Questions to Ask When Building an HR Department
For a founder, operations lead or first HR hire setting up human resources at a growing company that has never had it. The questions run in the order the work tends to go: what leadership wants HR to own, legal and compliance basics, pay and benefits, hiring and managing, the handbook and records, and then what to hand to a PEO or consultant and when to add another HR hire. Each has a note on what a good or a worrying answer sounds like and what to do with it, and many say who to ask and where the answer depends on your country, state or provider.
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The questions
Each question, and why to ask it
The mandate
What made the company decide it needs an HR function now?
Why ask it
Ask each founder or leader on their own. A useful answer names an event: a resignation that stung, a complaint nobody knew how to handle, a funding round, a headcount that outgrew the spreadsheet. If all you hear is 'it felt like time', ask what they picture the HR person doing in the first month.
What do you want HR to own outright, and what stays with managers or finance?
Why ask it
Write the answer as two columns and send it back for a yes. Payroll, recruiting and manager coaching are the usual gray areas, and anything left unassigned will drift to HR by default. A leader who says 'everything to do with people' has not decided yet, so walk through the list one line at a time.
A year from now, what would make you say this was worth the money?
Why ask it
The answer is the scorecard you will be held to, whether or not anyone writes it down. Good ones are concrete: roles filled faster, no payroll surprises, managers who stop bringing every people question to the founder. Turn them into three or four numbers you can report, and if leaders give different answers, get them in one room before you plan anything.
How many people do we plan to hire over the next two years, and where will they work?
Why ask it
Much of what follows hangs on this number: which obligations may switch on, whether a spreadsheet will do, when HR needs a second person. A rough hiring plan tied to the budget is a good answer. If leaders give figures that are far apart, plan for the larger one where the law is concerned and the smaller one where spending is.
Who makes the people decisions today, and how do they make them?
Why ask it
Put this to managers, not only to leadership. You are mapping the HR that already exists: who approves time off, who sets a starting salary, who hears about a problem first. Expect different answers from different teams, and note each difference as a place where two employees are being handled two ways.
Which people problem cost us the most in the past year?
Why ask it
Ask for the story and what it cost in money, time or people. One leader will name a bad hire, another a pay dispute, another a manager who lost half a team. Whatever comes up most is a strong candidate for what you build first, ahead of anything on a generic checklist.
What do you want it to be like to work here, and where does an ordinary week fall short of that?
Why ask it
Adjectives such as 'fast' or 'like a family' tell you little, so ask for something people do here that they would not do elsewhere. The gap a founder admits to is often the thing they hope HR will fix, and it is worth writing down in their words. Later, hold each policy you draft against it: a company that says it trusts people should not need three approvals for a day off.
Who will HR report to, and how much of that person's week can it have?
Why ask it
Reporting to the chief executive, to finance or to operations each shapes what HR gets pulled toward. More telling is the second half: a standing half hour every week is a real commitment, and 'grab me when you need me' usually means decisions will wait. Ask for the slot before you start.
What budget does HR have this year for software, advisers and training?
Why ask it
A number, even a small one, means the function has been planned. 'We will see what you need' means every purchase becomes its own negotiation. If there is no figure, come back with a short priced list in order of urgency and ask which lines are approved.
When HR tells a founder or a manager no, what happens next?
Why ask it
This tests whether the role has authority or only responsibility. Ask for the last time someone here talked a leader out of a people decision, and how it went. If nobody can think of one, agree now on which calls HR can stop and which it can only advise on.
What is the hardest thing to get a straight answer about as an employee here?
Why ask it
This one goes to employees, a handful from different teams, and it helps to say you will pass on the themes and not the names. Expect things like pay dates, time off, who to tell about a problem and how raises work. Whatever several people bring up is a quick win, and fixing it is how a new function earns some trust.
Compliance
Which employment laws apply to us at the size we are, and which start to apply as we grow?
Why ask it
Take this to an employment lawyer or the labor agency where you operate, not to a search engine. Obligations often switch on at certain headcounts and differ by country, state and sometimes city. Ask for the list in writing with the next thresholds marked, so you see a new duty coming before you cross it.
Where is every person on the payroll working from today, remote staff included?
Why ask it
Each location can bring its own registrations, taxes and leave rules, and leaders tend to count offices, not people. Check the answer against home addresses in payroll. The surprise is usually one employee who moved quietly and told nobody but their manager.
How did we decide who is an employee and who is a contractor?
Why ask it
The reassuring answer is that someone compared each arrangement with the tests that apply where the person works. The worrying one is 'they preferred to invoice us'. Make a list of contractors who keep set hours, report to a manager and work only for you, and ask your adviser to look at those first.
Who is paid a salary with no overtime, and what was that decision based on?
Why ask it
Who can be paid without overtime is set by rules that vary by place, and a job title alone may not settle it. 'Everyone here is salaried' answers a different question. Find out who checked, when, and against which rules, then have the borderline roles reviewed.
What do we collect to confirm a new hire is allowed to work here, and where is it kept?
Why ask it
Requirements and deadlines differ by country, so confirm yours before judging the answer. What you want to hear is one person doing it the same way for every hire. Then open a few recent files and look, because the process people describe and the paperwork in the folder often differ.
What registrations, insurance and workplace notices does an employer like us have to have in place?
Why ask it
Nobody at a young company holds this whole list in their head. Get one each from your payroll provider, your insurance broker and your lawyer and lay the three side by side. Items that appear on one list only are the ones to chase.
Is there any training we are required to give employees or managers, and who keeps the record?
Why ask it
What is mandatory, for whom and how often depends on where people work and what the job involves, so get the list from your lawyer or the responsible agency, not from a training vendor. Then ask to see who completed what and on which date. 'We covered that at an offsite once' with no attendance list leaves you with nothing to show.
When someone raised a complaint about how they were treated, what happened?
Why ask it
Push for a real instance: what was written down, who looked into it, and whether the person who spoke up heard back. 'Nobody has ever complained' may only mean there was no clear way to do it, in which case a reporting route with a named person belongs among your early builds. What an employer has to do once a complaint comes in differs by place, so ask your lawyer before you design the route.
Who is responsible for workplace safety, and when was an injury or near miss last recorded?
Why ask it
Ask it even where everyone sits at a desk, and expect to do far more for a warehouse, a kitchen or a field team. What the regulator expects depends on your industry and location, so check with them or with your insurer. If no name comes back, that is the finding: assign an owner before you write a policy.
Has anyone from outside ever reviewed how we employ people?
Why ask it
If a lawyer or consultant has audited the company, ask for the report and what was done about it. If not, a one-time review is often a sensible early spend, because it turns a vague worry into a ranked list. Agree on the scope and the price before it starts.
Pay and benefits
Who runs payroll today, and what happens when that person is away?
Why ask it
You are listening for a named backup and written steps. Often the answer is a founder or bookkeeper who does it from memory, which works until the week they are sick. Sit beside them for one full pay run and write down each step before you change anything.
When did a paycheck last go out wrong, and who noticed?
Why ask it
Mistakes caught by an internal check are a sign of a working process. Mistakes caught by the employee are not. Ask how long the correction took and whether the same kind of error keeps returning, such as new starters, hourly totals or commissions, since that shows which handoff is broken.
How was each person's pay decided?
Why ask it
At this stage the truthful answer is usually 'whatever was negotiated at the time'. Put everyone on one sheet by role, level and start date and look for gaps you could not explain to the people involved. Before adjusting anything, ask your adviser what the pay equity and pay transparency rules are where you employ people.
How does someone here get a raise today, and who has the final say?
Why ask it
Ask managers about the last raise they gave and what set it off. If the usual trigger is that the person asked or had another offer, quieter people are likely earning less for the same work. One date each year when every salary is looked at together, however informally, is a modest first build.
What benefits do we offer, who chose them, and when were they last compared with anything else?
Why ask it
Find the renewal date first, because it sets your calendar for the year. Then ask whoever sold the plans how they are paid and whether they have quoted alternatives recently. A package nobody has looked at since the company had ten people deserves a fresh comparison.
Which benefits are we required to provide, and which are a choice?
Why ask it
The line falls in different places depending on country, state and headcount, so get it from your broker or lawyer for each location. Knowing it stops you from trimming something mandatory or treating an optional perk as untouchable. Keep the answer with the date you were told, since it can change as you grow.
What do employees value most in the current package, and what would they not miss?
Why ask it
Ask employees, not leadership on their behalf. Ten short conversations or a five-question survey is enough at this size. You may find people prize something cheap, like flexibility around school hours, over something expensive, which lets you move money before requesting more.
How does time off work in practice: who approves it, where is it recorded, and what happens to unused days?
Why ask it
Have a manager show you the last request they approved and where the balance was recorded. If each team keeps its own spreadsheet, nobody can vouch for the totals, and moving everyone to one record is the first fix. Whether unused days must be carried over or paid out depends on where the employee works, so settle that with your adviser before you put a rule in writing.
What promises about pay, bonuses or equity were made in offer letters or in conversation?
Why ask it
Read every offer letter yourself, then ask founders and managers what they said out loud. Spoken promises such as a review after six months or shares 'once we set up the plan' are the ones that resurface at a bad moment. List them, and have leadership either honor each one in writing or go back to the person.
Hiring and managing
How does a new role get approved, and who signs off on the pay range before it is posted?
Why ask it
A single route with the budget agreed first keeps offers consistent. If managers post a job and then ask what they can pay, the range gets set by whichever candidate negotiates hardest. Start with a one-page request form before any hiring software.
Do our job descriptions match the work people really do?
Why ask it
Pick three roles and compare the description with what the person in the seat says fills their week. Descriptions feed pay, overtime status and performance conversations, so a stale one causes trouble in three places. If none exist, write them for the roles you are about to hire and backfill the rest later.
What are interviewers not allowed to ask, and has anyone told them?
Why ask it
Which topics are off limits depends on the law where you hire, so get a list for your locations from your adviser and turn it into a single page. 'We just have a chat' is the reply that should move this up your list. A short session with every interviewer covers it.
What goes into an offer letter, and who checked the template?
Why ask it
Lay the letters sent this year side by side. If each manager edits the last one they sent, old promises travel with it from hire to hire. Terms about notice, probation and ending employment work differently from place to place, so have one template read by an employment lawyer for each location you hire in.
What happens on a new hire's first day and first week, and who owns each step?
Why ask it
Walk through it with the people who joined most recently. Equipment, accounts, paperwork and a named person to go to are the basics, and the usual gap is that each team assumed another one had it. A checklist with an owner beside every line is a fine first version.
What do our newest hires wish someone had told them in their first month?
Why ask it
Their answers are free onboarding content: how expenses work, who decides what, which meetings matter. Ask within their first ninety days, while they still recall being confused. Then make the same question a standing check at thirty days for everyone who joins.
Which managers are leading people for the first time, and what help have they had?
Why ask it
People are often promoted for being good at the work and then left to work out the managing alone. List them, and ask each one which conversation they felt least ready for. A short session on the situations they name, such as giving bad news or turning down a time off request, is a better start than a general course.
How do managers tell someone their work is falling short, and is anything written down?
Why ask it
An early conversation, a dated note and a fair chance to improve is the pattern to look for. Silence followed by a sudden exit is the one to worry about, for the employee and for the company if the decision is ever challenged. Simple guidance for managers may do more here than a formal review system.
Who decides to end someone's employment, and what gets checked first?
Why ask it
A second pair of eyes, the written history and a plan for final pay should come before the conversation. Notice, final pay timing and what must be handed over differ by location and contract, so find out how it works where that person is employed. A manager acting alone at the end of a bad week is the scenario this question exists to prevent.
Why did people leave in the past year, and how do we know?
Why ask it
If the reasons come from the manager's memory, you know the manager's version. Begin a short exit conversation held by someone other than the direct boss. Sort departures by team and by time in the job, since a cluster in either points to where to look.
Handbook and records
Which rules does everyone follow here that are written nowhere?
Why ask it
Unwritten rules about remote days, expenses and time off are the first draft of your handbook. Put the question to managers one at a time. Where two of them give different answers, you have found a policy worth writing early.
If there is a handbook, who wrote it, when, and for which location?
Why ask it
A document borrowed from a template or a founder's last employer can promise things you do not do and leave out things you must. Have an employment lawyer read it before it is reissued under your name. If there is no handbook, that is a cleaner start than a bad one.
Which policies have to be in writing first, and which can wait?
Why ask it
Your lawyer or adviser can say which ones are required where you operate, so ask for that list by location and write those first. Next come the policies for problems that have already happened here, beginning with last year's costliest. Ten pages that people read will serve you better than eighty they sign unread.
Which of our written policies do managers not follow in practice?
Why ask it
Read a few aloud to a manager and ask what they would really do. A policy nobody follows can be worse than none, because it records a standard the company then did not meet. Close each gap by rewriting the policy or changing the practice, and get a dated acknowledgment from employees whenever the text changes.
What is in each employee's file, and where do the files live?
Why ask it
Pick one person and try to assemble their whole file. Expect to find the offer letter in an inbox, reviews on a shared drive and notes in a manager's notebook. Take that inventory for everyone and move it to one place with restricted access before shopping for a system, since software will not tell you what is missing.
Who can see pay, medical and disciplinary information, and how long is it kept?
Why ask it
Pull the list of people with access to payroll and to the shared folders. It tends to be longer than anyone expects and to include people who have changed jobs. Rules on keeping medical or identity records apart, and on how long records must be held after someone leaves, vary by place, so get a retention schedule from your lawyer and name who carries it out.
Which systems hold employee data, and do they agree with each other?
Why ask it
Choose five people and compare their start date, title, pay and manager across payroll, the benefits portal and any spreadsheets. Mismatches are normal and show where information is typed twice. Decide which system is the source of truth before adding another.
What do we need an HR system to do over the next two years?
Why ask it
Write the list before you book a demo, starting with the tasks done by hand today. For a small team, the HR features inside a payroll product may cover it. Be wary of any purchase that began with a sales call and not with that list.
Outside help and next hire
Which parts of HR do we want to run ourselves, and which would we rather pay someone to run?
Why ask it
One way to divide it: keep the work that depends on knowing your people, such as hiring decisions and coaching managers, and consider handing off the work that depends on knowing the rules, such as tax filings and benefits administration. Leaders who want to outsource everything are often hoping to outsource the hard conversations too, and those do not transfer.
What exactly would a PEO take over, and what would still be ours to do?
Why ask it
A professional employer organization shares some employer duties with you under a contract, and which ones it takes on differs by provider. Put the question to the provider and get the answer in the contract, not the sales deck: who files what, who is responsible when a filing is wrong, and who employees call. 'We handle everything' is a reason to ask for the list of what they do not.
How does the provider charge, and what would we pay at twice our headcount?
Why ask it
Fees may be a flat amount per employee or a share of payroll, and the two behave very differently as salaries rise. Request a quote at today's numbers and at double, with every bundled and optional item named. Compare it with the cost of a payroll service plus a broker plus a few hours of a consultant.
If we leave a PEO or payroll provider, what do we take with us and how long does it take?
Why ask it
Have the exit described before you sign: notice period, data export, and what happens to any benefit plans held in the provider's name. Ask which dates are clean, since the middle of a benefits year can be an awkward time to move. A provider who answers this easily is one you can leave, which is a point in its favor.
Which decisions should always go to an employment lawyer before we act?
Why ask it
Agree on the list with leadership while nothing is on fire. Risky terminations, harassment complaints, changes to contractor status and layoffs are common entries, and your lawyer will have others. Choose the lawyer now and ask how short questions are billed, so nobody hesitates to make the call.
What would a consultant or fractional HR lead build for us, and when would they hand it over?
Why ask it
Ask for a defined project with an end date, such as an audit, a handbook or pay bands, and question an open retainer with no deliverable. Then ask to see something they built for a company near your size. Settle who inside your company will own the work once they have gone.
Should the first dedicated HR hire be a generalist, a recruiter or someone senior who sets direction?
Why ask it
Go back to the problem leadership named at the start. A company that mostly needs to hire quickly may want a recruiter first, and one untangling compliance needs an experienced generalist. Hiring a junior coordinator and expecting strategy is the mismatch that disappoints both sides.
What would tell us it is time to add the next HR person?
Why ask it
Settle the signals in advance: a hiring target, a new state or country, or weeks when HR does nothing but react. Employee-to-HR ratios quoted online vary widely and say little about your workload. A trigger agreed today is far easier to act on than a request made when you are already underwater.
What will HR deliberately not do this year?
Why ask it
Answer it yourself first, then show leadership the list. Engagement surveys, a full leveling framework and a formal review cycle can often wait until the basics hold. A function of one that agrees to everything ends the year with nothing finished, so get the 'not yet' list approved alongside the plan.
How to use these questions when you set up HR
Practical guidance for the conversation itself
Before you ask anyone
Match each question to the person who knows
The mandate belongs to founders and whoever HR will report to. How things work today is best heard from managers and from the person running payroll. What is confusing or missing comes from employees. What the law requires where you operate comes from an employment lawyer, a broker or the responsible agency, and the PEO questions under Outside help and next hire go to the providers themselves. A few, such as what HR will not do this year, are for you.
Gather the paperwork first
Before the conversations, collect what already exists: offer letters, any handbook, the last few payroll reports, the benefits summary, a list of contractors, and an org chart even if you have to draw it. Reading these first lets you say 'I found three different offer templates, which is current?' in place of 'do we have a template?'
Say why you are asking
A new HR person asking how pay was set or how complaints were handled can sound like an investigation. Open by saying you are mapping how things work so you can decide what to build, and that nobody is being graded. With employees, say what you will do with their answers and how far you can keep names out of it.
Start with leadership, then check it on the ground
Take The mandate to leadership first, since their answers set the scope. Then carry the same topics to managers and employees. The distance between what leaders believe happens and what managers describe is the most useful thing the first month will show you.
Running the conversations
Ask for the last time it happened
'How do we handle time off?' gets the policy someone imagines. 'Walk me through the last request you approved' gets the real one. Nearly every question under Compliance, Pay and benefits and Hiring and managing gets a better answer when you ask for the most recent example.
Put the same question to three people
Ask three managers how a raise gets approved or what happens on a first day. Matching answers mean a process exists even if nobody wrote it down. Three different answers mean it lives in people's heads, and that is where to start writing.
Ask to see it
Where a question has a document behind it, ask for the document: the file, the template, the payroll report, the insurance certificate. People describe the process as it was designed. The folder shows it as it runs.
Send your notes back
After each leadership conversation, write up what you heard in a few lines and send it for correction. It catches misunderstandings early, and it gives you a record of what was agreed about scope, budget and authority before the first disagreement.
Deciding what to build first
Sort every finding into three piles
Required by law where you operate, already causing harm, and worth doing later. The first pile is filled in with your lawyer or adviser, not from a general checklist. The second comes from the stories you heard. Most of what is left can wait a quarter.
Put the fixed dates on a calendar
Benefits renewal, tax and reporting deadlines, contract end dates with providers and any headcount threshold you are approaching all have dates you do not control. Plot them first and fit the rest of the plan around them. Your payroll provider and broker can tell you which deadlines apply to you.
Pick one fix employees will notice
Compliance work is invisible when it goes well. Alongside it, choose something from the employee answers that people will feel within a month, such as a clear way to request time off or one place to find pay dates. It shows what the new function is for.
Plan for ninety days, not three years
List what will be done in the first three months, who owns each item and what it costs, and get leadership to approve it together with the list of what will wait. Revisit both at the end of the quarter, when you will know far more about the company than you do now.
Mistakes to avoid
Buying software before you know the process
A system records whatever you do, including the confusion. Until you know who approves what and where the data lives, a new tool adds a login and little else. Map first, then buy the smallest thing that fits.
Copying another company's handbook
A handbook written for another employer reflects its location, its size and its promises. Borrowing the structure is fine. Borrowing the wording can commit you to things you never decided, so write your own and have it reviewed for the places where you employ people.
Treating general guidance as the rule where you are
Checklists online, this page included, cannot know your country, state, industry or headcount. Use them to find the questions, and take the answers from a qualified adviser or the responsible agency. Where a note here says to find out how it works where you are, that is the step to take.
Promising more confidentiality than you can keep
It is tempting to tell employees that nothing they say will leave the room. Some things, such as a report of harassment or a safety risk, may have to be acted on whatever you promised. Say so before they start talking, and ask your lawyer where that line sits where you operate.