Creating a Human Resources Department: 10 Things a CEO Should Know.

There’s an old joke in business that every business owner who has hired anyone just once suddenly recognizes the need for a Human Resources Department. Fundamentally, a Human Resources Department that is fully functional and carrying it’s weight in an organization should handle the following duties:

• Maintaining awareness of and compliance with local, state and federal labor laws
• Recruitment, selection, and on boarding (resourcing)
• Employee record-keeping and confidentiality
• Business transformation and change management
• Performance, conduct and behavior management
• Industrial and employee relations
• Human resources (workforce) analysis and workforce personnel data management
• Compensation and employee benefit management
• Training and development (learning management)
• Employee motivation and morale-building (employee retention and loyalty)

You can plainly see the time saving that occurs if you have a human resources department and you can also plainly see that these are “backbone” type functions for any organization. Properly organizing and operating the human resources function sets the stage for smooth present operations and for more seamless future growth.

Let’s look at growing a company. First, growth means more employees and this means more dotting of the i’s and crossing the t’s.  These are all important but time-consuming duties. Any CEO suited to lead knows that his function is to think about the business and strategize for future growth. If the CEO isn’t doing the thinking, he is basically worthless to the organization. The main person can’t render himself useless.

So like the earlier discussions on setting up operations, a CEO must be careful to think in terms of business function for the long haul, even at the expense of some present functions not running in an exacting ways.  The CEO that is a micromanager will jeopardize the growth of the business.  As we have discussed, some CEO’s have a personality type and style of leadership that tends towards being too hands-on. The solution for this well-meaning but shortsighted leadership style is found in doing a good job picking great people for the positions in human resources management the first time. It starts with picking the right human resources manager.

Let’s look at the problem of when and who?

When is like a lot of things in business: open for debate depending on the individual circumstances of the business. Just because it is a generally recognized hard and fast rule that 50 or fewer employees doesn’t require a full blown human resources department, doesn’t mean there aren’t exceptions.  A decent rule of thumb is when the time resources of the employees entrusted with the tasks of human resources exceeds the cost of hiring an HR manager, you hire. Keep in mind, this rule doesn’t account for a CEO who rightly wants to plan ahead for future growth.  The good thing about the rule is it keeps the CEO very aware of the bottom line costs and benefits of each action by each employee in the organization. (A CEO should seek to master actual costs and benefits analysis within his organization for everything that is going on.)

So how does a CEO know who to hire? First, the old law that you should lay out a very specific and extensive list of qualities you are looking for in the ideal candidate applies here as to all other positions.  Some qualities to consider important are: strong people skills, a high energy personality, and extensive experience in departments of the size you aspire to be as a company. It is likely better to hire an assistant manager with a long stand-out history in a large company that you admire, than to hire a head manager from a company that isn’t well regarded or is similar size to yours (if you are looking to grow).