Long reads

How to invent HR from the ground up

2 Sep 2021 By Rob Gray

Setting up a function from scratch can bring its own challenges. We meet a handful of people professionals who were the first in their organisations

“All by myself… Don’t wanna be all by myself,” lamented Eric Carmen in his infamous tear-jerking power ballad. And while it’s clearly a genuine sentiment, whether or not it’s shared by HR professionals is up for debate. As with any job, people practitioners move between organisations to gain experience in a variety of teams and move up the career ladder. This in itself is nothing new, although apparently to a lesser extent during the last 18 months, given that research from the Association of Professional Staffing Companies (APSCo) and Vacancysoft found that the number of vacancies for the HR profession dropped 38 per cent year-on-year in 2020.

And each time a people person starts a new role, the HR team is on hand to show them the ropes, offer help and advice and act as a sounding board for ideas. Unless, of course, there isn’t a team, and you’re the first and only HR professional in the organisation, brought in to set up the function from scratch.

Most commonly, this is the case when SMEs reach a point in their growth when the leadership team realises a lack of in-house HR expertise is causing inefficiencies that may harm performance. However, the need to build HR from the ground up can occur in a wide range of situations, from a larger organisation selling off part of its business to the establishment of a new subsidiary, or moves towards greater professionalism in charities, educational institutions, sports clubs and so on. 

“The approach an organisation takes when establishing an HR function or department is determined by whether the organisation is a start-up or has been in operation for some time,” explains Dr Washika Haak-Saheem, associate professor in human resource management at Henley Business School. “Additionally, this process of building an HR function is affected by the industry, size, culture, mission, vision, institutional environment in which this organisation is embedded and its growth forecasts. Throughout this process, the general perception of the role and competencies of HR also plays a role.”

She adds that when appointing their first HR professional, organisations should choose someone who has expertise but also the passion to establish an infrastructure to manage their most valuable assets.

Tutu Popoola, director of consultancy Sleek HR, helps businesses build HR capability. She says headcount shouldn’t be the only indicator of when to hire HR support, because decisions should also be based on what kind of people and culture challenges a business faces; whether there are adequate skills to handle these in-house; and how they impact growth.

Typically, businesses start giving serious thought to HR when they have around 15 people, says Popoola. “At this point, most businesses may rely on the expertise of an external HR consultancy to build culture, mitigate risks and provide much needed structure. However, as the business grows and is approaching 40 people, it’s time to build an in-house function, perhaps starting from a part-time in-house generalist and building up to a full team.” 

Joanna Chatterton, partner and head of employment at Fox Williams, says a headcount of around 50 is the magic number at which to begin investing in a specialist HR function. Until that point she generally sees responsibility for HR sitting with the finance function or a chief of operations, with day-to-day employee relations handled by an office manager with the support of external advisers or an HR consultant who dips in and out. 

“Once you hit 50 employees you will probably be best served with an experienced HR manager and an HR administrator,” says Chatterton. “You will be buying experience you don’t need with an HRD. A good HR manager will be flexible about acting up or doing some admin tasks which an HRD may be less inclined to engage in. If the HR function has been sitting elsewhere in the organisation, be clear who is responsible for what when your HR manager arrives to avoid things falling between the gaps or tension because assumptions have been made.”

Earlier in his career, Aaron Taylor, today a principal lecturer at the University of Sunderland, was in exactly that position. He was recruited to help design and develop the HR function at the distribution arm of a large retail organisation after the company became concerned it was not legally compliant.

“My initial priorities were mainly operational,” says Taylor. “Payroll used to be done manually and record keeping was haphazard. One of my first tasks was to transfer all of the data I could find onto a spreadsheet. I also focused on the creation of an employee handbook, although that took several months to complete.”

Performance management was also a big concern given a lack of clarity around standards and expectations. For instance, even simple details such as start and finish times had not been agreed. Taylor also initiated an employee forum and created onboarding, induction and training programmes that concentrated on developing skills. Moreover, he felt it was important to create a culture of support. 

The same can be said for Helen Reeves, head of human resources strategy and development at special needs school Manor Green School, who joined her organisation in 2014 to set up and lead the HR function. Until her arrival, responsibility for staff recruitment and training lay with a business manager, and Reeves was on her own for the first six weeks before the team was expanded, so she had to quickly familiarise and establish herself both within the school, and as part of the leadership team.

“I met with individual school leaders to learn about their HR needs, and being new to the education sector, also spent some time in classes gaining a better understanding of how the school met the needs of its students and the skills and talents that are required to do so,” she explains. “I also undertook a review of HR systems and processes to decide what was working well and what needed improving.”

Having joined the school from a regulatory background, Reeves also embraced the opportunity to raise awareness of best practice and compliance. One of the biggest challenges, she says, was records management – she recalls how there seemed to be a paper form for everything and how she struggled to navigate the information held in various computer network drives and paper personnel files. So changing paper-based appraisals and absence management to online systems, and recruiting a contract records manager was high on her agenda.

“School staff were not used to having an HR team, so it took some introductory meetings and a communications plan to let people know who we were and why we were there,” Reeves says. “We also needed to build trust. By being visible and inviting staff to training, workshops, discussion groups and ‘open door’ surgeries, staff soon found their voice and I could see the positive impact our presence was having.”

Away from education in the world of start-ups, Hessie Coleman has twice built HR functions from scratch: firstly at challenger bank Starling, and today in digital workspace company SEDNA, which she joined as chief people officer in January 2020, just prior to the coronavirus pandemic. Since her arrival, the company has seen fast growth and doubled in size from 50 to 100 people. 

“Hiring the right talent for a business is not only crucial for the product but also for the company culture,” Coleman explains. “Nowadays, talent does not join a business for the product alone but also for the culture, and so I needed to deeply understand and articulate what makes SEDNA’s culture special while creating a highly welcoming environment to quickly integrate many new team members without destabilising the existing team.” 

A focus on mental health, giving room for open feedback and engagement, and ensuring the team continued to feel connected despite the ensuing global upheaval were high on Coleman’s list. Onboarding many of the team throughout the pandemic meant reinforcing and extending remote working policies to strengthen existing practices as an international company with a fully remote team. Coleman also invested time in developing forums such as town hall meetings for company updates, and ‘Show and tell’, a chance for teams to present informally on work in progress to help employees engage with teammates despite not sharing an office. Curiosity is an essential part of SEDNA’s culture, adds Coleman, leading to the creation of a programme to support training that is accessible to all. 

Higher education provider TEDI-London was established as a joint venture in 2019 by three institutions with the aim to increase the number of engineers for the future. Michelle Wenham, who joined as chief people officer, had to develop a suite of policies and processes that reflected the organisation. Values and associated behavioural work were undertaken, which then reflected the way the policies were written and developed – the tone of voice, how TEDI would lead and manage its teams, and what type of people it was looking to work with. Wenham then had to develop the induction approach and all supporting documentation for individual staff members and their managers. 

The biggest challenge, she says, was the “sheer breadth and depth” of what she needed to know as the only qualified HR professional within the organisation, covering the entire lifecycle from attraction and recruitment through to learning and development, policies, reward, and everything in between. 

“You are a true manifestation of what you need to be able to do in a start-up: one day you can be writing a strategy, another day you could be writing the most basic letter. The type of person you need has to be extra comfortable with ambiguity, multitasking and not being worried that there is not a blueprint to follow but love the idea of creating it all themselves.”

Wenham adds that while it’s vital not to underestimate the amount of process development and admin required, you must not get lost in it. An eye must always be kept on the strategy and approach you are designing within your organisation. 

“Colleagues don’t always understand what’s required to ensure you are a fully operational people function and the initial monetary investment to get up and running can be underestimated,” says Wenham. “You may think you have a greenfield opportunity, but in reality, team members bring their own experiences with them and often try to replicate what they have done elsewhere rather than what is required within this new organisation.” 

Another organisation that has grown fast over the past year is Yorkshire-based drug and alcohol charity Project 6, which has doubled staff numbers and increased locations from one to three. Shaun Rafferty (pictured) joined as its first director of people in April 2021 and initially made a big push on EDI, HR policies and employee relations. But a lack of basic HR systems quickly became another priority, and an audit of HR policies found they all needed some rewriting – and recruitment and onboarding processes also needed review.

Rafferty says the charity’s CEO and trustees have been completely behind him and established a strong set of values that have guided his work. To build his team, he has successfully made the case for moving the finance and HR administrator studying for a CIPD qualification into a full-time HR role to strengthen the function. “Spend time absorbing the culture and values before deploying solutions you’ve used elsewhere,” Rafferty advises people professionals in a similar position. “From the beginning, link everything to better services on the front line, efficiency, empowerment of staff and do a long-term plan that the whole board owns.”

How to set up HR from scratch – from those who have

“Know when you need to start hiring into your HR team. You can get very used to doing everything yourself when you first start an HR function and it’s important to notice when too much of your time is taken up doing the ‘doing’ when you could be providing much more value through bigger strategic work. The company and the people are definitely not getting the full value of having you at that point and that’s when it’s time to expand the team.”

– Alys Martin, head of people and culture at Eave, previously head of people at Zappar

“Being responsible for establishing the HR function in an existing company can be overwhelming. My advice is to begin with reviewing what HR practices are in place and how they’re being executed. Even in a company without a formal HR department, HR-related tasks are being performed. The HR professional should, then, identify what’s being done correctly and what needs to be changed. Ideally, an action plan should be created, prioritising specific items based on their importance and urgency. Undoubtedly, organising HR and tuning it to operate effectively can be challenging. HR professionals should trust themselves and recall their past accomplishments.”

– Melina Demosthenous, HR officer at Ancoria

“I advise really integrating yourself into the culture as it is and understanding where the organisation is currently operating and making small changes as needed. Also, read the existing employee handbook in the first month or so and make notes of anything that may not be represented accurately, whether it needs to be edited, omitted, or added to. Especially in a start-up environment, new employees are seeking this information out and will likely point out inconsistencies.”

– Jacqueline Curb, recruitment and HR at Gig

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