How Do I Create an HR Department When My Company Doesn’t Have One [Reader Question]

One of the most popular features here is a series answering reader questions. If you have a question you’d like to ask here or on the podcast, please send it to questions AT or record a short voice note here anonymously:

See other reader questions here. Today’s question is about starting an HR department when the company doesn’t have one yet.

Hey there! Hope all is well with you and your family! My name is Demee and I just finished watching your video on YouTube that you posted several years ago. I will give you some quick background on myself.

I was a Business Manager at a massage business for almost 2 years and decided to step down because I had a feeling that I was on a sinking ship–and it turns out that I was right! So I took a huge leap of faith and changed fields completely! I am now an Oral Surgery Assistant (I had no experience & they trained me) for an oral surgeon group with 9 locations. I’ve currently been at my position for almost 2 years now and I realize that there is no HR department so I see the need for this and want to start one.

Do you have any tips or suggestions for me? I would have to convince my manager of this and he would then have to probably bring it up to the doctors. I have experience hiring/terminations, processing employee verifications, doing payroll, creating/editing the employee handbook (which we desperately need), and I used a payroll technology vendor in the past.

how do I start an hr department at my companyHi Demee! This is a wonderful question, and thank you for your passion to help your organization and your team with this. I think it’s a great idea, but you’ll definitely have some challenges ahead of you. Let’s talk through some of them before I give you some ideas and pointers on how to go forward with this.

Roadblocks and Challenges

Starting an HR function means change. Right now there is an established method at your company for hiring, terminating, paying, etc. This means taking that out of the hands of the people that currently do it and putting it into an HR function. That can be tricky to do if you don’t have experience setting up and running an HR department from scratch.

You need to be able to answer the question for why you are a better fit for this than some outside hire. From my limited viewpoint, you should emphasize your awareness of the leadership structure, the culture/values, and other things that an outside hire would not have. Those are strengths for you.

If you can overcome that by demonstrating that you have the right skills, you still have another issue: budget. Right now, you help the company make money. If they move you to an HR role, that means you’re not only not helping them earn money, you are consuming the revenue that comes into the business to support your function in an overhead capacity financially.

Translation: you need to be thinking about how this new HR department is going to save the company money or enable better profitability in order to build a proper business case. 

If you don’t, you’re unlikely to get the funding and support to make this happen.

Ideas and Strategies for Success

Hopefully I didn’t rain on your parade! I just want you to go into this eyes wide open and not realize that you were missing some important pieces for consideration. That said, let’s talk about what you need to do in order to make this work.

As pointed out above, you need to build a business case. This is like a mini business plan for this HR department showing what it will cost, the benefits it will provide, and the value you will create. This value can come from reduced compliance risk, reduced use of external consultants, or even lowering employee turnover by creating better onboarding, hiring, and engagement programs.

In our Ultimate Guide to New HR Departments we cover some great ideas, strategies, and suggestions for making this happen from about half a dozen experienced HR professionals. Bookmark that one, because it’s a keeper.

Essentially you’ll need some documents, policies, and more to get started, assuming you get approval, such as:

  • Offer letter
  • Employee information for payroll (direct deposit, etc.)
  • I-9 Employment Verification

You’ll also need sample policies. You can get drafts online as a starting point but may want them to be reviewed by a compliance partner, HR consultant, or legal counsel to ensure applicability in your state/locality.

I’d also point out that if you’re shifting yourself in terms of your career, you need to be thinking about how you are going to get up to speed on all things human resources. This list of HR training resources has over 40 different places where you can learn and grow your skill set for free. It’s a never-ending battle and there’s always something new to learn, which is why so many of us love HR as a profession!

HR community, what else am I missing here for Demee? What advice would you give?