For HR managers, the process of setting up an HR system from scratch is often overwhelming and rarely goes without stress. This is especially true if they lack the buy-in from the management, department heads, and teams. We've noticed that in such challenging situations, employee turnover is quite high, while employee satisfaction is relatively low. As a result, HR managers often feel like they are stuck in a vicious cycle of constantly filling vacant positions.
Consequences of a poor HR system
When an organization lacks a structured HR system, employee dissatisfaction rises. Opportunities for professional development are high on employees' priority lists, and companies without a structured HR system often lack such opportunities, which almost always leads to a high turnover rate. As the company loses quality talent, it also loses knowledge, since knowledge transfer and learned skills are not systematic.
Although such a situation may initially seem hopeless, through the Employer Partner HR audit process, we've seen many organizations successfully overcome these issues. Annually, up to 100 regional organizations go through an assessment of the overall quality of their HR systems, where an HR consultants certification team dives into the details of every HR process and initiative, evaluating 30 HR topics across 7 HR areas. Therefore, it's not surprising that over 90% of companies have successfully improved their HR system thanks to the Employer Partner methodology.
By investing the necessary resources and securing the support of owners, management, department heads, and teams, many organizations can meet the Employer Partner quality standard within one to three years. Today, these are stable and successful organizations that find it much easier to attract and retain talent. In fact, during job interviews, candidates often mention that they are aware of the company's annual Employer Partner certification.
Recognizing investment and progress, not just excellence
Every year, 20% of organizations enter the certification process for the Employer Partner label knowing that they will not receive the certificate. Such companies do not enter the process intending to achieve the highest level of HR system quality required for the certification. Their goal is for the consulting team to help them establish an HR system through the HR audit. Some organizations are starting this journey from scratch, setting up an HR system for the first time, from the ground up. Others already have an established HR function, but it only deals with personnel administration and some parts of the employee life cycle, such as recruitment.
To recognize the commitment to improving the HR system, the SELECTIO Group awards the To be certified Employer Partner label. This label guarantees that the company has decided to invest considerable resources into the extensive and demanding process of building a system according to the highest Employer Partner standard. Such companies also have the support of management and managers, who very often, before taking this step, led all rudimentary HR processes in the company themselves, without the support of HR professionals.
Practice shows that organizations that strategically and patiently approach building an HR system from scratch achieve better long-term results, with strengthened team leaders and engaged, satisfied employees. Before you start considering 10 tips for building a quality HR system, review the most common mistakes in building HR systems that we have noticed in nearly 20 years of working with regional companies.
10 mistakes companies make when building an HR system and how to avoid them:
Neglecting a clear strategy
An HR strategy derived from the company’s business strategy can be imagined as a roadmap guiding you and the entire organization toward achieving business goals. When companies skip this phase and begin building HR processes without clear guidelines, they often get lost in implementing initiatives that are not aligned with long-term business plans. Without a clear strategy, there's a risk of resources being spent on activities that don't add value, which can result in low employee engagement, turnover, and inefficient processes.
Scattered focus
It’s unrealistic to expect companies to have a strategic focus on establishing 10 different processes simultaneously. Arrange a meeting with management and department heads to set priorities, keeping in mind the complete employee life cycle. Without a clear focus, the organization risks investing resources in fragmented initiatives that are neither effective nor interconnected. Companies can build a solid and consistent HR framework by focusing on priority areas, such as talent attraction, employee development, and performance management, and gradually establishing other processes.
Lack of management buy-in
Full engagement and support from the top is key to successfully implementing HR processes. Often, HR initiatives are perceived as solely the responsibility of the HR department. In reality, the effectiveness of HR initiatives is significantly conditioned by collaboration with managers at all levels. If management and department heads do not actively support HR processes and recognize their importance for the overall business, the processes will likely be ineffective and implemented without the necessary intensity. This can result in resistance within the organization, especially from employees who view their managers as key bearers of organizational culture. Therefore, involving managers in all phases of HR processes – from design to implementation – is crucial to ensuring success.
Lack of two-way communication with employees
We’ve established that you shouldn’t start creating and implementing processes unless managers and management are those who “walk the HR talk.” But have you also considered employees? HR processes often fail because they are created without involving the employees – the ones most affected by those processes. Companies can develop great strategies and processes, but if employees don’t feel included and informed, much time will be spent trying to gain their support and engagement. Therefore, don’t underestimate the power of two-way communication. It is crucial for employees to understand the purpose of HR initiatives and how they will positively impact their daily lives.
Lack of resources
People, time, and money – have you included all these in your calculations? Companies often start implementing HR processes with great ambitions but without a realistic insight into how many different resources will actually be needed for successful implementation. Human resources are a critical factor – an HR department might not have enough employees with the necessary competencies, experience, or capacity to carry out complex processes. Also, HR professionals often have to balance between operational tasks (like recruitment or administration) and strategic initiatives.
Companies often underestimate the time required for developing, testing, and implementing HR processes. Many HR projects demand thorough preparation, including needs analysis, strategy definition, employee involvement, education, and continuous monitoring of results. Without sufficient time, processes may be superficial, implementation rushed, and outcomes unsatisfactory. Additionally, HR initiatives often rely on collaboration with other departments, requiring extra coordination and time for alignment.
Introducing new HR technologies, such as Human Resource Management Systems (HRMS), performance tracking systems, or employee training and development programs, often requires substantial financial investment. Funds are also needed for engaging external consultants or experts, training employees, organizing events and employer branding campaigns, and developing and implementing policies and procedures. Without an adequate budget, companies may be forced to make compromises that reduce the quality of the implemented processes, which can lead to lower returns on investment in the long run.
HR manager doesn't have a "seat at the table"
Problems also arise when the HR manager is not sufficiently skilled and informed. If they lack knowledge about business results or the impact of the HR system on achieving business goals. Or if they do not participate in management meetings and decision-making processes. Losing its “seat at the table “, the HR function loses power and fails to demonstrate how HR activities directly affect the profitability and competitiveness of the organization. In such an environment, HR remains an operational function, rather than a strategic partner in achieving business goals.
Implementation without assessing the current situation
Suppose HR does not evaluate key aspects such as the current HR system, employee satisfaction and engagement, organizational culture, or managerial capacities. In that case, the company risks introducing solutions that do not address actual needs. Without analysis, processes may be incomplete or inappropriate, and resources are spent on activities that don’t solve real problems. For example, without insight into managerial capabilities, investments in leadership development may be directed toward the wrong competencies.
Not asking: "Are we going in the right direction?"
Without collecting feedback from key stakeholders (managers, employees, and other stakeholders), the company cannot assess the success of HR initiatives. Regular feedback enables insight into how processes function in practice and whether key business goals are being met. If feedback is not monitored, the company risks not recognizing where adjustments or improvements are needed. That can lead to the failure of initiatives and low employee engagement.
Ignoring data and analytics
Many companies overlook the importance of using HR metrics and analytics when tracking processes and making HR decisions. Relying on instinct or subjective assessments without analyzing actual data can lead to wrong conclusions and decisions. Using HR analytics provides more precise insights into key indicators, such as employee turnover, training effectiveness, employee satisfaction, or recruitment efficiency. Without data, it’s difficult to measure the success of HR initiatives, identify problems, or make timely adjustments. For example, without tracking employee engagement data, a company may overlook a decline in motivation, leading to reduced productivity and increased turnover over time.
Forgetting that the HR manager and HR team are not all-powerful
The HR team cannot solve all challenges within the organization on its own. Although they are key to establishing processes and initiatives, their success depends on collaboration with management, managers, and employees. If department heads don’t take an active role in implementing HR strategies, or if employees are not engaged, even the best-designed processes won’t deliver the desired results. HR is not an isolated function – success comes from the collective engagement of the entire organization.
Based on the most common mistakes we’ve observed while working with organizations across nearly all industries, we’ve compiled a list of 10 tips to simplify and break down the implementation of an HR system.
Don’t forget about synergy. It requires buy-in from the management, managers, and team leaders.
Start with a clear and approved HR strategy. It must be aligned with the organization’s long-term goals, mission, and vision.
Assess the current state of the HR function. Include an evaluation of competitors and similar employers in the market. Check what they offer, how they attract, and how they retain employees. Gather opinions from management, managers, and key employees. Assess employee satisfaction and engagement levels. For help in assessing the current state and competition, you can also rely on external HR experts. We conduct detailed analyses of HR management processes according to the Employer Partner methodology and compare them with the market, region, and industry. Based on this HR benchmark, we compare quantitative indicators of employee management efficiency in your organization with a comparative group of organizations. Be mindful of the structuring of all necessary actions and implement them in stages. Remember, you cannot do everything at once.
Consider the human resources needed for a large HR system implementation project. You need a skilled, educated, and experienced HR team. Although the standard is one HR employee for every 80 employees, many organizations hire their first HR person when they reach 20-30 employees. This significantly impacts productivity, and efficiency in executing HR tasks, and reduces turnover.
Managers and leaders are your partners. For HR processes and initiatives, trained and aware managers and leaders are crucial. Start by educating managers on the legalities of implementing HR processes through “HR for non-HR” training. Don’t be discouraged by resistance – if HR initiatives are being implemented for the first time, resistance is a normal and expected stage. It can occur at all employee levels, especially during performance evaluations or initial development discussions. Remember to direct managers and leaders towards building leadership competencies. This will help them first learn to understand and lead themselves well, and then lead the rest of the team.
Find ambassadors within the organization. You likely have some, and they will be essential during the HR function transformation period.
Set motivating and achievable targets and milestones for establishing the HR function. Celebrate early successes and acknowledge those involved in the process. Ensure all employees are aware of what has been done so far and how.
Invest in HR metrics. Proving the value of HR initiatives and processes has always been challenging to demonstrate and measure. However, there are various indicators you can present during annual planning and retrospectives.
Share your successes with key stakeholders. The specifics of your organizational culture and satisfied employees will be your best allies in highlighting the competitive advantages of working within your organization. Think about your employer brand and remember that satisfied employees are the best brand ambassadors.
It’s important to remain proactive and monitor changes in your organization while building the HR system and establishing effective HR practices. Be flexible and adjust the strategy based on changes to ensure it continues to support both the business and employees. The expertise of our HR specialists can be an invaluable asset in implementing best HR practices – they will ensure that HR processes meet the real needs of your organization.
