Building an HR Function From Scratch: A Practical Sequence for Growing Organisations
September 4, 2026 · Human Resources · 6 min read
Building an HR or people function is not a matter of copying a large company’s department structure into a smaller organisation. The right model depends on workforce size, legal obligations, growth plans, operating complexity and the capabilities the organisation actually needs.
CIPD notes that smaller organisations may have one stand-alone people role or combine HR responsibilities with another role, while larger organisations are more likely to use a mixture of generalist and specialist positions. It also advises organisations to design the function around the capabilities needed to deliver the people strategy rather than assuming one standard operating model.
Source: CIPD, Working as a people professional in a small organisation
Source: CIPD, How to use the Profession Map to design your people function
Start with organisational needs and legal obligations
Before designing HR roles or buying systems, map:
- workforce size and locations;
- employment types;
- growth plans;
- high-risk or regulated activities;
- manager capability;
- recruitment volume;
- payroll, benefits and records processes;
- country-specific employment obligations;
- where specialist legal, payroll, immigration or safety expertise is required.
This tells you which responsibilities need internal ownership and which can reasonably be supported by external specialists.
Illustrative example: a growing Riyadh logistics business
Consider a fictional 40-person logistics company in Riyadh that has grown through founder-led hiring and now needs a more structured people function. The first task is not to build a large handbook. It is to confirm the employment and workforce requirements that apply to this establishment and create reliable basic processes.
Saudi Arabia’s Ministry of Human Resources and Social Development currently provides official guidance on employment contracts and Qiwa contract documentation. The exact requirements should be checked against the organisation’s current activity, workforce and applicable rules.
Source: Saudi MHRSD, Contract Management through Qiwa
1. Put employment basics under clear ownership
Identify who owns:
- employment contracts;
- personnel records;
- payroll inputs and approvals;
- leave administration;
- working-time records where required;
- statutory registrations and benefits;
- employee queries;
- required reports or platform submissions.
Do not rely on informal founder knowledge for processes that affect legal rights or payroll.
2. Build a simple workforce plan
Map current headcount, critical roles, expected hires and workforce constraints. The plan does not need to be elaborate. It should answer what capability the business expects to need and when.
For a Saudi organisation, this can also include current nationalisation or role-specific requirements where applicable. Use current official guidance rather than an old percentage copied from another business.
3. Standardise recruitment and onboarding
Use a consistent process for defining the role, assessing candidates, approving offers and onboarding new employees.
Useful building blocks include:
- role profiles or job descriptions;
- structured interview criteria;
- documented approval for offers;
- contract and pre-employment checks;
- onboarding responsibilities;
- probation or initial-review processes where lawful and relevant.
A structured process makes decisions easier to explain and reduces dependence on individual managers’ memory or preference.
4. Create the policies the organisation actually needs
Do not start with an enormous generic handbook. Identify the policies required by law, risk and operating need, then build from there.
Depending on jurisdiction and organisation, priorities may include conduct, leave, complaints or grievances, disciplinary processes, harassment, health and safety, flexible work, data handling or expenses. The exact minimum set is not universal.
For drafting principles, see How to Write an Effective Organisational Policy.
5. Give managers a basic people-management system
HR cannot compensate for managers who do not set expectations, give feedback or raise problems early. Establish simple routines for:
- role expectations;
- regular one-to-ones;
- goal setting;
- feedback;
- performance concerns;
- development conversations;
- escalation to HR when required.
Keep the system proportionate to the organisation’s size and risk.
6. Create reliable people records and a small metric set
Start with information that supports real decisions:
- headcount;
- joiners and leavers;
- turnover and retention;
- open roles and hiring time;
- absence where appropriate;
- training or compliance completion where required;
- workforce mix needed for statutory or planning purposes.
Do not build a dashboard simply because the software can produce one. Each metric should have a decision or risk attached to it.
7. Add specialist capability as complexity grows
CIPD’s function-design guidance emphasises identifying the capabilities the organisation needs and then deciding how to resource them. A growing organisation may eventually need deeper expertise in areas such as:
- talent and learning;
- reward;
- employee relations;
- people analytics;
- organisation design;
- workforce planning;
- employment law or immigration;
- health and safety.
Not every capability needs a full-time internal specialist. Some can be shared, outsourced or bought when needed.
How the HR operating model should evolve as the organisation grows
A new HR function does not need to copy the structure of a large corporation. It needs an operating model that matches the organisation’s size, risk, workforce complexity and management maturity. Building too much process too early creates bureaucracy. Building too little leaves managers improvising employment decisions with inconsistent records and unclear accountability.
Records, contracts, payroll interfaces
Recruitment, onboarding, policies
Performance, capability, workforce planning
Rewards, analytics, L&D, ER
At the foundation stage, the priority is control. The organisation should know who is employed, on what terms, where records are held, how pay changes are authorised, who owns government-system requirements where applicable, and how leave, attendance and employee changes are recorded. This reduces avoidable compliance and payroll risk.
The next stage is consistency. Recruitment should use clear approval and selection steps. Onboarding should identify what every new employee must receive and complete. Policies should focus on recurring decisions rather than producing a large manual nobody uses. Managers need to know which decisions they can make themselves and which need HR review.
As headcount and organisational complexity increase, HR should add a management system. Workforce planning connects hiring to business demand. Performance management creates a common rhythm for objectives and feedback. Basic people metrics help identify turnover, absence, recruitment bottlenecks and capability gaps. Manager development becomes important because HR cannot personally mediate every people decision.
Specialist roles should be added when the workload and risk justify them, not because a textbook organisation chart says they should exist. A business with complex incentive plans may need reward expertise early. A high-growth employer may need talent acquisition depth. A regulated or highly unionised environment may need stronger employee-relations capability. A geographically distributed workforce may need HR operations and analytics earlier than expected.
This sequence also helps leaders decide what to outsource. Payroll processing, recruitment support or specialist legal advice can be external while accountability for people decisions remains internal. The test is whether ownership, data quality and decision rights stay clear.
A minimum viable people-function checklist
| Area | Minimum question |
|---|---|
| Legal and contracts | Are current obligations identified and owned? |
| Records | Is employee information complete, secure and retrievable? |
| Payroll interface | Are changes authorised and reconciled reliably? |
| Recruitment | Are roles, criteria and offer approvals consistent? |
| Policies | Are essential rules current, clear and accessible? |
| Managers | Do managers know how to set expectations, give feedback and escalate concerns? |
| Development | Is there a practical way to identify capability gaps and support growth? |
| Data | Are a few useful workforce measures tracked accurately? |
Common setup mistakes
- Buying HR software before the underlying process is defined
- Copying another company’s handbook without checking local law
- Making HR responsible for every manager conversation
- Collecting more people data than the organisation can govern or use
- Building specialist roles before the need exists
- Waiting for a crisis before assigning ownership for employment basics
Related MATSH resources
- HR Training in the GCC and Africa
- How to Run a Performance Improvement Plan
- Saudization and Emiratisation Compliance 2026
Related MATSH training
For professionals building or inheriting a broad people remit, see the Human Resource Management Training Course.
Sources
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