When to hire your first HR person

In most small companies HR is a founder, an office manager or an accountant, doing it alongside their real job. That works for longer than people expect and then stops working abruptly. The question is not whether to hire someone for HR but when, and what the role is when you do. Here is how to think about it.

The signals

Headcount is the usual trigger, and 40 to 60 employees is the range where most founders make the hire. But headcount is a proxy. The real signals are these:

• Payroll or compliance is being done late or wrongly. A missed PF filing, a payslip with the wrong leave deduction, a Form 16 that went out in August. Once these happen twice, the cost of the hire is lower than the cost of the errors.
• Hiring is the founder's main job. If a founder spends more than a third of the week on sourcing, screening and offers, the company is paying its most expensive person to do a job someone else can do better.
• A people problem went badly. A resignation that surprised everyone, a harassment complaint with no process to receive it, a termination handled over the phone. Each of these is a failure of process, and process is what an HR person builds.
• Policies exist only in people's heads. When three managers give three answers to the same leave question, you have outgrown informal.
• The office manager has quietly become HR. They are good at it, they are overloaded, and they do not have the training for the compliance side. Either give them the role properly or hire above them.

If two of these are true, hire. If one is true and the company is growing, start the search; it takes three months.

What to do before the hire

The first HR person should not spend six months discovering what the company does. Before they arrive, put the basics in order:

1. One employee record per person, with joining date, designation, salary structure, bank and statutory IDs, in one system rather than three spreadsheets. Our guide to one employee record explains why this matters.
2. A written leave policy and holiday list, even a short one.
3. Payroll running on a fixed date with a documented process, whether in-house or through an accountant. The payroll runbook is a good template.
4. The compliance calendar: PF, ESI, professional tax, TDS and whatever state registrations apply, with due dates and who files them today.
5. A PoSH Internal Committee, if you have ten or more employees. This is a legal requirement regardless of whether you have HR, and it is the first thing a competent HR hire will ask about.

Doing these first means the HR person's first quarter is improvement, not archaeology.

What the role covers

A first HR hire in a 50-person company is a generalist, and the mix is roughly: compliance and payroll coordination, hiring and onboarding, policies and the handbook, employee relations (the conversations managers avoid), and the administrative core of records, letters and exits. What it is not is a strategic people partner, a learning and development function or a culture lead. Those come later, and a job description that asks for all of them at once will attract people who have done none of them.

Decide where payroll sits. In many Indian small companies payroll processing stays with finance or an external accountant while HR owns the inputs: attendance, leave, joiners, exits and salary changes. That split works well if the handoff is clean; the HR system should pass attendance and leave into payroll without a spreadsheet in between. What does not work is nobody owning the inputs, which is the state most companies are in before the hire.

Who to look for

For a first hire, five to eight years of experience in a company that was larger than yours but not enormous is a good profile. They have seen a working process and can build a smaller version of it. Someone from a very large company often struggles without the infrastructure; someone with two years of experience will be learning on your mistakes.

Test for three things in the interview. Statutory knowledge, specifically: walk through a joiner's first month and ask what filings and forms happen when. Judgement, with a scenario: a manager wants to fire someone today for a performance issue first raised yesterday; what do you do. And comfort with difficult conversations, by asking for a real example of one they handled and how it ended. Use a structured interview with a scorecard, which also demonstrates the standard you expect them to run.

Level and pay the role honestly. An HR manager hired at an executive's salary will leave within a year, and the company will be back where it started with a worse reputation among HR candidates, who talk to each other.

The first ninety days

Give them three things to deliver: a compliance audit with every gap listed and dated, a handbook draft covering the sections in our employee handbook guide, and a hiring process that the founders no longer need to run personally. Then stay out of the way on process and stay close on judgement. The founders still decide who is hired, promoted and let go; the HR person makes sure those decisions are made fairly, in time, and on paper.

The hire pays for itself the first time a termination is handled properly, a compliance notice is answered calmly, or a strong candidate accepts because the process was fast. In most companies that is within the first quarter.