Setting up an HR Department for a SMB: What You Need to Know

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Joanie Turmel
April 27 2022

Your business is slowly taking off, and you now have a few employees to manage?

In the hustle and bustle of day-to-day operations and tasks, it can sometimes be tricky to set up a proper HR department from scratch. However, this exercise is a worthwhile investment for your business.

Why Should You Set Up an HR Department?

Human resources departments are the cornerstone of an organization. Human resources have a significant role in achieving business growth objectives. So, while you may think you’re doing fine without one, an HR department will allow you to take your small business to the next level by optimizing your workflow.

Human resources professionals play an essential part in a business as their job is to ensure that employee performance is optimized. In doing so, HR improves employee satisfaction with their workplace, productivity and overall company performance: hence the importance of having an HR department in place sooner rather than later.

Setting Up an HR Department: Where to Start?

While there is no miracle approach, we have put together the basics to get a successful HR department up and running.

1) Conduct a Preliminary Analysis

The first step to a successful implementation is to conduct a thorough and documented evaluation of your SME and its workforce to obtain an overall picture. 

An analysis of your organizational set-up will allow you to identify your company’s priority HR needs and, therefore, better plan the set-up of your new department.

Also, consider letting your current employees have their say on the subject. They will be able to shed light on specific issues and bring a different viewpoint. Moreover, including your employees in the process is a general principle for effectively managing organizational change.

2) Write an HR Plan

Once you have completed the preliminary analysis and pinpointed your priority needs, it is time to write your HR plan. 

This step essentially consists of auditing your company’s current needs and anticipating the staff you will need as you expand. Knowing and concretely defining what you expect from your new department will make the job much easier. After this step, you will easily be able to structure your HR department around your goals.

Not quite sure how to develop an HR plan? Outsource it to an external resource!With HR outsourcing, you’ll be able to get on with your day-to-day tasks while a human resources professional provides expertise to ensure your plan is flawless.

3) Establish a Budget and Salary Structure

To set up your HR department, you will need financial resources. Therefore, the next step will be to forecast the various costs related to your HR department’s implementation and establish a detailed salary structure. 

This exercise will allow you to remain within the limits of your budget and guide you in your salary offers for the various functions available in your organization.

Creating your salary grid within Folks HR management software is even possible. This functionality allows you to manage increases and step changes more quickly.

4) Get the Right HR Management Software

The next step – you guessed it 😜 is to purchase an all-in-one HR software for SMBs. Folks HR software was designed specifically for the reality of small and medium-sized businesses.

This software will help you stay organized and develop your HR department efficiently. Among other things, it allows you to automate your onboarding process, manage vacation requests in a single interface, generate an organizational chart for your department and even have access to the timesheets of all your employees.

Centralizing HR information and employee database as quickly as possible will avoid duplicate data and allow you to take advantage of Folks’ many featuresin managing your human resources. Request your free demo now!

5) Hire the Resources You Need

With the above tools in hand, it is now time to hire a dedicated HR team (or a manager) that will make up your HR department. 

Folks ATS can support you in this hiring process. Folks ATS is one of Canadian’s application management systems that aims to optimize your work as a recruiter with an accessible and intuitive tool. Its many features will help you select candidates whose values align with your organization’s.  

6) Define Key Performance Indicators for Your HR Department

The last step that will complete the process is the implementation of HR performance indicators (KPIs). KPIs are key to providing a precise measure of an organization’s HR performance.

Therefore, it is in your best interest to use them to ensure that your department is meeting the targets you have set in your plan. Most importantly, KPIs provide the data you need to guide your future HR decisions. 

KPIs are also among the many features offered by Folks HR management software for SMBs so that you can analyze your data with ease!


Small and medium-sized businesses that go the extra mile to ensure the satisfaction and well-being of their employees at work stand out positively.

You always come out on top by putting people first in your management! So… are you ready to set up your department with Folks HR?

Build your HR department with the help of an all-in-one software!

Benefit from powerful, flexible solutions:

Try out Folks HR for free today

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