Empower Your Startup with an HR Checklist: 9 Valuable Steps

According to a recent survey, more than half (65%) of startups lack dedicated human resources (HR) support. That's a stark contrast to Fortune 100 enterprises, where HR is a standard department for 100% of top companies.

For many startups, this is the result of limited resources. Founders and CEOs face difficult choices, such as whether to devote resources to product development or seek additional funding.

Yet, HR is a critically important function for every business. Not only can establishing an HR department early on help your company scale effectively, but it can handle the legal and ethical challenges that are part of every workplace.

By establishing a dedicated HR department and following our comprehensive checklist, you'll empower your startup to scale effectively, foster a positive company culture, and navigate legal challenges with confidence. Investing in HR from the start sets your business up for long-term success and ensures your most valuable assets—your employees—are well-supported and engaged.

HR for Startups: Is It Really Necessary?

The simple answer is yes—no matter how big or small your business is, HR matters.
An HR department helps startups craft policies, plans, and processes to take care of short-term needs and mitigate long-term risks. Solid HR policies make for better employee satisfaction and limit your company’s liability.

However, creating HR policies and ensuring compliance with federal laws isn’t just about making it to an IPO or getting external funding. An HR department will help your startup in a few key areas:

• Ensure ethical behavior. Emphasize the importance of ethical behavior to your employees. Unethical behavior is often a result of bad company culture, so it’s important for HR to address culture at  and must be addressed by HR.
• Comply with employment laws.  For example, if your business includes managing remote employees in different states, you’ll need to know which have at-will employment laws.
• Navigate policy changes. Reserve your company’s right to change policies whenever necessary.
• Handle compensation and benefits administration.  Your HR team should work with accounting so they can answer any payroll questions employees have.
• Discover ground truth about company culture.  HR is there to help employees in every department and needs to know what’s going on. Your HR personnel should meet and interview other employees to get a feel for the company, see different viewpoints, and gain employee trust.
• Set goals for growth.  When creating your HR plan, make sure HR and company goals align. Help set realistic HR goals that can be implemented within the first three to six months.

HR Checklist for Startups: The Top 9 Priorities

1. Establish Your HR Department Structure

Your company doesn’t need to have a comprehensive organization plan the day you open, but you do need to have a basic HR department plan for structure and operation. This plan will act as a guideline as your company expands and will help you develop your HR department.

Unlike a 1,000-person enterprise, startups will likely have fewer people and resources. At a minimum, your department structure should include a strategic leader who’ll establish company policies and ensure compliance.

According to SHRM, companies typically handle core functions in-house:

• Compensation and incentives
• Employee communication plans and strategies
• Performance management
• Developing and implementing HR policies
• Supporting strategic business planning

Additional HR functions, such as payroll and benefits administration, are often outsourced to third-party vendors.

2. Use a Human Resource Information System (HRIS)

HR software helps businesses of all sizes manage people analytics, performance management, onboarding, and more—but it's especially helpful for startups.

If you have limited resources for HR, an HRIS for small businesses can help you introduce core HR functions into your business. We recommend investing in an all-in-one solution that makes it simple to manage these diverse functionalities. Otherwise, you'll risk burning time and money by working in disconnected systems that don't pair well together.

For example, BambooHR® comes with built-in tools that help you track employee time, recruit new employees, manage pay checks and benefits, automate administrative tasks, and much more.

3. Establish Onboarding and Recruiting Procedures

Even if your startup is small, you need to consider onboarding for new employees. This includes where to post your job ads, how to determine who your target candidates are, and how to structure the onboarding process. Whether you’re hiring your first employee or your 50th, make sure you have the necessary paperwork ready for them.

• Offer letter
• Employee information for payroll
• I-9 employment verification
• Any employment agreements (intellectual property, etc.)

In addition to the required paperwork, consider your onboarding process for new employees and re-hires alike. A good onboarding process sets your employees up for success from day one.

Make sure you’re ready for them on their first day with an employee onboarding checklist, and use it to establish expectations and introduce objectives. Check in regularly with your employees during their first several months and maintain open communication with new hires.

4. Comply with Health and Safety Regulations

A key point is making sure your work environment is safe for employees and meets federal and local regulations.

Your work environment must comply with the Occupational Safety and Health Act (OSHA) and outline policies for behaviors to stay in compliance:

• Safety: This includes creating an emergency action plan, identifying emergency exits and routes, providing first aid and medical supplies, and keeping the work environment safe.
• Behavior: This includes policies on equal employment opportunity in the workplace as well as sexual harassment policies.

Developing an HR department focused on creating a workplace that complies with federal regulations for health and safety compliance provides legal protection for your company.

5. Set Up Processes for Payroll and Benefits

Now that you’ve created your hiring process, you’ll want to know how to keep employees with your company for the long haul. Ensuring that your company establishes competitive compensation and benefits can help you get there.

To establish these plans, you’ll need to determine what your pay structure looks like, as well as policies for vacation and sick time, retirement benefits, and what system you’ll use to manage payroll.

• Compensation Strategy: Determine a company pay structure that is competitive and fair based on an evaluation of your market. Learn how to create a competitive pay structure in a changing economy in our blog.
• Benefits Administration: Some benefits are voluntary and some are required by law. Voluntary benefits include medical, dental, vision, life insurance, and retirement accounts such as a 401K or IRA. Mandatory benefits vary from state to state but can include workers’ compensation, unemployment insurance, and disability insurance.
• Payroll Management System:  Payroll errors can be expensive to fix—finding the right payroll management system to fit your startup’s needs can save time and money.

6. Nurture Employee Relationships

Managing employee relations is as important for small business HR as it is for large corporations. In 2023, just 3% of Inc. 100 startups had dedicated DEI leadership positions, compared to 85% of enterprises. Without dedicated support and resources, many startups struggle to create and nurture an inclusive environment.

An HR department can help you establish policies before complaints occur, so you'll be ready to handle them. Prepare to address any employee concerns by outlining your business’s standard of conduct, creating a plan to address issues, and establishing a system for gathering employee feedback.

Along with addressing employee concerns, you should take an individualized approach to employee engagement to maintain relationships. Following up once a year isn’t going to cut it, and if you don’t consider employee engagement and satisfaction, you’ll end up with employees who are disengaged from their work.

Employees need to know their purpose in your organization, find meaning in their work, and gain skills to do their jobs well.

Employee satisfaction surveys are an easy way to find out employee sentiment and assess the overall morale and feeling of your teams. The insights you gain can also help with managing employee relations and developing employee retention tactics. Proactively addressing recurring issues raised before they become bigger problems builds trust and mutual respect.

7. Introduce Performance Management Processes

When you’re just starting up your new business, training employees and evaluating their performance may not be top of mind, but important part of setting up an HR department in a startup is making sure you are allowing employees to grow and develop their skills and providing them with appropriate feedback for improvement.

Make the most of your employees’ talents by using performance management tools, keeping personnel files, and establishing a performance evaluation process.

8. Prepare for Audits

Another key point to consider when detailing your HR policy is keeping in mind that you’ll be audited at some point. Before that happens, your HR department should establish areas to review and check for compliance, as well as ensure they meet manager and employee needs.

Key areas include:

Company Policies

• Recruitment
• Orientation and training
• Company policies
• Benefits
• Payroll
• Salary structure
• Employee relations

Documents

• Organizational strategy
• Safety plan
• Personnel files
• Posters
• Performance evaluations
• Organizational strategy

9. Create an Action Plan

Creating a detailed action plan to implement these key points in the HR department startup checklist is crucial for getting management approval and making sure everyone is on the same page with budgets and HR actions. Management can then categorize projects by priority level and help HR create a project timeline for implementing each action.

Part of your action plan should be creating an employee handbook that details HR policies such as benefits, commitments, equal opportunity, employment practices, pay, health and safety compliance, consequences for misconduct, and leave of absence.

This ensures employees are on the same page and aren’t confused about new policies and procedures. This will also help answer many basic employee questions that would otherwise take up valuable HR department time.

Bonus: 12 Best Practices for HR at Startups

1. Create an intentional company culture. Your company culture will be there whether you establish it or not. Company culture relates to the personality of founders. Think about your company personality and how it will mesh with your own personality.

2. Determine core values. Define your company’s core values and let HR know your expectations. A good HR department will recruit and hire new employees that reflect your company values.

3. Start at the top. Building a great company starts with developing and retaining top talent in leadership.

4. Simplify, simplify, simplify.  Startups pivot and change quickly. Keep your HR department simple so it can keep up and match the maturity of the organization. There’s no need to complicate things.

5. Match expertise with culture. Consider who you’re hiring for your HR team just as you would any other position. Hire an experienced HR professional who reflects your company culture.

6. Stay consistent. Your HR department should reflect your company values, mission, and vision in all of its job descriptions, benefits, and policies.

7. Create leaders.  HR should focus on hiring great leaders that are aligned with company values and HR strategies. Great leaders train new leaders and promote success within your growing startup.

8. Consider the total cost. Having an internal HR department is great, but startups should consider the overall cost and determine whether small business HR software can help them streamline their operations and save on costly mistakes.

9. Create a culture of learning. HR departments that implement training programs from the get-go help create a strong company environment.

10. Focus your energy on your people. Processes are necessary and important, but they’re not everything. Streamlining processes can help HR departments focus on employee development and maximizing human capital.

11. Stay involved. Make sure you stay involved in the HR department processes. While you shouldn’t micromanage HR, you should be aware of HR operations.

12. Create a culture of clarity. HR can help create actions and policies that promote trust and encourage transparency in the workplace.

Leverage HR Software to Drive Small Business Growth

Performance management wasn’t designed to be painful, but years of poor practices and bad habits have turned it into one of the biggest headaches of the business world. Yet when done right, it’s one of the best tools for boosting performance and increasing employee engagement.

Learn how to cut through the fluff of traditional performance management and build a system that actually works with BambooHR®.