A small step for the company, but a big one for the HR department: hiring the second HR employee. All of a sudden you are the "HR manager", you have to professionalize your department, define structures and processes. This guide explains how you can do this step by step.
Sometime it is there, the moment. You can definitely not fulfill your role as a personnel officer, recruiter and employee caretaker in personnel union any more. Even management realizes that things can’t go on like this. The budget is approved and you start looking for an additional employee for the human resources department.
As soon as the number of employees in HR grows to two or three, the following questions arise for you: How do you structure your new HR department?? How to arrange the processes? How HR supports the further growth of your company?
What is a personnel department?
HR is the department in the company that handles all HR topics and issues. It is the point of contact for all employees, managers, as well as if necessary. the works council and ensures that they are deployed and promoted in the company in the best possible way to ensure the company’s success.
The term "personnel department" is also synonymously called HR department, while HR is also known as HR management, human resource management (HRM) and personnel management.
What are the tasks of a human resources department?
HR tasks are spread across all stages of the employee cycle: from recruiting to offboarding. Specifically, this includes the following tasks:
The human resource planning or. personnel requirements planning: In workforce planning, you make sure your organization has the right number of people with the skills it needs to achieve its goals at any given time.
The personal or. -acquisition: Recruiting is also known under the terms Talent Acquisition, Recruiting and E-Recruiting. It describes all the measures and methods to reach new employees through various channels and attract them to the company. This also includes employer branding.
Workforce planning: With optimal workforce planning, you ensure that your employees are deployed as efficiently as possible to avoid personnel bottlenecks or overcapacity.
The personnel management resp. human resources management: Human resource management describes all administrative and transactional tasks in HR. This includes paperwork needed to hire and issue employees, z. B. Create contracts and create a digital personnel file.
Human resource development: In order to promote employees’ strengths and eliminate weaknesses, the HR department should establish good performance management and an open as well as constructive feedback culture.
Payroll: In addition, the human resources department takes care of payroll and salary accounting. This either happens completely internally or is partly outsourced and handled together with a software provider or tax consultant.
Employee retention: Employee retention includes all measures to retain employees and thus bind them to the company in the long term. In this article you will find many examples and best practices.
The personnel controlling or. People Analytics: It is now part of every good HR department to make personnel-related decisions based on data. With the help of personnel controlling and people analytics, you have various key figures at your fingertips to analyze your employee structure or fluctuation rate, for example, and to derive appropriate measures from the results.
Strategy: While HR has been primarily responsible for administrative issues such as payroll, more and more companies are finally realizing how important it is to involve HR strategically as well. The HR department has a decisive influence on the future viability of companies, because it looks after the company’s most important asset: its employees.
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Why your HR department needs structure
In start-ups or small companies there is a family atmosphere, a strong corporate culture, people know and appreciate each other. Everyone is highly motivated and feels personally responsible. The criterion for hiring new employees is simple: either he or she fits into the team and the chemistry is right, or it is not.
Above a certain size – somewhere between 50 and 100 employees – this personal character is lost. A second hierarchy level becomes necessary, new colleagues are only known from saying hello, everything becomes more anonymous. Many companies report a noticeable drop in employee satisfaction and increase in turnover at this stage. Mistakes in HR that didn’t matter before suddenly have tangible consequences.
Many topics that previously arose naturally and almost by themselves are now the responsibility of HR. The HR department must professionalize itself, actively take care of corporate culture and employee loyalty. She has to develop salary and working time models and master the increasing bureaucracy.
If you hire additional HR staff now and otherwise continue as you are, you will quickly run into limitations. Only with a structure for your HR department and standardized processes can you meet the challenges of a (fast) growing company.
How big does your HR department need to be?
The well-known rule of thumb "1 HR position per 100 employees" is not wrong, but it tends to apply to larger companies with a well-equipped HR department. In companies with up to 250 employees, the need is significantly higher, as the "Workforce Analytics" study shows: an average of 3.4 HR employees per 100 full-time positions in the company!
Source: Workforce Analytics: A Critical Evaluation: How Organizational Staff Size Influences HR Metrics (SHRM, 2015)
Peter Rosen of HR Strategies and Solutions recommends creating your first full-time HR position when you have about 50 employees, and a second when you have about 150 employees. This recommendation is quite realistic, as experience shows.
Through automation and outsourcing, you can replace one or two employees in the HR department. This is shown by practical examples such as the Berlin heating manufacturer Thermondo. On the other hand, companies that have an ongoing need for highly skilled professionals may decide early on to hire their own recruiter.
Instead of relying on a key figure, you should determine your own need for HR employees. How they proceed thereby and define at the same time a structure for your personnel department, learn in the following parts of this article.
How to define a suitable structure for yourself?
When structuring your future HR department, proceed as you would with any other project: set goals you want to achieve and then figure out the steps necessary to get there.
Identify your key topics
List all the tasks you need to take care of in the future. Assign priorities to the tasks. Identify the critical issues that pose a particular challenge and could prove to be a "bottleneck" for further company growth.
By identifying such key topics, you are already laying the foundation for a future HR structure. You may need an employee who explicitly takes care of these areas. More on this later.
Don’t forget important topics. Put employer branding and onboarding programs on your list, as well as payroll, contracting and health benefits. For each item, list the individual tasks that need to be completed and estimate the resources needed to complete them.
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Do it yourself or outsource?
Which tasks do you want to and can you take on in-house with your own HR staff? This is the next decision you should make. Criteria for this are the resources required for each task, the complexity as well as the existing know-how in your company.
Operational issues such as payroll tend to be more suitable for outsourcing. Despite ever-improving software, such issues can be very complex. Flexible working time models, for example, entail a long tail of social security issues and administrative tasks. Collective bargaining and legal regulations are constantly changing. Without outside help, a small HR department will have a hard time with this.
On the other hand, you can hire HR consultancies to help you with more strategic issues. Some offer concepts for employee retention or performance appraisals or measure employee satisfaction on an ongoing basis.
External headhunters or recruiters have long been part of the standard outsourcing repertoire. Help you find employees in difficult markets or recruit larger numbers in a short period of time.
Decide on "make or buy" for each task on your list. Now you have an overview of how many and which resources you need internally in your HR department. You group tasks into job functions, such as HR administration, training, recruiting, HR marketing, and get a rough idea of the structure of your future HR.
Define your processes
Now comes probably the most tedious step. If you skip it or do it half-heartedly, the efficiency of your HR will decrease as the size of your company grows. In small companies, HR works on demand and with informal processes – "that’s just how we do it". Now you need to define fixed processes to handle the increased workload.
Document all HR processes, assign responsibilities and job roles. Describe how you want to work with external service providers, for example in service level agreements. Work out a plan for personnel requirements and thus for your recruiting with the management.
Determine which recruiting channels you want to use. Create job descriptions, requirement profiles, training programs together with the departments. Work out standard contracts and other regulations – keyword compliance.
Keep them oriented to your priorities in this phase. Start with the critical areas and work out the others later.
Introduce HR software
Invest in software early on, such as a comprehensive HR management solution. Ideally, start the software selection process in parallel with the definition of your processes. If and which software you use determines how your processes will look like. You can automate many tasks from the beginning. Data interfaces make it much easier to collaborate with the payroll office and other external service providers.
Don’t put off implementing new software. If you first introduce manual processes and only later switch to software, you have to change your workflows twice. It is superfluous and costs.
Software-assisted processes can easily save you a half- or full-time staff position. Or you can assign an employee to other tasks instead.
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What organizational structures exist for personnel departments?
There are different ways to structure your human resources department. Among them are classic models as well as modern approaches. Which one you choose depends entirely on your goals and your corporate culture. We present six of them here.
1. The hierarchical model
For example, a personnel department can be organized hierarchically. The personnel department consists here of a personnel manager, who reports to the managing director and stands completely above in the hierarchy level. He is given departmental targets to achieve together with his team.
For example, the HR department might consist of two managers for recruiting/staffing and HR management/personnel administration, who in turn lead their own teams and report to the HR manager.
In this model, the communication is completely vertical, d. h. from top to bottom. Information is kicked off by upper management and is then passed on to managers via HR management and eventually reaches the team.
In this model, the clear distribution of authority is especially advantageous. Everyone knows where they are in the model, where they want to go and what their development plan is for this.
2. The formal and informal model
You can set up the staff department formally or informally. The hierarchical organization is a good example of the formal model, because it is built on clear hierarchies, goals and tasks.
In contrast, the informal model is more freely conceived, because team members can be more flexible and interact with each other according to dynamics.
In many companies both models coexist. Then, for example, the formal model is the standard structure of the HR department and, depending on the project or goal, informal cooperation results, which breaks up the formal model for a certain phase.
3. The goal-oriented model
In the goal-oriented model, company goals are broken down to individual departments – and even down to individual employees. Which measures are implemented to achieve the goal, each team decides for itself.
Company goals are determined between the CEO and management and require the commitment and dedication of each individual. Because this model only works if each employee is clear about their goals and how they will be measured against them. Most often, this model is accompanied by a financial bonus depending on the achievement of goals.
This model is also only partially used in many companies, z. B. In distribution. For HR departments, the benefits of the goal-based model include: Commitment and focus from each employee, higher team performance, and compliant goal planning.
4. The Shamrock model
This model is based on the image of the "cloverleaf", as it consists of three basic pillars that together form a whole.
- At the core are the most qualified and relevant employees.
- Less important activities are done by external service providers and thus outsourced.
- Employees with temporary contracts, z. B. project-based work, complement the cloverleaf.
For the HR department, this means that there is a small core of permanent employees, who in turn manage externals on special projects. External service providers could thus assist with issues such as relocation and provide employees with temporary contracts, z. B. Additional recruiters, can help hire more new employees in a shorter period of time.
5. Networking and outsourcing
This model is completely about HR departments getting outside help. Thus, there is only a small core of permanent HR employees who outsource many of the upcoming tasks and activities to external service providers and thus achieve their goals.
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How small HR departments can structure themselves?
As you can see, the "right" structure for your HR comes from your own situation and planning within the company. Nevertheless, there are recommended approaches. With two, three or four employees, the number of options is limited – after all, an HR structure should not be fanciful, but efficient.
Here are more examples of how you can structure your HR department.
Hire an assistant to work alongside you, taking care of paperwork, administration and routine tasks. This will make you up to 50% more productive and allow you to focus more on important and strategic areas, employer branding, recruiting, and employee retention.
Advantages of this option are that you are already familiar with the important tasks and the transition is easier. The cost of an assistant position is lower than hiring a specialist.
In the future, you will take care of internal HR issues: administration, training, employee retention and so on. An additional recruiter is responsible for finding new employees. The recruiter may be able to take on other topics such as employer branding or onboarding.
This structure is suitable for companies that want to grow quickly and need many new employees. It requires a clean segregation of duties, as both you and the recruiter work independently, even if the recruiter reports to you.
Further growth: Think in terms of roles
From the third HR employee onwards, it is entirely up to you how you structure the HR department. You could hire a recruiter if you already employ an assistant, and vice versa.
If you can’t find new employees fast enough, you may want to hire a second recruiter instead. It all depends on your priorities where the critical areas are to meet your growth goals.
Don’t just hire "any" new employee when the workload becomes too high. Think in terms of roles. This article lists seven roles you need in HR.
Ask yourself: Which topic is currently being neglected and will require more attention in the future?? What kind of employees, what know-how and what soft skills are required for this?? What role does the new HR person need to take on and how does that role fit into the current HR structure?
Instead of growing your HR department, you could automate or outsource more processes. This gives existing employees more freedom again and allows them to take on new topics – new roles.
Make all decisions based on your previously defined goals and roadmap, which you regularly review and adjust. This way you can be sure to find the best possible HR structure for you and thus pave the way for the further growth of your company.
Use an organizational chart to represent your HR department
Organizational charts for the HR department (and the whole company) help to keep an overview of tasks and responsibilities of individual colleagues. This is especially important in a (rapidly) growing team, because it shows the structure of the HR department, who employees report to, and who colleagues can turn to for questions about feedback meetings or administrative matters, for example.