HR stages and HR needs for SME, start-up, Entrepreneur, business owners


Globally the trend indicates that start-up & young entrepreneurs are doing businesses that are disrupting businesses done traditionally for decades. Silicon valley, India, China all have witnessed the trend. While big business houses are struggling to generate profits, these SME companies are doing wonders. One of the reasons for SME’s success is, owners are personally involved in every decision & execution of business. Interestingly these owners are hands on to all jobs, roles, functions & departments.
From setting up the admin, to IT infra, to sales, to setting up company HR, they do it all.

One of the critical functions that needs lot of attention, takes lot of time, and sensitive in nature, needs understanding of law & finally is the most important requirement to run business, is Human resources [HR].

Organisations have done extremely well when they have a team that delivers. From building a successful team, to identifying talent & grooming them in the organisation, to retain talent in the organisation, this is a full time job. And we are not even considering the efforts of day to day HR operational activities like maintaining employee files, salary, labour compliance, employee grievances & such other employee needs.

Let us further understand why an HR is required for a small team but progressive organisation.

A SME business goes through following HR stages in their entire tenure–

HR Stage 1: The 1st 10 employees in the organisation. These are typically close connect, trusted people from friends, family or past associations. When we are hiring employees at this stage, HR polices are not priority, in fact salary are also mutually managed. This team has been sold with the idea of going big, hence they do not worry about appointment letters & leave policies.

HR Suggestion: Once we cross 10 employees, stage is set for HR services, especially the HR ops.

HR Stage 2: The team has grown to 20-25 employees. Talent is now hired from the industry. In such cases we have to have a good hiring process in place. Organisation needs to create Job description, interview panel, background verification of the candidate. Salary structure, offer letter, etc must be in place for the employee on-boarding process.

HR Suggestion: HR policies, HR practices, HR process needs to be established. Organisation HR set up & employee KIT needs to be designed. Time to Hire an HR expert or service.

HR Stage 3: The team is now more than 25+ employees, say up to 100. With the increase in volume of employees in the organisation, there is a need to manage the complete employee life cycle in the organisation. Moving forward from employee letters & working policies. Payroll needs to move from accounts to HR experts. Also to manage attendance & leave records, shop & establishment compliance, labour compliance. Employee engagement program, training & development for employees. Helpdesk for HR admin & ops. We have to function like a full-fledged HR department.

HR Suggestion: immediately appoint an HR or HR service provider. Recommend to hire an expert SME HR agency who understands entrepreneur mindset. HR Automation is a must.

HR Stage 4: The organisation has grown more than 100+ employees in strength. HR resources & HR automation is a prerequisite. The HR team needs to expand, you will need a core HR person, recruiter, HR admin. A few external HR consultants or HR advisory to support the core team.

HR Suggestion: Deploy a cloud based SaaS HRMS software, which has functionality from hiring to retirement.

If you are an Entrepreneur or a business owner, at any of this stages and need any support or have any HR questions, feel free to write to me at You can even call me on 9821186599