It is a myth that startup does not need HR department. The simple reason that HR dept incurs cost and expenses. They do not have too much work to do. Also, HR is not a core function but a support function.
I have a different view. Even Accounts is a support function but all Business Owners hires an accountant in the first three months of starting Business.
HR is a function which facilitates the business owner to establish the right Selection Process, Policies, Discipline, Documentation and most importantly Culture. It is totally agreeable that startup cannot afford to hire very highly experienced and salaried HR resource. That is why outsourced HR solution can design the following modules.
1.Organization Structure: Startup needs a very lean and flat structure. But still few functions can be outsourced and only core function can be kept in a house.
2.Recruitment & Selection Process: Startup needs very high skill and talented resource but at the same time attracting and retaining the right talent for a startup is challenging.
3.Joining Formalities & Induction: Lot of time this is not done or done at a very basic level.
4.Legal Draft: offer letter, appointment letter, confirmation letter, and even exit documentation is very crucial to get & issue.
5.HR Policies: HR Policies plays a very important role in setting the right Culture from Day One. Office Timing, Leave, Code of Conduct, etc needs to be prepared and to follow from the initial day of joining else once the discipline gets diluted, it is difficult to control the same.
6.Review of Employees: Startup cannot have much time to do a lot of experiments on talent because of Time involved and the cost incurred on experienced employees. If the human resource is not justifying their salary or responsibility it needs to review at the right time.
7.Compensation & Compliance: Startup does not have an idea about different compliance, license, and labor laws. They do not have the expertise to create a salary structure which is compliant proof and even cost-effective.
I am sure above all areas are very critical for a startup. This can be done easily by an experienced outsourced HR process consultant. These services are available at a very reasonable cost since few are just one time.
I would strongly suggest all startup not to ignore HR in the initial period. HR cannot only set the right culture but can establish all good system from Day one.