Student Question

Why is establishing the right culture and hiring processes important, especially for "new" companies? Why is it worth it for HR managers to discuss career development with their employees on a regular basis? Why or why not? At what point do you believe a separate Human Resource staff member (or department) should be hired for a company? 10 employees? 50? 100? Or should no HR department be created? Why? List at least two potential consequences (good or bad) of your decision.

Expert Answers

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It is vitally important for any company, new or old, to establish the right culture and a sound hiring process. Creating a culture that employees respect and buy into is one of the best investments company owners can make. The cost of turnover—constantly seeking and hiring new employees—dwarfs the cost of having happy, stable, productive employees to begin with. It is more efficient to spend money up front to thoroughly vet each new hire and ensure they are a good fit.

In my opinion it's definitely worth it for HR managers to discuss career development with employees on a regular basis. Open communication on this topic allows managers to gauge employees' ambitions and identify good candidates for internal promotion. Also, it indicates to employees that management cares about them and encourages them to take a broader view of their jobs. A company that promotes qualified candidates internally inspires employees to stay and work their way up the ladder, because they see a clear path for promotion.

The point at which companies establish an HR department is variable, and depends on a number of factors—the nature of the company, number of employees, management philosophy, and so on. I once worked for a small company (about 100 employees) that had no HR department for years, until the company was sold to a larger one. The new bosses immediately established an HR department, with mixed results. On the plus side, the HR director took a lot of work off managers' plates, especially with regard to hiring and handling small inter-office disputes. On the negative side, the nascent HR department added a layer of bureaucracy between employees and management, which some employees resented. Also, light banter in the office turned into a disciplinary situation when a couple of employees complained about a joke. Behavior that was no big deal before suddenly became deadly serious. In my experience, the office became a more formal, less fun place to come to work, which affected employee morale and led several, including me, to leave for a job elsewhere.

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