When Should an SME Make Its First HR Hire?

Almost nobody hires their first HR person on time. It happens after a labour inspection, or after two good people leave in the same month, or after a payroll error that took a week to unpick. The decision gets made in a bad mood, and the job description gets written by someone who is angry.

The signs turn up well before that.

What the signs actually look like

Not headcount. Headcount is the number everyone quotes, and thirty to fifty is roughly where it happens, but the real signals are behavioural.

• A founder or an ops manager is spending five hours a week on contracts, leave and payroll questions, and doing it badly because it is their fourth priority
• Nobody can answer a basic question about a person without opening three files
• Managers are inventing their own rules because there are none, and two of those rules now contradict each other
• Someone left and you found out about the reason afterwards, from a third party
• You have started to worry about compliance without knowing exactly what you are worried about

Three of those five, and you are already late.

Decide what they own in year one

The most common way this hire fails is that the role is defined as everything. Somebody arrives expecting to build culture and spends nine months fixing contract templates, or arrives expecting an admin job and gets asked to redesign performance reviews.

Pick two things for year one and say so in the job ad. For most SMEs the honest answer is records and payroll first, then hiring and onboarding. Culture work is real work, but it does not survive being layered on top of a broken filing system.

Generalist, admin, or outsourced

An HR generalist can build a process from nothing. They cost more, and they get bored if the job turns out to be pure administration.

An HR admin will run a process reliably but will not design one. Hiring an admin when you needed a generalist is the more common mistake, because the admin salary looks reasonable and the gap only shows up in month five.

Outsourcing payroll and compliance while you hire is a reasonable middle path, though I would not outsource the whole function at this size. The person who knows why someone resigned needs to work in your building.

Give them somewhere to put things

Whoever you hire will spend their first month gathering documents that exist in six places. If you can, have one system waiting for them. A new HR person who spends their first quarter building a filing structure is a new HR person who has not started their actual job.

TalentHR is often the thing an SME sets up in the month before the first HR hire arrives, so day one is reading the records instead of building them. Either order works, but this one is faster.