**HR · March 2026**

# How To Design An HR Function Before You Have HR

*The lightweight version of people ops that will carry you to 50 employees.*

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Most businesses don't hire their first HR person until something has already gone wrong — a difficult dismissal, a grievance nobody knew how to handle, a hiring process that's clearly not working. By the time HR arrives, it's arriving to clean up rather than to build.

There's a better way. You don't need an HR department to have HR done properly. You need a lightweight structure, put in place early, that scales cleanly as headcount grows. Here's what that structure actually needs to contain.

## Start with the four things that create the most risk

Not everything needs formalising early. These four do:

**Contracts and offer letters that are actually correct.** Templated, legally sound, and consistent — not adapted ad hoc from whatever the last hire signed. This is the single highest-risk, lowest-effort fix available to a growing business.

**A written (short) process for handling problems.** Not a full handbook — a one-page guide covering what happens when performance slips or conduct becomes an issue. Having this before you need it means the first time it's used, it's used calmly and consistently, not improvised under pressure.

**A clear, simple pay and progression logic.** It doesn't need bands and frameworks at ten employees. It does need enough consistency that two people in similar roles aren't paid on entirely different logic — because that inconsistency is exactly what erodes trust once the business is large enough for people to compare notes.

**Onboarding that isn't left to whoever's free that week.** A short, repeatable process — before day one, first week, first month — does more for early retention than almost anything else HR touches, and costs almost nothing to build.

## What can wait

Full policy handbooks, formal appraisal cycles, competency frameworks, and dedicated HR software are all things growing businesses over-invest in early. They're not wrong eventually — they're just premature at 15 or 20 employees, and building them too early usually means building the wrong version, which then needs redoing once the business understands its own shape.

## Who owns this before there's a dedicated hire

Usually the founder, or whoever leads operations, owns this lightweight structure directly — with external HR support brought in specifically for the moments that carry real legal risk: dismissals, disputes, restructuring. That combination — clear, simple internal process plus expert support for the sharp edges — covers the vast majority of what a business needs until roughly 40–50 employees, which is typically when the case for a dedicated HR hire becomes clear on its own.

## The moment to make the first HR hire

The signal isn't headcount on its own. It's when the founder or ops lead is spending real time each week on people issues that pull them away from running the business — recruitment coordination, contract admin, handling minor disputes. When that time cost becomes visible and recurring, that's the signal, not an arbitrary number on a spreadsheet.

## Why this matters more than it looks like it does

People problems handled badly early don't stay small. A messy first dismissal, an inconsistent pay decision, an onboarding process that loses a good hire in month one — these compound as the business grows, both in direct cost and in the culture they quietly set. Businesses that build a lightweight, correct foundation early spend far less fixing HR problems later, and spend it on people, not on cleanup.

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*Ferngate Advisory helps growing businesses build the right-sized HR foundation for where they actually are — not where a template assumes they should be. [Book a discovery call](https://www.ferngateadvisory.com/book-consultation) to talk through your people function.*