Companies with 50 or fewer employees rarely have a formal human resources department; instead, duties from recruiting to benefits administration are scattered among of colleagues--an accounting manager might manage a payroll vendor while mid-level employees write job listings, and a manager makes key hires.
Over time, that piecemeal approach becomes inefficient. If your company is growing, when is it time to add a human resources director? Simple, experts say: When the staff resources consumed by the tasks that can be managed by a human-resources director exceed the costs of hiring one. For some companies, creating a HR department is a way to consolidate outsourced jobs such as hiring consultation and payroll maintenance under one purview.
"To make it worthwhile to have someone dedicated full time to HR, you have to have a critical mass in the office," says Ellen Rudnick, the executive director of the Polsky Center for Entrepreneurship at the University of Chicago Booth School of Business.
With various critical HR functions – employee training, setting standards, payroll, hiring and firing – lumped into one position, it's essential to find the right person for the job your company needs.
Some strategic questions to consider: If you are growing, it may make sense to hire an HR manager who has run a department for a company that is twice as large as your own - even if the cost, in term's of that candidates desired salary, will likely be higher. Remember this: You want an HR manager who will be qualified to help you as you grow.
Second, to what extent will you look at your HR director to establish your company's culture? If you really want a person to build upon the culture you have established, you may go into the hiring process with the expectation that you should hire two people: one to work on culture and one to assist in handling more mundane tasks such as the paperwork involved with sponsoring employee visas or benefits administration.
To better identify what the position you'll be hiring entails, you should start by taking the time necessary to carefully craft a job description.
Hiring an HR Director: The Job Description
The first item under the job title should be a summary overview of what the position will be. A list of job duties and responsibilities should follow. Depending on what your company needs in an HR director, that list could include design and administration of employee policies and employee-compensation programs, managing incentive pay and s alary oversight, administrating employee benefit programs, overseeing the staffing process – including hiring and firing – and administering worker-training programs. Bullet points work best for organizing these responsibilities.
It's key not to forget a catch-phrase line to include additional "duties as assigned," just in case the job morphs over time or something is omitted. 'Basically, it's so a hire doesn't come back and say ‘that wasn't in my job description," said Roberta Chinsky Matuson, president of the Northampton, Massachusetts-based Human Resource Solutions.
When the job description is clearly laid out and agreed upon by management, it's time to write and post the job listing, for which the foundations are already laid.
Hiring an HR Director: How to Determine Compensation
To find a salary that's fair to offer, a small business owner or hiring manager should contact an agency or two that do HR salary studies. Average sales-manager salary information, particularly if it is industry-specific, may cost you a fee. You can take that data and combine it with knowledge gleaned from PayScale.com or Salary.com and current job listings online to obtain an accurate picture of what candidates are expecting.
That said, it's perfectly couth to ask applicants about their salary expectations in terms of base plus commission plus benefits. It's also worth asking what sort of salary scale the candidate expects for the rest of his or her staff.
To keep the salary right, for small companies adding their first HR staffer, Jamie Resker, president and founder of Employee Performance Solutions, suggests seeking the perfect hire who's only perhaps three to five years into their career – a junior HR representative who worked hard for someone else and, though eager, hasn't been out on their own yet.
"Someone who has a network of resources and a lot of motivation to be out on their own is perfect," Resker says. "Someone who is perhaps involved in some professional organizations, so that they can tap into, others tools, say, their telecommuting policies, and help them bring in resources."
Hiring an HR Director: Attracting the Right Applicants
In addition to the overview and list of responsibilities found in the job description, a great job listing incorporates the desired behavioral characteristics of your ideal hire. If you're not sure about these temporal and experiential traits, Matuson suggests to just look around you.
"If you have employees, you look at your star performers, and look at what they have in common," she says. "In a start-up, the ideal employee is someone who can multi-task, who has high-energy, and can switch their game instantly. A person who will work well at a law firm is very different."
Say, for an HR director, admirable behavioral traits could include confidence, self-direction, motivation, accountability, and the ability to listen and communicate effectively. A line in the resulting listing might read: "The ideal candidate will have excellent verbal communication skills and will be able to adapt to handle fast-changing situations. The position also requires strong networking, reasoning, and time-management skills. A candidate must be able to maintain confidence in tasks such as interviewing, prospecting, and evaluating employees."
Next, include at least a paragraph detailing minimum qualifications, including preferred educational and experiential background. Being detailed will help narrow the applicant pool.
Preferred educational and experiential background can also incorporate behavioral characteristics. Instead of a bullet point saying "10+ years experience required," consider something along the lines of "Team player with strong leadership skills and 10 or more years of demonstrated ability to manage effectively."
If a flood of applicants is your fear, listing a salary could narrow the pool. Otherwise, experts suggest it is not necessary - it also limits your ability to negotiate with a candidate later on.
With the listing complete, post to your company jobs site, if you have one. Supplement that with listings in targeted trade publications and specialized media and postings on online job sites. If sites such as Craigslist.org and Monster.com seem too general-interest, don't worry. In the era of spider-search sites such as Indeed.com and SimplyHired.com, your listing will be crawled by search engines, and qualified candidates will have the opportunity to find your post.
Once applications start coming in, it's up to you to sort through them, and to find out who fits your qualifications and with whom you'd like to talk. Even the experts say this process is always subjective.
Hiring an HR Director: Interviewing Applicants
If interviewing seems intimidating, just remember your key objectives are to find out: Can this applicant truly do the job, and will they fit into my company's work culture? Of course, these are just the basics. To this, add discovering whether the applicant possesses the desired behavioral traits you've already laid out.
"In an interview, you want to go over job responsibilities and skills, and then the other component is behavior," says Jamie Resker, president and founder of Employee Performance Solutions. "Especially at a start up, the entrepreneur typically wants someone who is like moldable clay, not someone who has the personality of a steel rod. Will they go with the flow? Because a small business works a lot different than a big company."
Simple? Crafting questions that elicit responses that easily display the answers to these questions might not be as easy as it seems. Asking a candidate whether they function well under pressure is likely to elicit simply a "yes." Asking her a question that directly applies pressure, such as "What makes you think you are better for this job than all the other candidates?" or "Which co-worker at your last job did you not get along with well and how did you handle that situation?" is more effective, and will likely yield a telling answer. Hypotheticals about a candidate's future employment at your company can be even more revealing.
As you ask these behavioral, open-ended questions, listen not only to the content of a candidate's response, but also to the voice and manner behind it.
Matuson says: "Are they pretty lethargic? Are they being honest with you? Did they do the right thing? Did they ask for help when they needed it? After a while it becomes really obvious this person is a go-getter, or they work hard, or they make good decisions."
Hiring an HR Director: Checking References
Checking a candidate's references is the most overlooked part of the hiring practice, but experts say it is absolutely essential. Many employers also ask that applicants agree to credit-history checks and pre-employment drug screenings; those are optional, and often depend on vocation.
Of three references, have a phone conversation with at least two, and pay attention to the tone of a reference's recommendation, not just its content. Most people feel that it is not wise to hamper future employment for a past employee, so savvy references won't say anything negative. One tip: Leave a voicemail message that says, "I would appreciate a call back only if you feel this candidate is exceptional." If a reference truly believes in the candidate, he or she will return the call quickly. If you don not hear back from them, you can read into that, too.
Human resources experts also recommend trying to check a reference that's not recommended by the candidate: Hunt down a person at the applicant's most recent workplace (on LinkedIn, for example) who should have known him or her well, and ask for an opinion.
And when you have a reference check on the phone, what should you ask? Resker, president of Employee Performance Solutions, says: "A question I like to ask is 'if the person could have been more effective, what could she have done differently.' Rather than asking one weakness, which can make them uncomfortable."
Hiring an HR Director: Other Best Practices
• Great candidates should naturally follow-up on an interview with a call or e-mail, making it easy for you to invite them back for a second meeting. Do so, and allow other managers to meet with potential candidates on their second interview before offering a position. A second or third opinion is valuable.
• Set up a program that rewards current employees for referring apt job candidates. People within the organization can recognize others who would fit in well, and are unlikely to choose someone who wouldn't pull their weight.
• In both job listing and interview, pose only legal obligations and ask only legal questions. As an employer, you are not permitted to ask questions about a person's age, race, creed, sexual orientation or marital status.
• Despite a good gut feeling, never hire on the spot. Take time to review all candidates interviewed, both so that you have a chance for reflection and because you want to be in a strong negotiating position when discussing compensation.
• Once you find an ideal candidate whom you have interviewed and reference-checked, make a prompt offer and bring that person on board as soon as possible. Don't forget that they've been actively seeking an ideal position, and could recieve multiple offers in rapid succession.
Hiring an HR Director: On-Boarding the New Hire
The buzz-word right now is "on-boarding" for making sure a new employee is up-to-speed and productive as quickly as possible.
Before the new employee even walks in the door, there's much to be done. Resker sums up the mindset for managers to embrace: "Employers forget that it's very scary to start a new job. Thinking about it from an employee's perspective – they don't know where things are located, even – how are they to know they're meeting expectations."
The first objective should be to make sure their work station is set up and clean. The computer should be ready for use, and it should be their nameplate on the door and their business cards on the desk – not those of a recent fire.
"When you work in these small companies, you are always understaffed, you never have time," Rudnick says. "But it's really important to take the time you don't have to get a new employee up to speed."
One thing that helps is to have company policy, including employee guidelines and procedures in place. Even if you don't have an HR department, having human-resources policies in place is essential from day one, experts say. It will not only ease the transition into the new job for employees, who will know what's expected (it's never fun to have to ask a new boss "what's the vacation policy?" on the first day), but also protect your company from potential future legal trouble. Consider including expected work hours, presence in the office, and acceptable personal use of company electronics and space. Binding it in a guidebook, or having an online employee guide that's always available to staff is your best bet.
Managers should make it a priority to schedule face-time with a new employee within the first day or two – and ask pointed questions about how they're feeling and what they feel would help them out in their job that hasn't been provided.
Looking ahead, a company intent on keeping its new employees should schedule regular check-ins. Matuson suggests a manager checking in with a hire after 30, 60 and 90 days, just to ask what changes they might suggest and allow them to ask any lingering questions in a pressure-free way.
Hiring an HR Director: One More Note
If all this seems overwhelming (hey, you don't have a HR Director yet, so no one's judging), there are employment services, head-hunters and hiring consultants to whom you can contract out any or all of this process.