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How to Build an HR Department Without HR People

In Human Resources — by Greg Roche

You run a growing company. New customers come through the door every day. Revenue is rising.

To meet the demand, you need more people.

When you think about adding people, you think about the challenges of a bigger workforce. You start thinking about building an HR department.

Two things come to mind:

1. The words “Human Resources” makes you think about all the reasons you left the traditional, corporate world for a smaller company: bureaucracy, endless policies, and slow-to-change, stuck-in-the-’90s HR people.
2. If you need HR capabilities, how do you build them in a way that is compatible with your fast-moving, innovative company?

There’s a way to achieve the second without falling victim to the first.

All HR professionals are not the same. There are smart, innovative people trying to make the workplace better.

Unfortunately, I’ve found there are too few of them in the world.

I’ve led most functions of human resources from recruiting, HRIS and HR analytics, benefits, compensation, performance management, and talent management. For the functions I haven’t led, I’ve worked closely with leaders from L&OD to employee relations.

What I’ve noticed is many people who build careers in HR tend to view it as a set of skills transferable from one organization to the next. What works in one company works in all companies. Certification associations like the Human Resources Certification Institute (HRCI) and Society for Human Resources Management (SHRM) exist to train HR “best practices.”

You can build a traditional HR department by hiring people with the letters “PHR,” “SPHR,” “CEBS”, or “CCP” after their names. You’ll get someone who has studied HR practices, passed a test, and attended a few classes each year to maintain their certification. Also, they’ll have years of experience doing HR “by the book” in a traditional organization.

But, you don’t have to build a traditional HR department.

There are a couple ways to do this. The first is to hire non-traditional HR people into HR functions. The other way to build HR capabilities is to integrate the functions into existing roles at your company. I’ll explain both approaches for the roles of recruiting, compensation, and benefits.

Recruiting

Recruiting is sales. Recruiters sell your organization to the rest of the world. Using the same principles as your sales force, recruiters generate “leads” in the form of applicants for open positions. Those same recruiters grab those leads, contact them, determine which are worth pursuing, and move them through the “funnel.” Except this funnel leads to becoming an employee instead of a customer.

In reality, recruiters sell twice. They sell the candidate on the job and sell the hiring manager on the candidate.

According to Morgan Hoogvelt, managing partner of human capital consulting firm MorganHCM, the number-one quality a recruiter needs to have is, you guessed it, strong sales skills. Some of the other skills listed are an ability to build relationships, hunter’s mentality, and strong follow-up skills. You already have these skills on your sales team.

If you’re looking to build a great recruiting team in your organization, look for people who have a sales background. Empower them to re-invent the recruiting process to find great candidates the way they would find great customers. Compensate them the way you would your sales team.

Speaking of your sales team, why not make finding new employees part of their role? They have the skills and the mentality. Integrate the recruiting function into the sales team. You may need a few more sales people on the team due to the expanded role, but if you’re looking to get away from the traditional recruiting model, hiring salespeople to recruit or making recruiting a part of the sales team’s role are two different ways to look at it.

Compensation

Your payroll is the biggest expense you have, and if it isn’t yet, it will be soon. As you grow, each compensation decision becomes more and more important. You’ll start asking questions like: Are we paying enough? Are the incentives we’ve created to attract people working? Will we be able to sustain this level of payroll expense as we grow?

These questions can be answered by a financial analyst. Someone who loves to get into numbers to find patterns and trends. Someone who loves to find answers in data.

Hiring a financial analyst is an alternate approach to get the skills you need to manage your compensation programs. At the same time, if you already have growing finance operations, you can add compensation management to this group’s role.

Among the top 10 skills every compensation manager needs are resourcefulness in using different sets of data, analytical thinking, and business-wise thinking.

Consistency is important in compensation. At one point in my career leading a compensation team, I learned to say, “We don’t pay equally, we pay consistently.” The point is that the compensation strategies don’t pay everyone the same; instead, they pay everyone consistently according to the compensation policy.

Consistency is not a trait reserved for career compensation professionals. Financial analysts usually have it as well.

Expertise is another valuable asset when it comes to compensation management. While there are compensation principles that are useful to know, like job analysis and salary range development, this knowledge can be obtained through online training, your local SHRM chapter, or the World at Work organization.

The most important skill in compensation is the ability to look at data and glean insights. Financial analysts can do this job as well as any compensation professional.

Benefits

Benefits are often the second-biggest expense behind payroll. When you started your company, your employee benefits package was probably purchased through a broker or association. In addition, most of the administration happens through a third party, possibly in conjunction with your payroll processor.

As a result, this role is about vendor management. Instead of hiring someone with the title of benefits manager, look for someone with experience in purchasing. Someone who is familiar with service-level agreements (SLAs) and will hold vendors accountable for performance and service.

A purchasing background may bring another competency to this role: business acumen. Many benefits managers grow into their roles through understanding the technical side of benefits but don’t have financial analysis experience.

Your consultant or broker will help with the technical side. By identifying someone with business acumen, you can make this role part of your existing purchasing department or you can hire them to manage the benefits program in a way that makes your program competitive AND fiscally responsible for you organization.

What’s next?

For recruiting, compensation, and benefits, these are some examples of how to build your HR capabilities in a different way.

There are other parts of HR, like training and compliance, that could be integrated with existing functions, as well.

Still not convinced and want to hire career HR professionals?

As I indicated at the beginning, there are people in HR who are innovative and trying to do things differently. If you’re looking for those types of people for your organization, check out DisruptHR and see if there’s an event coming up in your city. If so, go to the event and talk to the people who are there, particularly the speakers. If there isn’t an event in your city, watch the videos from some of the past events – especially the Idea Sex video by yours truly.

I think you’ll see there are different ways to approach HR.

The final point is there are no HR textbooks that make someone fluent in human resources.

Your HR team simply needs to be human and resourceful.

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