesses between 50 and 100 employees. I’m using those figures loosely because it is very dependent on factors like:

  • the type of organisation
  • the split between salaried employees
  • any awards or agreements in place
  • whether the workplace is unionised
  • whether the workers are blue collar or white collar 

When you’re at the point of hiring your first HR person, I can almost always guarantee you that it’s going to be more of an HR administrator role, because the HR person needs to take on the administrative tasks that are already in place. But at this HR Professional stage, you’re moving into more complex areas like

  • policies, procedures, compliance and workforce reporting
  • basic training
  • industrial relations
  • grievance handling
  • investigations
  • basic work health and safety work

Stage 4: HR Manager

The next step is establishing an HR manager. This is when the business gains a standalone HR function. It handles all the things that the HR Professional was managing, but now you can take your HR strategy to the next level. You can ask questions like: 

  • who are my internal customers?
  • what HR strategies do we need to have to serve those customers and link to the overall business strategy?
  • how can we invest in leadership development, coaching and future planning?

now you can take your HR strategy to the next level’

Stage 5: HR Business Partnering

In the final stage of business partnering, the HR function becomes much more strategic. This is when the HR lead becomes a strong influencer in the leadership team and an adviser to the CEO.

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6 Top Tips

I’ve just described a smooth expansion of the HR function as a business expands, however unfortunately it doesn’t always go smoothly. I’ve seen many businesses stumble along the way, but here are my six top tips to save you from making the most common mistakes. 

1. Separate Admin from Strategy

If you are relying on an HR administrator alone, you will start to notice that you are lacking strategy. Problems will arise around grievances, resignations and staff turnover. It may be that your HR administrator is too busy, or they simply don’t have the skills and experience to work on strategy. 

The best way to solve this is to split your HR admin and your HR strategy. These are two separate roles and it’s unlikely that you’ll find someone who can do both. Just as you wouldn’t ask your CFO to do your bookkeeping, you shouldn’t ask your HR Professional to just do admin. It’s a different skill set and a different level of experience. 

Just as you wouldn’t ask your CFO to do your bookkeeping, you shouldn’t ask your HR Professional to just do admin’

2. Use Software & Outsourcing Solutions

Before you hire your first HR person, you can reduce some of the HR admin by putting in place an HR Information System (HRIS) to collect and store data about your employees. This will significantly reduce the administration workload. You can also hire consultants to assist you with recruitment and WHS. This will free up your new HR person to be more strategic in workplace culture, staff development and retention.

3. Don’t Use HR to Manage Staff

It’s fantastic to bring your first HR person on board, but beware of the big pitfall that can appear at this stage. I often see that small businesses simply don’t have enough strategy work to keep their first HR professional busy. 

This is when organisations say, ‘that’s okay, we’ll get the HR person to do the performance reviews, the probation reviews and the check-ins with new staff. They can let people know when they’re performing and not performing.’

This is not a good idea. HR should not manage your staff. The HR person is supposed to be the person in your organisation that is always straddling business and employee needs. If you ask your HR person to manage staff, you will be:

  • removing employees’ voice If the HR person delivers performance conversations the employees will just see them as a manager. 
  • divesting responsibility of managers If managers aren’t having performance discussions, doing promotional reviews, and having those difficult conversations, the employees are not going to respect the managers. 

HR should not be the police. They should not be the bad guys. If you find yourself saying things like ‘oh, I shouldn’t say that because HR is in the room’, then you have a problem. You and your HR person should be in it together. Your HR person should be your sounding board and your trusted advisor, and they should fill that role for your employees as well.

4. Don’t Try to Squeeze Too Much into HR Roles

Some people try to fit too much into an HR role, by combining HR and payroll, or HR and WHS, or even worse, HR and payroll and WHS. This can cause people a lot of issues because they are completely different areas of focus. 

It’s really important to clearly define your HR role. Sometimes I find that when a business is hiring an HR person, what they actually need is a strong people manager and not an HR manager at all. 

5. Use the Right Terminology

Here’s a question I’m often asked: what’s the difference between Human Resources and People and Culture? 

Back in the 90s, we used the word ‘Personnel’. Then we moved to ‘HR Management’. Now we’re calling it ‘People and Culture’. But you can’t separate these out – you can’t have an HR person who isn’t concerned with your culture and the best ways to make your people more effective. 

To me, the actual wording isn’t that important. But to some people, ‘People and Culture’ seems more forward-thinking, as though you’re making a statement that this is not traditional HR, in a policy and policing sense. Instead, you are interested in supporting workplace culture. However, sometimes people can think, ‘well, if that person is responsible for people and culture, I don’t need to be’. This is not what we want either.

What you call the role is not as important as what you expect from the role. If you hire an HR Business Partner to provide advice to managers, they’re essentially an internal consultant to your business. That means they’re not going to do admin, they are going to be very focused on influencing the leadership team, being the advisor to the owner or the CEO, and will usually have people reporting to them. 

It’s important to think your terminology through before you go to market with the job. Will you use HR or People and Culture? And are you looking for an HR Administrator, an HR Manager or an HR Business Partner?

6. Avoid HR Burnout

Unfortunately, there is quite a bit of burnout in standalone HR roles. For businesses under 100 employees, you’ll usually find an HR person working on their own. They may have a lot of people talking to them on a regular basis, including divulging very personal situations. There may be situations where people are disclosing self-harm or psychological distress. 

It’s important to think about the support that you can provide for your HR person before you hire them. Is there someone internally that can be a support person for conversations and debriefs? If you don’t have someone internally, is there an external person who can do this? 

At Amplify HR, we act in that role for some HR managers, because sometimes in HR you need someone else to talk with, to bounce ideas off and even just to have a whinge! HR is not like other roles. If, for example, you’re the only finance person in the business, there aren’t many circumstances where you can’t talk with your colleagues about issues that come up. However in HR roles, very often you can’t talk to people about what happened in your day.

Takeaways

So to recap here are the answers to the key questions on hiring your first HR person.

When should I hire my first HR person? It’s very dependent on your particular situation, but usually when your business is somewhere between 50 and 100 employees. Before then it is important to still be intentional with your people and culture which is where we can help.

What does an HR person do? That depends on what you want to achieve. Think about whether you need an administrator or someone with a more strategic skill set. Part of your solution may be in setting up an HR Information System, or outsourced recruitment and WHS support. 

Can my HR person take over performance reviews? No – your HR person should not manage staff performance, that’s a manager’s job

How do I support my first HR person? HR can be a high-pressure role, sometimes dealing with sensitive psychological issues. Make sure you put some mechanisms in place to provide debrief support so your HR person doesn’t burn out.

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