Startups need a solid set of human resources (HR) policies in place before they make their first hire. When building HR policies from the ground up, you’ll need to consider not only your business’s legal obligations but also your team’s expectations and how your policies will impact your bottom line.
Whether you’re an HR leader at a startup or a small business owner who’s wearing an “HR” hat, here’s what you should know about building out some core HR policies for your current and future employees.
Why should a small startup have HR policies?
Company culture is a critical component of growing your team. Effective human resources policies can guide that culture-building process, especially if leadership takes care in designing the policies and communicates hard-and-fast rules over guidelines.
Startups that create, implement, and manage HR policies become skilled at attracting and retaining employees. Having a plan for onboarding, pay structure, progress pathways, and firing will maintain consistency and establish expectations among a team.
[Read more: Does Your Small Business Need an HR Department?]
5 steps to developing HR policies for a startup
From creation to execution, here are five steps for startups to develop HR policies.
1. Establish an organizational structure.
Before hiring employees, startup owners should establish a basic organizational HR structure hinging on a person (or people) employees can talk to about issues. This will serve as the foundation for an HR department as the business grows, so make sure to choose an HR team that embodies the company’s culture.
[Read more: What Are the Legal Requirements for Hiring Employees?]
2. Decide on recruitment and onboarding processes.
A must-have HR policy includes basic recruitment and onboarding processes.
For recruitment, the policy should outline how to write job descriptions (and what to include in each), the platforms or job networks to advertise the position on, and how to build out a recruitment pipeline with the company software — if you’re using one.
A startup should have a policy for maintaining positive relationships with employees once they're onboarded.
Once you hire a new employee, onboarding policies will retain consistency and establish expectations. In your onboarding policies, include information like how to write and send employment contracts, the methods you’re willing to use to onboard employees (in-person, virtual, or both), the legal paperwork you need from the new employee, and the culture-setting you’ll do on the new hire’s first week (including a welcome lunch, office stipend, or other perks you’ve decided to offer).
3. Determine the pay and benefits package for each role.
Perhaps the most important HR policy is the compensation and benefits package for employees. This policy affects every aspect of the business — from accounting to operations — and should be built with care and forethought for the future.
Depending on the size and industry of your organization, compensation and benefits will differ by role. However, every business needs a pay structure and federally mandated benefits like worker’s compensation or family medical leave.
The benefits policies should also include expectations and guidelines for any voluntary benefits you plan to offer, including (but not limited to) PTO, home office stipends, parental leave, health and wellness perks, and health insurance.
[Read more: Do Enhanced Employee Benefits Work as a Recruiting Tool?]
4. Establish employee retention programs.
An HR policy many organizations tend to overlook is employee retention. A startup should have a policy for maintaining positive relationships with employees once they're onboarded. Such a policy may include setting role paths, professional development classes, mentoring, culture-building activities, and more.
The ongoing Great Resignation has highlighted the fact that employees give their loyalty to the organization that shows they value their employees as humans by investing in their growth, caring about their passions outside of work, and offering general personal and professional support.
If you don’t know where to begin with this policy, you can start by asking your team via a survey or one-on-one meetings. Chances are, they’ll advocate for the benefits or professional development guidance they want.
5. Prepare for audits.
Audits remain a regular part of business, and your HR team’s policies need to comply with federal and state regulations. To prepare for an audit, ensure your organization’s policies for recruitment and onboarding, pay and benefits, and more are in compliance. Documents to have handy for an audit include personnel files, business structure, performance evaluations, and any safety policies and plans you have in place.
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