MBA2394 How To Create an HR Department on a Budget + Free Ride Friday

Summary

The $100 MBA Show | Episode MBA2394: How To Create an HR Department on a Budget + Free Ride Friday

Release Date: November 24, 2023
Host: Omar Zenhom

---

Introduction

In Episode MBA2394 of The $100 MBA Show, host Omar Zenhom delves into a crucial aspect of business growth: establishing an effective Human Resources (HR) department on a tight budget. Titled “How To Create an HR Department on a Budget + Free Ride Friday,” this episode provides actionable strategies for entrepreneurs and small business owners looking to organize their teams efficiently without incurring significant expenses.

---

The Importance of HR in Business

Omar begins by emphasizing the pivotal role HR plays in running a successful business. He articulates that while a sole proprietor or a duo might manage without a dedicated HR department, the complexities multiply as the team grows. Effective HR management ensures:

• Organization: Streamlines administrative tasks.
• Culture Nurturing: Fosters a positive and productive work environment.
• Time Management: Frees business owners to focus on revenue-generating activities rather than getting bogged down by administrative duties.

Omar states, “When you run a business, you have a team. You don't really need an HR department per se. [...] But once you start building a team, you have team members and employees and contractors and all kinds of people. You need a way to organize their ability to work for you” ([01:27]).

---

Three Steps to Building an HR Department on a Budget

Omar outlines three essential ingredients for creating a robust HR department without breaking the bank:

1. Develop a Team Handbook

Creating a comprehensive team handbook is the foundation of an effective HR system. Omar shares insights from Laura Roeder, founder of Meet Edgar, highlighting the value of a well-crafted handbook.

Purpose of the Team Handbook:

• Rule Book: Acts as an instruction manual for HR policies, benefits, and organizational structure.
• Resource Efficiency: Reduces repetitive questions by providing clear answers to common queries regarding leave days, public holidays, vacation planning, and more.
• Cultural Blueprint: Communicates the company’s mission, vision, and expectations, ensuring all team members are aligned.

Omar emphasizes, “The team handbook is basically the rule book. It's like the instruction manual of anything HR” ([03:15]). He advises making the handbook a live document, preferably hosted on a cloud platform like Google Docs, allowing for easy updates and accessibility.

Key Benefits:

• Consistency: Ensures uniform policy enforcement.
• Value Addition: Enhances company value by demonstrating organized HR practices to potential investors or acquirers.
• Time Savings: Minimizes the need for constant policy explanations, allowing business owners to focus on core activities.

2. Hire an Assistant

An administrative or executive assistant can significantly alleviate the burden of HR tasks. Omar shares his experience with hiring Romina, who effectively managed HR-related inquiries during a team retreat.

Roles of an Assistant in HR:

• Point of Contact: Acts as the first responder for HR queries, reducing the direct workload on the business owner.
• Administrative Support: Manages calendars, emails, and other organizational tasks.
• Enhanced Team Dynamics: Provides a comfortable channel for team members to address their concerns without feeling they are disturbing the leadership.

Omar notes, “Having somebody they can just go to that is not that person is a lot more comfortable for them” ([06:45]). This structure not only streamlines communication but also reinforces a professional HR system within the company.

3. Utilize HR Software

Implementing affordable HR software like HR Partner can centralize and simplify HR management. Omar discusses the benefits of using such software compared to more complex and expensive alternatives.

Features of Effective HR Software:

• Leave Management: Allows team members to apply for leave, view their leave balances, and see public holidays.
• Performance Evaluations: Facilitates the uploading and viewing of performance reviews and salary increments.
• Organizational Insights: Provides analytics on leave usage and other HR metrics to assess the effectiveness of policies.

Omar explains, “HR Partner makes it super simple for every team member to log in and see things privately. This really gives a little bit of polish to your company” ([08:20]). He recommends considering HR software once the team size exceeds five members to maintain organization and professionalism.

---

Conclusion and Final Thoughts

Omar wraps up the episode by reiterating the significance of implementing a minimal viable version of HR practices. He encourages entrepreneurs to “start with the most minimal viable version” to ensure efficiency without unnecessary expenditures. This approach not only optimizes resources but also builds a solid foundation for scaling the business.

He leaves listeners with a motivational note: “There's no reason to spend money just to spend money. [...] Just spend money on things that actually matter, that actually help your team and add value to your company” ([14:50]).

---

Free Ride Friday

As part of his ongoing Free Ride Friday segment, Omar announces the winner of the week’s free access to the $100 MBA program. User mvalesco07 was selected for their commendable 5-star review, reflecting the value and impact of the podcast.

Omar encourages all listeners to participate by leaving an Apple Podcast rating and review to enter the weekly draw, enhancing community engagement and rewarding loyal listeners.

---

Key Takeaways

• Start Small: Implement essential HR practices that cater to the current size and needs of the team.
• Leverage Resources: Utilize tools like team handbooks, assistants, and HR software to streamline operations.
• Focus on Value: Invest in HR components that add tangible value to the company and support sustainable growth.

By following Omar’s pragmatic approach, entrepreneurs can establish a functional and efficient HR department without exceeding their budgets, thereby fostering a well-organized and motivated team.

---

Learn More:
Visit The $100 MBA Show for additional resources and to explore the practical online program designed to elevate your entrepreneurial skills.

Transcript

[Ryan Reynolds]

Are your ulcerative colitis symptoms proving difficult to manage? Tremphya Guselcomab can help you manage the cycle of UC symptoms. At one year, many patients taking Tremphya achieved clinical remission and some patients also achieved endoscopic remission. Individual results may vary. Tremphya is a prescription medicine used to treat adults with moderately to severely active ulcerative colitis. Serious allergic reactions and increased risk of infections may occur. Before treatment, your doctor should check you for infections and tb. Tell your doctor if you have an infection, flu like symptoms or if you need a vaccine. Ask your doctor if Tremphya can help you manage the cycle of UC symptoms. Call 1-800-526-7736 to learn more or visit tremphiradio.com Ryan Reynolds here from Mint Mobile.

I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistance. Switch you to Mint Mobile today. I'm told it's super easy to [e-mail].

Switch upfront payment of $45 for 3 month plan equivalent to $15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees, extra fee full [e-mail] hey yo.

[Omar Zenhom]

Welcome to the $100 MBA show you can count on. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started back in 2014 and today's episode is Free Ride Friday. On Free Ride Fridays, we give away a free ride to the $100 MBA program, our practical online program showing you how to become a better entrepreneur. 100% guaranteed over at 1-000- MBA net. If you want to win a free ride, just leave us an Apple podcast rating and review and you enter our weekly random draw we call Free Ride Friday. Listen in on Friday just like if you won, we announce this week's winner a little bit later in the episode. In today's episode you will learn how to create an HR department on a budget. As you're growing your business, you know that human resources is an important thing, helps establish organization in your company. It nurtures the culture of your team. It frees you up from a lot of admin work, answering messages about leave and evaluations and pay and all kinds of stuff. But how do you do it when you have a tight budget? When you're Just starting out when really you don't need a full blown HR department. Well, that's what today's lesson's all about. I'm going to show you what we've done in our company when we were growing, how we built an HR department that's effective, that's robust, that works brilliantly in a low cost way, in a way that's easy to manage and just as organized and professional as a big HR department in a company. So let's get into it. Let's get down to business. Let's first talk about why you would need hr. Basically, I see HR as the business of running a business, okay? When you run a business, you have a team. You don't really need an HR department per se. If you don't have a team, if you're a solopreneur or it's just you and your co founder, then you pretty much can manage it without an HR department. But once you start building a team, you have team members and employees and contractors and all kinds of people. You need a way to organize their ability to work for you. When you hire somebody, there's a transaction happening here, right? They're doing work for you in exchange for a bunch of stuff that you're going to give them, like time off, like salary, like maybe an annual bonus. And maybe these bonuses are based on evaluations. This could be quarterly annual evaluations. You might organize a team retreat or off site and that's part of like their benefits package. If your team members are not contractors or full time local employees, probably you're going to have to deal with medical. Now that's a lot of boring administrative stuff that's very time consuming that you really shouldn't be doing. As the leader of your business, you need to maximize your time on bringing in revenue, building great products and services, serving your customers. The thing about this administrative work in hr, it's very time consuming, it's very tedious, and it just never stops. Because as your team grows, the more demands will be on you as an HR personnel. So you need to kind of build a system. Even if you just have a small team and you have a handful of people working for you, because this system will serve you, will free you up and help you spend more time on what really grows the business. So basically having an HR department frees you up, gives you time, it buys you time and relieves you of a lot of the stress and worry that you'd have to deal with. Trying to follow up with people, making sure that they're being Heard that their, you know, their leave requests are being approved, all that kind of stuff. So in today's lesson, I'm going to give you three steps, three ingredients that you can add to your business that can build a very simple but effective HR department on a budget. Let's start with number one. And this one, though simple, is incredibly effective. I'm starting with this one because it's going to do the bulk of the work for you and eliminate a lot of headaches. And that is a team handbook. Building out a team handbook is going to help you tremendously. I learned this actually from Laura Roeder, who was the founder of Meet Edgar. And she was incredibly helpful with showing us her very own team handbook. And we actually used it as kind of a template as an example to build our own. Now, what's the purpose of the team handbook? The team handbook is basically the rule book. It's like the instruction manual of anything hr. This is great because it means you don't have to answer any more questions. When anybody asks a question like, how many leave days do I have? What are the public holidays that are available in the company? Want to plan my vacation? You could just say, hey, no problem. Check the handbook, and here's the link. All the information is in the handbook, all the rules, all of the benefits, all of the things that they need to know. So they are on the up and up on their arrangement, how your company works. Now, the teen handbook is not just about, like days off and increments and all kinds of stuff like that, but it also tells them about the mission, the vision of the company, how to succeed at the company, the organizational chart so they know who their boss is and who to report to and who they're responsible for. And it's incredibly helpful because it's a source of knowledge. It's the place that people are going to go. Now, what's great about it is that as you're building your handbook, you're basically building out your HR rules. You're building out your policies because you're going to make decisions like how many days you're going to give each team member off for holiday, how many sick days. What about maternity leave? What about public holidays? And you do this once and then you can just refer to it, right? Of course you can adjust as you go along. And this is why I highly recommend you make this document a live document, like a Google Doc, where anybody can access it via the cloud. And you as the administrator or somebody on your team, can easily adjust it, modify it. Our team handbook is something that we give immediately when we hire somebody so they can read it, understand it, and get most, I would say 95% of all their questions answered by just reading the handbook. Now, your job is, once you've created this handbook and handed it to your team members, is not to fall into bad habits. What are bad habits? Bad habits are answering questions, having discussions you don't need to have. Meaning. When somebody asks a question and the answer is in the handbook, you tell them, go to the handbook. Why? Because if you just answer the question or you explain it to them, then the handbook is useless. Okay? They're never going to go to the handbook. They're just going to go to you because you're the one who's giving the answer. So your job is to always say, hey, just check out the handbook. All the answers are there. They might ask you another time, a third time, a fourth time, but eventually they're going to get the message that all their answers are in the handbook and they'll just go to the handbook first before asking any questions. And having a handbook actually adds value to your company. Because if one day somebody acquires your company, this is a part of the value. They have a system to follow. They have an sop. They can easily just pick up where you left off, rather than having to reinvent the wheel and having to adjust to it. I can't stress how powerfully important and helpful having a handbook is because it answers a lot of the questions the team has. It also forces you again to establish the policies, the rules that you have in your company. Ingredient number two that you can add to create a powerful. An inexpensive HR team is a virtual assistant, right? They don't need to be virtual. They could be in person. But get an assistant. An administrative assistant can really help you save a ton of time. This person becomes your personal assistant, helps you manage your calendar, manage your email, that kind of stuff. But also it can be the point of contact for your team if they have any HR related questions. For example, we ran our team retreat earlier this year in my ea Romina, who's also the head of hr, so to speak, was a point of contact for any questions it came to the retreat, like how do I get my ticket so I can get to the destination? Which one is my hotel room? Who am I staying with? What time is dinner? All these questions that you're going to have in a team retreat are not being asked of me anymore, right? They're not going being directed to me. They're being directed to Armenia, saving me time saving me effort. And this is just one incident, a retreat. But this is throughout the year. They have a contact person that they can speak to and ask questions. Now by the way, this is better for you and better for the team because they don't want to bother you. The boss, the founder, the person that actually pays their salary with every little question. Having somebody they can just go to that is not that person is a lot more comfortable for them. So investing in an executive assistant is incredibly good value because they'll manage and direct all the questions possible. They'll direct them to the handbook and you become hands off. They'll help you organize things. For example, recently one of our team members was ill and we sent them flowers. I didn't send them flowers, Romina did. Hermina did that and helped us out. Your EA will also help you with ingredient number three.

[Ryan Reynolds]

Ryan Reynolds here from Mint Mobile. I don't know if you knew this, but anyone can get the same Premium Wireless for $15 a month plan that I've been enjoying. It's not just for celebrities. So do like I did and have one of your assistant's assistants SW Switch you to Mint Mobile today. I'm told it's super easy to [e-mail].

Switch upfront payment of 45 for 3 month plan equivalent to 15 per month required intro rate first 3 months only, then full price plan options available, taxes and fees, extra fee, full [e-mail] got.

[Jim]

A 7am meeting on a Monday expensing breakfast because it's in policy.

[Ryan Reynolds]

Yay.

[Jim]

Wasting all afternoon submitting an expense report for that breakfast. If your company used Ramp, you could submit expenses with just a text.

[Ryan Reynolds]

Free your team from expense reports today. Switch your business to ramp.com.

[Omar Zenhom]

So what's ingredient number three? Number one is the handbook, two is an assistant and three is software. There's a lot of great software out there to help you manage your team when it comes to hr. I've tried a lot of different pieces of software. Some of them are really complicated, overblown, and I really don't need all the bells and whistles. Most people in business, especially online business teams that are less than, you know, 500 people don't need most of the HR software that's out there. It's just too much, too complicated and too expensive. To be frank, we use a software called HR Partner. I'm not an affiliate, I'm not endorsing them, they're not a sponsor, nothing like that. They're just a great product. They're pretty Inexpensive in terms of what they offer. It's exactly what you need. Nothing you don't. And it's a good software for you to manage your team. I think you should start considering having HR software once you have a team that is five people or more because now it's starting to get crowded. Now you need some organization. Now what does this software do? Well, it basically allows you to organize all HR matters. It's a place where your team members can log in and apply for leave, can see their evaluations because you can upload your evaluations there. They can see if they got a salary increment. They could see what are the public holidays that are ahead, that they can take time off. They can see their leave balance, they can see their sick leave balance. And of course you can manage this. When I say HR software in a very simple software like Google Sheets, if you're really on a strict budget, but HR partner makes it super simple for every team member to log in and see things privately. This really gives a little bit of polish to your company. If a new hire comes in and they see that you have HR software and a place for them to manage their, you know, their benefits, it leaves an impression, makes it look like you are a pro, adds value to the workplace. It also gives you one source to go to to understand what's happening with everybody on your team, where everybody's at. It's also a good place to evaluate if your policies are working. For example, if you feel like maybe you're not giving enough time off or paid leave, a good way to test this theory is to go into the software and see how much leave has been taken. Is everybody's leave depleted already and it's only April? Are people taking enough leave? And that's just one example. So three ingredients for a great HR department on a budget. One, creating a team handbook Number two, hiring an assistant to run your team. And three, using some sort of HR software to put it all together. That wraps up today's lesson. I hope it helped if it did, leave us an Apple podcast rating and review and let us know what you think of the show. We read every piece of feedback. Thank you so much in advance for doing that. Today's episode's not over though. It's Free Ride Friday. Let's see who won this week's Free Ride. And the winner is mvalesco07. That's the handle on Apple podcasts. Mvalesco says a must. Listen. Five stars. I recently discovered the $100 NBA and I'm so glad I did. I'm consistently impressed by the depth of knowledge and insights shared in each episode. I truly learn something valuable every time I tune in. Highly recommend. Give it a listen. Thanks, Mvalesco, for that great review. Your mission is to email me [e-mail] so we can hook you up with the free ride to the $100 MBA program over at 100mba.net. If you want to win a free ride, just leave us an Apple podcast rating and review and you enter our weekly random draw. Listen in on Friday, just like right now to see if you won. It's that simple. Before I go, I want to leave you with this. Anytime you create something new in your business, a new department, a new policy, a new activity, always start with the most minimal viable version of that. You'll be surprised how much you can get done, how efficient that minimal, viable version can be. There's no reason to spend money just to say to spend money. You know, just spend money on things that actually matter, that actually help your team and add value to your company. Thanks so much for listening and I'll check you in Monday's episode. I'll see you then. Take care.

[Narrator]

And we're back, folks. It looks like Jim from Snails just got in from his client lunch and he's got receipts. His next meeting is in two minutes. The team is asking, can he get through his expenses in that time? He's going for it. Is that his phone? He's snapping a pic. He's texting Ramp. Jim is fast, but this is unheard of. That's it. He's done it. It's unbelievable.

[Omar Zenhom]

On Ramp, expenses are faster than ever. Just submit them with a text.

[Ryan Reynolds]

Switch your business to ramp.

[Jim]

Com.