By Barry Rubenstein

If you take the view that “human capital” is a company’s biggest and most important asset, you will agree that the start up of a Human Resources function is one of the most critical factors in the success of any organization. However, to begin an HR organization, a myriad of building blocks need to be in place. These building blocks provide the infrastructure of organizational success. As a Human Resources consultant, I have been tasked with developing and leading HR organizations for companies across a wide spectrum of industries. Drawing upon my experience as a consultant, this article will detail the elements necessary for HR and overall company success.

1. Policies and Procedures/Employee Handbook
   Every organization needs to have clearly defined, legally defensible policies and procedures that govern the workplace. The handbook becomes something of a “bible” as the organization grows and develops. Human Resources is the catalyst for the development of the Employee Handbook and must ensure that the Handbook protects the company from liability. Upon completion of the handbook draft, an attorney’s review should take place to be certain that the handbook doesn’t place the company at risk. Attorneys understand the language that is necessary to avoid legal entanglement. As an HR professional writing a handbook, avoid using language that backs the company into a corner. For example, stating that “performance reviews occur annually at the employee’s anniversary date”, can be a set up for your company. Even if your company does its performance reviews diligently, you might want to consider inserting the word “typically” instead of “annually”. This language protects the company if there is a time when a review doesn’t take place on or around the anniversary date.

   Following receipt of the final draft, meetings need to take place with managers as well as employees to discuss the relevant policies. These meetings are critical to successful policy implementation. Since policies can be interpreted broadly, these meetings serve to eliminate ambiguity often associated with policies and procedures.

2. Job Descriptions
   As you start the HR function, a comprehensive development of job descriptions is critical. Job descriptions serve as a blueprint for the employees and assist in identifying clearly defined job expectations and responsibilities. Many organizations do not pay close attention to job descriptions which can be a costly mistake. This is especially true of organizations that are just beginning. There is a tendency to think that as a new company, everyone “shares the load”, i.e., while having a defined area of expertise, everyone wears many hats. While there is truth to the “many hats” theory, the lack of clearly defined descriptions leads to ambiguous roles and tends to bog down the organization over time. In addition, as you attract new candidates, it is important to be able to share a detailed job description with your prospects. This demonstrates a level of organization that may help entice a candidate to work for your company.

   Later in this article we will discuss the value of performance evaluations. However, it should be mentioned here that as a new organization, job descriptions can form the basis of your performance evaluation. In other words, employees will be accountable for the objectives on their job description(s). If a new organization doesn’t have a fully developed performance review process, clearly defined job descriptions are a start toward being able to evaluate performance objectively.

3. Supervisory Structure/Supervision Meetings
   HR plays an integral role in determining the supervisory structure as well as meetings that need to take place to develop supervisory and employee excellence. This includes developing a “supervisory strategy” — a strategy that brings about excellent employee relations, provides credible and timely feedback to employees and assists in the development of employee skills and abilities. This is critical because one of the biggest frustrations HR professionals face is the feeling that managers do not know how to manage adequately. HR must work diligently to be certain that managers understand the full scope of their managerial responsibilities. Those management skills include both technical and interpersonal skills. Typically, managers have tremendous strengths on the technical side. However, the ability to provide ongoing constructive feedback, solid performance management feedback, strong career and professional development feedback is often lacking. A recent example comes to mind. A Senior Manager was having difficulty providing feedback to an employee who was struggling. The manager, by nature, was a hands-off manager, choosing to let his employees set their own agenda, prioritize their work and, in essence succeed or fail largely on their own. In certain situations this strategy is indicated and extremely useful. However, in this situation it was unproductive and counterintuitive.

   In this case, the employee needed clear guidance regarding his performance. The manager, by backing off, inadvertently contributed to the problems his employee was experiencing. I challenged the manager to modify his personal style for the good of this employee and the company. We worked together to design a performance plan that resulted in improved performance and overall accountability. It also taught the manager a valuable lesson — the one-size-fits-all method of managing is simply problematic. With strong guidance, I was able to demonstrate to this manager that his supervisory style needs to be modified for each of his direct reports.

   Beyond this example, HR must provide a blueprint for how employees will be managed in the company. This includes working with managers to determine what supervisory meetings will take place. For example, will employees have one-on-one meetings with their manager? If so, how frequently? What makes sense for the organization? It is my experience that employees need one-on-one time with their manager on a monthly basis at a minimum. Across all industry sectors, employees require feedback. It doesn’t matter how fast paced your organization is; organizational success depends in large part on having a workforce that understands its goals and objectives and is getting feedback and encouragement to maximize strengths and minimize their weaknesses. Feedback of this type doesn’t happen in a vacuum. A carefully developed strategy for supervision, backed with supervisory and management training creates the roadmap for supervisory success.

4. Career Development
   Along with strong supervision, it is critical that companies take a flexible approach when it comes to the development of careers. Not only do the top performers need to be nurtured, the “B-level” employees also need to be nurtured and taken care of. Career development processes, when used effectively; identify ways to maximize your employees’ productivity, job satisfaction and retention. In addition, a strong career development focus keeps your pipeline full when it comes to succession planning. Many organizations have informal processes to develop careers. These include lateral as well as promotional opportunities. To take this a step further, the development of a career ladder process assists the organization as well as its employees. A career ladder creates a visual representation for employees which demonstrate potential career paths they can take. A strong career ladder shows employees some of the steps they need to take in order to be considered for a promotion. As such, career ladders detail the following items:
   • Job Titles
   • Job Accountability
   • Key Responsibilities
   • Specialized Knowledge and Skills
   • Career Development Opportunities
   • Training Opportunities

   A career ladder assists employees in knowing where they want to move within the organization and provides a roadmap that helps them get there.

   Recognition of employees’ special talents and abilities is critical to the success of career development initiatives. Speak up and commend employees for their special abilities; it’s a great way to motivate them! People want to feel good about themselves and feel that they are making positive and recognized contribution. Follow what behavioral psychologists suggest — strive to give four (4) praises for every criticism. While this is difficult to achieve, it is important to keep in mind that employees tend to believe they do not receive enough positive feedback regarding their work. Instead they feel as though they hear about the one aspect of their work that isn’t 100% up to part — and not about all of the other ways in which they contribute to the organization.

   Strong focus on career development will go a long way toward creating a sense of job satisfaction and will increase retention. Most surveys that look at employee satisfaction and “why they stay at a job” focus on the following combination of factors:

   • Career development and advancement opportunities
   • Recognition for the work they are doing — someone notices and cares about their work
   • Financial interest/money

   It is important to note that in virtually every survey of this kind, money is not one of the top drivers for employee satisfaction. When I work with companies that do not have large budgets — whether they be start ups or non-profit organizations, we discuss ways to maximize job satisfaction. When I bring up these 3 areas (career development, recognition and money), I ask which of the 3 the company can impact. It is clear that all companies can impact the first two — companies can work harder to develop careers and recognize performance. In some cases, money can only be minimally impacted. However, if a company can impact 2/3 of this equation on a regular basis, they will dramatically increase job satisfaction and retention. In starting up an HR function, it is important to share this information with senior management. They must understand that career development initiatives, even early in an organizations evolution, is a forward-thinking strategy that has a dramatically positive impact on the organization.

5. Performance Review Process
   At its core, a performance review is meant to review an employees’ progress, identify areas that need improvement, and hopefully, identify ways for the employee to develop their career. We refer to this as the “developmental” aspects of a performance review. In addition, there is an “administrative” aspect of the review process that helps to screen out employees who do not meet minimum acceptable standards, and identifies those who should be rewarded with salary increases. However, there is often a conflict between the administrative and developmental aspects of the process. This conflict can be avoided by providing ongoing feedback throughout the course of the year.

   Best practices characterize the review process as just that, a process. In other words, it is extremely important to generate a dialog with your employees that detail the positive and problematic aspects of their work along with detailed objectives for the coming year. The objectives that are listed must be discussed with your employees at various check points throughout the year. This ensures that adequate progress is being made on performance as well as developmental goals. However, most organizations view the performance review as an event. That is, annually a review takes place but the performance review document gets filed away and doesn’t get discussed until 12 months later. This approach greatly diminishes the impact of the performance review process. Employees grow, improve, and are motivated by well-rounded feedback. I want to emphasize the “well-rounded” aspect of feedback. Throughout many consulting assignments I have conducted both formal and informal employee opinion surveys. It is inevitable that employees state that they wish they received more critical/constructive feedback as this feedback will assist in their growth and development. Employees don’t want to only hear that things are going well — constructive feedback helps them as well and this is what they want! While the review process is one way to deliver this, managers must provide well-rounded feedback throughout the year — this point cannot be emphasized enough! In fact, a well-done review boosts an employees’ motivation because it demonstrates that their manager genuinely cares about their development. Conversely, a poorly done review can significantly compromise motivation.

   Performance Review Tips

   • Research clearly shows that the most effective performance reviews have two things in common: (1) good and poor performance are clearly defined, (2) there is a high degree of employee trust in the performance review system
   • Provide feedback to employees throughout the year
   • A helpful acronym for effective feedback is NORMS. Feedback should be based on performance that is:
     1. Not an interpretation
     2. Observable
     3. Reliable
     4. Measurable
     5. Specific
   • Employees can assist in the preparation of the review by soliciting candid performance feedback from trusted colleagues
   • The focus must be on performance not personality
   • Make sure that all performance measures are consistently applied throughout the organization and directly relate to the job description
   • If and when objectives change, be sure to document the changes and communicate them with the employee
   • If peers or others in the company are involved in the review process, discuss the importance of gaining feedback from peers and clarify who will be involved in the evaluation process
   • Consensus is your goal. However, this is not easily achieved in a review process
   • Base your feedback on as much direct observation as possible
   • Be descriptive in your feedback as opposed to judgmental. All feedback should be expressed in measurable terms. If possible, avoid terms such as “bad attitude”. If the employee demonstrates a bad attitude, discuss how the bad attitude manifests itself in the workplace.
   • The performance review form should be designed to be easily completed but should include the ability for some narrative description/comments regarding key performance factors.
   • End with goals — what should the employee focus on over the next evaluation period? How will you work with the employee to achieve their goals?
   • Relationship to money. If salary increases are tied to the evaluation process, be sure to identify how a potential raise is factored into the equation.
6. Compensation Strategy
   In order for any company to remain competitive it must be acutely aware of compensation trends. I suggest an annual compensation review of all positions within your company. This “project’ provides rich data that assists you in being certain that your employees are being compensated in a manner commensurate with the marketplace.

   As far as salary resources are concerned, participation in salary studies is a great vehicle for gaining/keeping up-to-date with compensation trends. Salary survey participation typically yields a copy of the survey for your company. The data provided will serve as a vehicle for ensuring fair compensation. It is inevitable that all companies have a percentage of employees who are under-compensated. Salary data will support this. Even if your company cannot “close the gap” on this within a year or so, it is important to know what you are facing. In working with companies that operate with small margins and correspondingly small budgets, I have developed 2-4 year plans for closing salary gaps. This type of planning communicates an important message to your employees that you are aware of a salary gap and are doing everything in your power to correct the problem. As stated earlier, if you pay close attention to career development and recognition, the financial aspect of the job will likely be less of an issue — remember, salary is not typically the driving force.

   Another aspect of compensation is the development of salary ranges for each position. For young companies that are often working within very confined salary budgets, this is extremely important. The ranges communicate to managers that parameters within which they have to work when hiring new employees. If your organization is to have a fair compensation strategy, it is important that ranges and guidelines be adhered to by all managers. If you encounter a manager who prefers to be extravagant with salary increases, HR must be assertive and work with managers to remain within established guidelines. It is my experience that HR must be the “compensation gatekeeper” within the organization. Gatekeeping assists in creating an equitable compensation strategy.

7. Employee Benefits
   It is certainly not newsworthy to state that the cost of employee benefits have escalated dramatically over the past several years. Unfortunately, this is not likely to change in the near future. If your company engages a benefit broker (a company that identifies insurance carriers and negotiates rates etc), it is critical to make them work for you! Benefit brokers are compensated by the carriers directly and should, at a minimum do the following for your company:
   • Research all available options for providing the best available coverage for your employees. Best available options include the best and most cost effective pricing for your company.
   • Benefit brokers must take all company benefits “out-to-bid” prior to every renewal date. This ensures that your company benefits will be cost-effective and comprehensive. While this may sound obvious, many companies fail to push their broker to do their job! This results in a benefit package that is often over-priced. Since benefit brokers are vendors for your company, HR must manage the vendor relationship accordingly.
   • Good benefit brokers work with HR to develop a benefits’ strategy for your company. They will identify trends in the marketplace and help HR to create a blueprint for employee benefits.
   • In addition, a good benefit broker will act as the company’s first line of defense when it comes to troubleshooting a benefits problem.

   Have you ever had the experience of waiting on hold with an insurance carrier for 45 minutes or more only to get a representative who really doesn’t understand how to assist you? If you have, it’s time to utilize your benefit broker more efficiently. Benefit brokers have direct lines of communication with various insurance carriers. As such, they can get issues resolved much more quickly than the average person. Not only does this create a greater level of efficiency within the office, the relationship can ultimately save a company thousands of dollars. For example, a company with 12 full-time employees was in need of upgrading its benefits package. The rationale was two-fold — they felt they were losing out to their competitors for top talent and they wanted to be sure they were taking good care of their employees with a benefits package that was robust. At its outset, the company provided only health and dental insurance. While health and dental insurance are certainly important, the company wanted to add significantly to their package without increasing costs. In designing the benefits strategy the first task was to review the health and dental coverage that was offered. The coverage was of high quality as well as high cost. Through strong contacts with a leading benefit broker, the company was able to create a plan that included expanded health and dental coverage while adding short-term disability, long-term disability and a life insurance policy for each employee — for less than the company had previously been paying for health and dental alone! As a result of this, the company is able to provide its employees with a much more extensive benefits package while realizing an annual savings of $3800.00. In addition, we added a 401k plan. The end result was a cost effective strategy that served this young company’s short and long-term needs, providing excellent coverage to employees and is assisting in the recruitment process.

8. Employee Relations Strategy
   From an employee relations standpoint, HR plays a critical role in any company. While the creation of a positive work environment is a “no-brainer” it is important that HR not overlook this and works with management to ensure that the office is both an enjoyable and productive place to be. Earlier in this article, I discussed the importance of providing constructive feedback to employees. It is critical that HR works with managers to assist in the management of difficult employee issues. The fair, consistent and equitable treatment of employees is of vital important to the organization. HR must understand the policies and procedures of the organization and must work with managers to ensure the consistent implementation of said policies. In addition, HR must slow down managers who want to terminate employees without having followed policies and procedures. This allows HR to provide one of its most important functions within the organization — minimizing exposure to lawsuits.

   In order to carry out your employee relations strategy, HR must have comprehensive knowledge of complex employment laws and must be aware of relevant changes in employment law. This knowledge allows your company to remain in compliance with said laws. The following 3 examples, by no means an exhaustive list illustrate this point:

   1. HIPAA legislation has changed the way we look at private health information.
   2. The Sarbanes-Oxley Act has had a significant impact with respect to 401k programs and reporting.
   3. Sexual Harassment laws/guidelines are change periodically and must be paid attention to closely.
9. Training
   One of the core competencies of all HR practitioners is training. While not all HR professionals possess the “stand-up” training skills that others may, HR plays a pivotal role in ensuring that managers and employees have access to relevant training opportunities.

   The following list details some of the critical factors that must be put in place in order to develop and implement a successful training program:

   • Conduct a training assessment: What are your current and future training needs?
   • Disseminate the results of the assessment. This assists in gaining buy-in throughout the organization
   • Develop a training menu. The training menu should resemble a menu at a great restaurant! Equal portions of soft skills (effective communication, team building, management skills, interviewing skills, sexual harassment training etc), technical skills (software training, engineering training etc), product training (product-specific training). Training choices can be made from the menu based on your company’s training requirements.
   • Subject Matter Experts. As part of the development process, HR must work with managers to identify Subject Matter Experts (SMEs). SMEs posses the knowledge necessary to train employees. I strongly suggest that all companies place their primary focus on internal people as SMEs. Why internal people? I would answer this question by stating that there is talent, sometimes hidden talent, within each company. It is important to develop and cultivate this talent. By providing an opportunity for an internal person to contribute to the training process you are working to develop their skills. The second reason comes down to dollar bills! Training can be costly. Internal people do not cost the company additional money. As an HR person, it is critical to develop a training program that doesn’t become a major cost center. Having said this, there are obviously times when it makes sense to send people out to training or to have someone come in from the outside to train.
   • Adult Learning. Whether the training is conducted by an internal or an external person, be certain that their training style mirrors the way adults like to learn. There’s nothing worse than a lecture-style trainer for adults. Adults learn best through active participation in the sessions. Breakout sessions, small group discussions, role plays and large group follow up all stimulate the learning.
   • Training as a differentiator. All companies are unique in their own way. How many companies can unequivocally state that their training program(s) are top-notch? Can yours? As HR strives to increase retention, develop skills, increase productivity and competes with other companies for top talent, it is important to develop your training programs to the point where it exceeds your companies’ objectives and that of your competitors.
10. Succession Planning — Thinking Ahead
    Despite the fact that this article addresses managing the start up of a Human Resources function, along with the start-up of the company itself, succession planning cannot be far from the HR department’s consciousness. As my colleague Dr. Todd Harris suggests, “succession planning is a process by which organizations identify, select and develop their future leaders. Given leadership’s well-documented impact on a company’s financial and motivational health, there may be no more important and challenging task, a task made all the more difficult by today’s increasingly complex, global and talent-poor business climate. Recruiting and hiring key talent from outside the organization is always a possibility, but my own experience, as well as the academic literature, leads me to believe that consistently successful companies are adept at grooming their own leaders from within. The purpose of succession planning is not to ensure that all of a company’s future leaders come up “through the ranks” but rather to assess the organization’s leadership requirements in a comprehensive, flexible and systematic manner.” The career development strategies discussed earlier play an important part in the succession planning process. Starting early in an organization’s development ensures that the company is identifying its high potential employees, is nurturing their growth and development and makes certain the company’s pipeline of high potential employees is filled.

In summary, the start up of an HR function within any organization is filled with complex tasks. It is probably simplest to think of this as putting together “organizational puzzle pieces”. All functions that emanate from Human Resources must fit in with the business plan and overall organizational goals of the company. Careful preparation, attention to detail, understanding the business and partnering with senior management ensures that the puzzle pieces fit together seamlessly.