What documents do I need to set up an HR department in my small business?

Even small businesses may benefit from a dedicated HR department. It’s not just your permanent, full-time employees that you need to take into consideration, but also part-time, temporary and contract workers, in addition to agency workers and freelancers.

However, creating an HR department from scratch isn’t easy. That’s why we’ve put together a useful checklist, detailing the documents that may be required. Of course, not every business requires every document, but this list is intended to give you a starting point for developing your own HR department.

Job profiles

Take the time to sit down and create profiles for every job within your company. Then fill in some information about the employees who currently fulfil these roles. Bear in mind that this information could prove useful in the future, either for hiring purposes or when considering other projects.

Hierarchical structure

These documents have fallen out of favour in recent years, yet they are still incredibly useful. Creating a hierarchy can help with planning, succession and outsourcing. It’s also valuable for determining salaries.

Business staffing plan

Even the smallest of businesses should consider introducing a business staffing plan. It may not seem a primary concern when you’re just starting out, but if you intend to grow your business, it will soon become essential.

As your business develops, you’re likely to have several departments, such as Sales, Marketing and Operations. Ideally, you need to know what sort of growth each of these departments anticipates over the following twelve months. This will enable you to calculate future staffing needs for budgeting and planning purposes.

Salary structure 

The majority of SMEs don’t seem to spend much time on their salary structure documents, but this is a crucial error. Every single salary within your organisation should be studied and assessed. It’s important to compare current salaries against the broader job market, to ensure that you’re paying your employees the going rate for their work. It is equally important to revisit the salary structure document regularly, at least twice a year, to make sure that your business remains competitive.

Compensation and benefits 

When a business is in its early stages, they probably won’t be in a position to offer employees very much in the way of traditional benefits. However, that doesn’t mean a business can’t be creative in establishing benefits that will appeal to staff. Perhaps employees could be offered flexible working, or even the opportunity to work remotely. Create a policy document detailing the benefits that you can offer, remembering to update it whenever new benefits are introduced for staff.

Time off

One thing that employees usually always enquire about is an organisation’s leave policy. Set out detailed information regarding annual leave, sickness policy and other time off. Every business has its own regulations when it comes to time off, so it’s essential to have full details of the business time off policies available to all employees which must be in line with the relevant legislation. It is also crucial to include a comprehensive system for recording employee absences so that you can keep track. 

Job appraisal

Using your job profiles as a guide, determine ways of measuring each employee’s performance. Of course, as the business grows, both the job profiles and the associated performance appraisals will develop, so they will need to be revisited regularly. 

Many companies consider appraisals to be outdated, but they remain an incredibly useful source of information about each employee’s performance in their role. At the very least, regular evaluations provide an opportunity to discuss your worker’s role and discover ways to improve matters for the employee and the firm alike.


If your employees need to travel as part of their workload, then you’ll need to include a travel element with the business expenses document. But even if they don’t, you should still have documentation in place to establish your policy regarding company expenses. It’s also worth using dedicated apps to keep track of employee expenses, as this will keep administration costs to a minimum.

Training, development and education

Even the smallest of businesses can offer useful training and development programs, again to the benefit of the firm and the team member alike. A company might not be in a position to set up specific training courses, however, mentoring and support for employees will enable them to thrive and grow in their roles. 

Job description templates

Successful small enterprises plan for growth, and it’s essential to aim to have job description templates in place for when the team starts to grow. The aim will be to attract the right type of talent, so it’s worth spending time creating templates that reflect the ethos of the business, to draw in new employees. A lot of companies include a brief background of the company within each template, to give prospective employees an understanding of the organisation from the outset.

All of these documents need to be revisited regularly, to make sure that they remain relevant as your business develops and grows. Review documents in the context of the applicable and current legislation, for example, inclusivity, minimum wage, working time directives, and so forth. It may be advisable to enlist the services of an experienced HR consultant or employment lawyer to ensure they are correct from the outset.

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