How to Set-Up an Enterprise

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Human Resource

Human Resource is an important element to be kept in consideration while setting up an business. Though, projections for manpower and staffing is made in the project report, however it is necessary to time the induction of manpower in a planned manner. For example : The engineers and operatives must be available before the installation of the machinery. While planning for manpower following points should be kept in consideration :

  • Make an estimate of number of personnel needed to operate each machine/equipment installed plus no. of unskilled workers required.
  • Estimate the number of shifts planned.

Before finalising your manpower plan, try and study the manpower design in similar organisation.

Recruiting and Hiring

Hiring the right employees can determine whether your business succeeds or fails. The hiring process should be systematic, and should include more than just classified ads and interviews.

  • Be sure about what legal responsibilities will you be exposed to, you may become subject to certain employment-related laws when you add a third, tenth, or a fifteenth employee.
  • Prepare a job descriptions.
  • Once you've determined job description and what type of worker you want, find out how to advertise and write job ads, and learn other ways of attracting applicants here. Use your personal contacts.
  • After you've publicized the opening, you should have some applicants expressing interest. Will you require that applicants complete applications, or will you accept resumes
  • You've collected all the information, so now what? Plan what to ask, what not to ask, and how to plan for your interview.
  • Check out an applicant's background in order to avoid negligent hiring claims and to protect your business, thoroughly check references and credentials.
  • After making your decision and chosen someone to hire, make a job offer.
  • Once someone has accepted your offer, get all the necessary paperwork done quickly, make the employee feel comfortable through orientation so that he or she can become a productive employee as soon as possible.
  • Next design and install job analyses and job evaluation process you may also need to keep in mind the following:
    • It may be possible for a worker to mean more than on machine/equipment
    • Continuous source of labour force must be maintained in order to cope with both planned and unplanned leave of personnel employed. As discussed in an earlier chapter you may find it difficult to get skilled operators at short notice, and this could upset the production and delivery schedule
    • Careful consideration is require regarding the number of workers that can be effectively supervised by a supervisor. However, this also depends upon the nature of a job. On the basis of this, you would be able to make an estimate of the supervisory staff you require for your organisation. You must prepare an organisation chart for the purpose.

When your unit becomes operational, the following steps must be taken to ensure availability of manpower for smooth functioning of your organisation.

  • Examine the objectives of your organisation for the next few years. For example, If you plan to increase your sales, would it require additional manpower, or would you be able to manage with the existing manpower? If you need them then at what levels and when would you need them? Even when you plan to expand to newer geographical areas, you need to do a similar exercise. If you plan to introduce better technology in future, you need to examine whether it is possible to train the existing workers or whether you can consider a reduction in the number of employees etc. On the basis of these factors, you need to forecast future manpower requirements.
  • To help you plan for human resources, you may make a table showing the existing manpower in different skills/grades, the estimated skill-wise manpower with an indication of when they are required. You also have to ensure that as you change your business from time to time, depending upon the market conditions, you need to incorporate these change in the manpower planning too.
  • Benefits for Your Workers If you can, provide the general benefits, including time-off benefits such as vacation, sick leave, and personal time off. , worker's compensation, retirement plans.
    • Health Insurance : Health insurance is a valuable benefit, but it can be expensive for small groups.
    • Life Insurance : life insurance is a great benefit to provide because it offers employees with a family some security at a fairly low cost. Check here for information on the different types of life insurance you can purchase and how to handle day-to-day administration.
    • Retirement Plans : retirement benefits are a valuable benefit to offer to your employees and to yourself. They can be costly and time-consuming to administer, but there are a wealth of options to choose from that can be financially advantageous for you, your business, and your employees.
    • Miscellaneous Fringe Benefit : this category includes all the other types of fringe benefits you may choose to provide to your employees. In some cases, you can deduct the cost of providing the benefits, but your employees will not have to pay tax on them!
  • Motivating Your Workers : Employee morale directly affects your bottom line. Dependable, productive employees are one of the keys to success. Many business owners rightly recognize that it is the people who work for them that make the difference, regardless of the product or service they sell. If an employee is not working up to the mark find out why it is so, try various methods like rewarding employees, recognizing their achievements and contributions to boost their morale.

Firing and Terminating Workers

Not every employee will work well with your organization, and chances are that you will eventually have to terminate an employee. For most business owners and managers, this is definitely not a job to look forward to. Before firing give them a warning or two if there are no noticeable improvements terminate him as per employment condition and explain to other employees the reason for firing particular employee.


Some of the state government offers incentives for training human resources and employing local people as well as set up centers for developing human resource.

Points To Remember When You Plan For Manpower :

While preparing the manpower plan, you need to consider the following points:

  • Promotion: the personnel likely to be promoted to a higher grade and in case of such promotion, would it create a vacancy at the lower level?
  • Succession Planning : the number of personnel likely to leave the organisation in the initial years. When a crucial employees leaves the organisation, it might put the organisation into serious trouble, especially if the organisation is small. Do everything possible to retain them. Prepare others to take the role of the crucial employees by training them. Some of the organisations have tried to keep crucial employees by offering them a small percentage of the profits. This may motivate them to stay.
  • Absenteeism : what is the rate of absenteeism in your organisation? Again, if it is on the higher side you need to take remedial action.
  • Man-days lost: because of leave due to sickness. Is it comparable to other organisation? If not, what could be the reason? Probable Rate of Accidents on the shop floor and how many man days could be/ are lost due to such accident? Are they comparable with those taking place in other organisation?