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As a new business owner, building an effective HR team is crucial for managing your workforce and ensuring compliance with employment regulations. However, tight budgets can pose a challenge when it comes to recruiting and retaining HR professionals. Fortunately, there are smart strategies that can help you overcome financial constraints while still building a capable HR team.
Below, Forbes Human Resources Council members provide cost-effective approaches for assembling an effective HR team, including leveraging technology, outsourcing specific functions, fostering internal talent and tapping into community resources.
1. Employ HR Employees With Growth Mindsets
Think broadly about the HR function and employ an HR business partner that has a growth mindset. Find someone who can learn all facets of the business and is willing to dive into task-based cross-cutting operational work as needed which will prove to be invaluable in the long term. This person should be able to work within the budget constraints of a startup while supporting various departments. - Hope Harris, National Association of Chronic Disease Directors, NACDD
2. Build Scalable Systems
Understand your technology and its functionality so that you can build systems that will scale. There are a myriad of self-service options with technology that allow smaller teams, including a department of one to successfully support the business when it's new and growing. Focus on the core areas of the business that are important in the current stage and ensure that the team's skill set aligns. - Nicole Roberts, People Solutions Group
3. Ensure Legal Compliance
First, you must realize that HR is the underpinning of an organization. Align with a professional employer organization firm to support an HR generalist on staff, ensuring compliance and that you have the policies and legal governance covered. While budgets may be tight, mistakes are much more costly whether legal or company brand. Bring the right team to scale, investing in the key functions as you grow your culture and your firm. - Julie Hankins, NNIT
4. Hire A Fractional HR Consultant
In a smaller business, HR is important but likely not a full-time job. Someone who's interested like a recruiter, office manager or bookkeeper might enjoy the chance to own HR. If they don't have the skills, a fractional HR consultant can help get the work done and mentor your team at the same time. It's a learning opportunity they'll appreciate and it will benefit you in the long run. - Mikaela Kiner, Reverb
5. Only Hire Top Talent
Do not waste time or money on anything less than top talent. Many new business owners make the common mistake of hiring less experienced, "budget-friendly" associates to help their start-up. To achieve top performance quickly, top performers should be hired. There's an old saying, "You get what you pay for." It stands very true when any organization is in start-up or ramp-up mode. - Ryan Tofte, BioPlus Specialty Pharmacy, A Carelon Company, Elevance Health
Forbes Human Resources Council is an invitation-only organization for HR executives across all industries. Do I qualify?
6. Invest In Training Department Heads
Hire a virtual assistant to handle most of the task-oriented projects that often keep HR bogged down and invest in HR training for your current department heads. This can give them increased knowledge and confidence to handle HR responsibilities. - Tiersa Smith-Hall, Impactful Imprints, Training & Consulting
7. Find Current Employees Who Can Handle HR
Look at your current employees and how you can engage them in the HR function. Is there someone who is a natural cheerleader who would be great for employee attraction and engagement? Is there someone who is a natural go-to person when employees have problems? Also consider areas that can be outsourced initially such as payroll, benefits and recruiting and then brought in-house later. - Hazel Kassu, Sudduth Search
8. Compare Outsourcing Vs. In-House Hiring
Look within your current team to see if anyone has any HR experience or interest and can carve out part of their time for HR or hire someone who can fill many roles. Have them work with an HR consultant or a third party to assist and guide them in building HR. Look for which parts to outsource and what you need in-house. This will give you a great starting point in moving your HR practice forward. - Amy Casciotti, TechSmith Corporation
9. Automate HR Functions
For new ventures, the best way to build an effective team is to automate HR operations (e.g., employee relations, payroll management and more) with HRMS software and position an HR generalist assisted by an HR executive to handle the rest of the functions such as performance management, recruitment, learning and development, policies, discipline, grievances and more. As the business grows, you can progressively establish centers of excellence, scaling up the HR team. - Subhash Chandar, Laminaar Aviation Infotech
10. Find A Cross-Functional Employee
Direct a hire a generalist who can provide cross-functional expertise: compensation, payroll, benefits, employee relations and recruiting with staff augmentation (contractors). A core leader with resources who can be flexed as needed. - Britton Bloch, Navy Federal
11. Communicate With Teams Often
New businesses often invest in HR last to the detriment of long-term growth. To not have to go back to go forward, 1. Hire a strong HR pro first, 2. Make people a measurable outcome in the business and report on it, 3. Share the HR responsibility with every leader and make them a stakeholder and, 4. Communicate often the connection between healthy teams and company success. We invest in what we value. - Jess Elmquist, Phenom
12. Partner With A Trusted Associate
I personally believe the hardest working recruiters are agency recruiters, so finding a trusted partner that you can team up with long term at a reasonable rate for contingency based on demand search is a great risk-free option. You will get better candidates to compare against your own and there is no cost unless you decide to hire the perfect fit. - William Stonehouse, Crawford Thomas Recruiting
13. Educate Yourself On HR's Function
Understand what human resources deliver to an organization beyond policies and payroll, and explore how the role can be a business driver. Consider your priorities and goals and how the right HR leader can help you drive outcomes. - Cat Colella-Graham
14. Invest In HR Software
Leverage technology and outsource certain low-value add HR tasks to help minimize staffing costs while ensuring essential HR functions are covered efficiently. Invest in HR software that can scale your business, outsource key HR expertise through consultants or freelancers, and focus the majority of your efforts on building a strong company culture as the foundation of your strategy. - Loren Rosario-Maldonado, Cultura, Inc.
15. Conduct Cross-Training With Current Employees
I had a similar challenge in 2020 when I was tasked to create an HR team for an edTech startup. I prioritized essential HR tasks, invested in cost-effective HR software and outsourced some functions such as sourcing to professional service providers. We also hired a part-time HR professional and did cross-training among employees to ensure efficiency and compliance with industry best practices. - Siddharth Sharma, JP Morgan Chase & Co.
16. Work With A Professional Employer Organization
Growing businesses should not make the mistake of understaffing HR teams to cut costs. If the business cannot compete on the compensation front, it can emphasize other desirable factors like a strong culture, good work-life balance or comprehensive benefits. In some cases, working with a professional employer organization may ultimately be a cost-saving measure. - Niki Jorgensen, Insperity
17. Build Tech With Scale
HR does not operate in a vacuum; new businesses can save costs by leveraging business operations technology within the HR function. This means leveraging the technology you already have in place to support HR projects and initiatives. When you are ready to invest in a human resources information system or applicant tracking system, make sure you are building the system with your growth in mind. One can save thousands when you build tech with scale. - Jessica Wallen, Marten Law
18. Document All HR Processes
Tap into existing team members who have worked in various capacities within the company. In smaller businesses, especially at the beginning, you have the benefit of people wearing many hats. Having current team members handle some HR responsibilities, and documenting their processes, will make it easier down the line when bringing on a dedicated HR employee. - Laura Spawn, Virtual Vocations, Inc.
19. Outsource Non-Critical Functions
Outsourcing is key. When I started the firm, I structured HR info critical (i.e., knowledge building) and non-critical (i.e., admin functions = payroll, legal, logistics) functions and have outsourced everything I could. Benefit from it by implementing a budget that is utilized on a unit and volume basis versus flat committed payments. Expenses are growing proportional with the firm making cash flow more predictable at early stages. - Nick Frey, Avomind
20. Train Current Employees
Identify key HR functions that are relevant to your business and invest in training your current employees to be well-versed and autonomous in those areas. This will not only keep things simple and easy to manage but also promote mobility and multifunctionality within your teams. Empowering staff to take on HR responsibilities will also lead to a more efficient and effective team overall. - Joseph Soares, IBPROM Corp.
