Step-by-Step Guide to Setting Up HR for Startups in 2025

Wondering how some startups flourishes and others fail? HR infrastructure plays an important role in this.

Human Resources department (HR) helps an organization acquire, organize, retain and manage human assets effectively and efficiently. Do you need to hire HR personnel? Of course not! You can outsource affordable HR assistants that can easily handle your hiring needs.  

Ignoring HR process could adversely impact your employee attrition rate. Let's explore some of the effective ways to set up HR infrastructure in your organization.

Phase 1: Build The Foundation

The initial step is assessing the manpower requirements, work modes (remote, in-office or Hybrid), employee hierarchy, and so on..

Next create reliable employment policies to ensure mutual interests are safeguarded.

Some of the employment policies might include the following:

• Leave Policy: Every employees must take permission from their line managers before three days of taking leave unless its a sick leave. If its a sick leave, employees must furnish doctors prescription once their recovery and back to work day. so on...
• Working hours: Employee must be in office for at least 7 hours a day. Every employee must punch in and out through the biometric attendance at the entrance. so on..
• Code of conduct: Every employee in the organization must treat each other equality irrespective of any personal or social biases. 

Note: Looking for a effective and affordable HR assistant to create your HR policies. Contact US at Recruire.

Phase 2: Define and Establish core HR Functions

Once the employment policies are generated. You need to establish various HR functions crucial to operate the organization. 

• Hiring and Onboarding: You must assess the right manpower requirements for various departments like sales, marketing, IT, Finance, etc. Subsequent to that assess the source of candidates, recruitment process, interview stages, candidate pipeline management, etc. Once the decision of hiring process is completed, you need to decide the correct onboarding mechanisms and stages which might include, documents verification, candidate profile generation, background verification, data maintenance, etc. 
• Employee- Record Keeping: An organizations must keep up-to-date record of every employees throughout their lifecycle in the company. It helps you avoid any information mis-presentation and helps in data analysis. 
• Setting up Payroll Structures: An organization must allocate compensation structures for different levels of job roles such as associates, executives, director, vice president, president, etc.
• Leave and Attendance Systems:  You must use effective and efficient use of attendance tracking systems. It helps us keep track of employee attendance and leaves. Modern corporate organizations opt for biometric attendance trackers to facilitate automation.
• Feedbacks and Grievances System: You must create a feedbacks and grievances system where employees can put up their requests and concurrently organization can given them timely feedbacks. It helps in maintaining peace and penalizing any kind of inappropriate act in the organization. 

Phase 3: Stay Compliant 

1. Strictly adhere and follow the labor laws laid down by your territorial country.
2. Implement these policies strictly throughout the organization
3. Register required certifications and complaints whenever needed irrespective of positional seniority.

Phase 4: Use the Right (Free) Tools

In the current era there are abundant free tools available online for various productivity activities. You can use it for various HR activities including Applicant tracking system (ATS), Attendance tracking systems, payroll, employee database management. Let's explore some of the examples as follows:

Task	Free Tool Suggestion
Hiring	Zoho Recruit (free), Loxo HR (free)
Payroll	Razaypay X Payroll (free version)
Leave tracking	Google sheets/Microsoft Excel
Documentation	Notion (free)

Common Mistakes Startups Make

• No written policies: Many startups avoid written policies and rather follow verbal system. It automatically leads to negligence due to non-provable system. 

• Delayed onboarding: Startups must focus on accelerating their onboarding process as it limits chances of candidate backout and avoids building adverse candidate experience. 

Ignoring compliance thinking: Startups tend to think themselves as "too small". This is a myth as no organization is small they are just running on low scale. You must think positively in order to build positive work environment and have sustainable growth.

• Pro tip: Delegate admin-heavy HR work to a virtual HR assistant. We are always there to support you in HR support related tasks. Contact us today!

Download free HR resources form here (Secret 🤫 no sign in required)

• Offer Letter Template

• Onboarding Checklist

To Summarize, Startups must focus on cost effective and reliant methods instead of focusing on time consuming and expensive avenues.