When to hire a Director of Human Resources

There are companies (especially SMEs) that operate successfully without a dedicated Human Resources department, or where one person handles multiple roles, including human resource management (for example, a finance and human resources director). Therefore, to what extent is it necessary to have a specific department or a director exclusively responsible for this function?

The mere hiring of the company's first employee automatically creates the HR function and introduces problems of recruitment, selection, how much and how to pay, whether it is a permanent or temporary collaboration, what the professional expectations are and the professional development that the person should have depending on the progress of the activity... in other words, all problems inherent to the Human Resources function.

However, this does not mean that with the first hire you must immediately hire a HR directorThe person or department responsible for this function appears much later and, in many cases, simply does not appear.

Initially, the owner or top executive typically assumes the functions of Human Resources: who is hired, who moves from one position to another, who sets salary levels, who analyzes employee performance, etc., are decisions associated with the highest organizational level. A first indication that a specialized department might be needed lies precisely in the fact that the top executive cannot make all the decisions, since they don't know everyone, or at least not well enough, and must delegate these decisions to people they trust, usually those responsible for the various functions within the company.

The four situations you must analyze

Delegating to the next lower level may work temporarily, but new problems often arise from conflicts between those responsible for different areas. In particular, you should pay close attention to the following situations:

• Similar positions in different areas are paid differently, which creates a comparative disadvantage that causes employees to become frustrated or try to force internal moves.
• It is rare for someone to be promoted to a different area because their supervisor treats the staff under their charge "as if they were their property" and prevents such a move.
• There is no unified policy; instead, each area behaves as if it were a separate company.
• There are complaints or the Labor Inspectorate draws up a report of events for which no one takes responsibility or believed to be correct.

Different stages, different needs

The need for a specific HR department usually goes through several stages:

1. The company is located in a “micro-SME” stagewhere all decisions are made by the owner or top executive. There are no dysfunctions because they have a close understanding of all employees.
2. The increase in staff or the need to open new centers causes a loss of the close knowledge. The top executive retains decision-making power but needs information to make decisions.
3. The company keep growing And it has different managers to whom decisions are progressively delegated, such as who to hire or internal transfers within their area. However, the owner or top executive still retains the final decision on all personnel matters.
4. The company continues to grow and is increasingly delegate more among those responsible for each function. They have more freedom to make their decisions in the HR field and it is usually conditioned by the results of their units.
5. La diversity of criteria When used by different people in HR-related decisions, it creates problems, hinders internal mobility, and leads to visible signs of nepotism in different areas.