As your team grows beyond a few founders and early hires, HR goes from a few Slack messages and spreadsheets to something that needs structure.

But if you’re a founder or the first HR hire, you probably don’t have time (or budget) for bloated systems or fancy strategies. You just need to know: what’s essential, what’s not, and where to start.

Basically you need to know when is the right time to invest in HR, and what does “just enough” look like for a company with around 50 employees or less?

This guide walks you through how to set up a basic but effective HR function when you're starting from scratch, without over-investing time or budget.

When Is the Right Time to Invest HR?

Start building HR basics around 15–25 employees.

At that size, things like payroll, onboarding, and policies start to break without structure. You’ll also likely hit regulatory thresholds that require more formal processes—especially in countries like Sweden and Norway, where local labor laws kick in early.

In Sweden, for example, you're required to maintain written employment contracts from day one, and benefits like paid parental leave and union engagement might need your attention. In Norway, you're obligated to comply with Arbeidsmiljøloven (Working Environment Act), which requires clear employment terms, a safe working environment, and documented working hours. These might not feel important around 5-10 employees, but more than that and it’s time to start looking at these regulations in more detail.

If your team is distributed or hybrid, getting even basic HR infrastructure in place can reduce friction, improve retention, and help you scale responsibly.

Where Should You Start? Priorities for HR in a Small Organization

Here’s a simple framework for where to focus your limited time and resources.

High Priority (First 60 Days)

• Recruiting Process

• Onboarding Checklist

• Payroll, Contracts & Benefits

• Employee Handbook (Simple Version)

• Legal Compliance

Medium Priority (60–120 Days)

• Performance Conversations

• Manager Support

• Culture and Values

Low Priority (Do Later)

• Detailed compensation bands or career paths.

• Internal training programs or complex L&D programs.

• Complex HR software integrations.

• Lengthy engagement surveys.

HR vs. Talent: What’s the Difference in a Small Team?

In early-stage companies, it’s common for one person to cover both HR and Talent Acquisition. But they will essentially wear two different hats.

If you’re hiring rapidly, recruiting takes the lead. If hiring slows, invest more in internal people processes until hiring picks up again. While there are synergies between these two functions, there’s not a lot of efficiency that can be gained from overlap. So keep in mind that expecting everything gets done quickly on both fronts is unrealistic.

What Not to Focus On

Okay, so you’ve decided to get your HR team up and running. Even though you have an idea of what your must-haves vs. nice-to-haves are, there are still some common traps to avoid when setting up HR from scratch.

• Too much tech too soon

• Overbuilding policies

• Rigid performance systems

• Perks over fundamentals

A Quick 0–1 HR Setup Checklist

High Priority

• Offer letter and contract templates (localized for Norway/Sweden)

• Payroll provider + pension and tax registration

• Hiring process: standardized job ads, interview guide, feedback forms

• Onboarding checklist (workspace, tools, team intros)

• Light employee handbook (5–10 pages max)

• Legal compliance basics: GDPR, contracts, anti-harassment

Medium Priority

• Quarterly performance check-in template

• Simple feedback guide for managers

• Values doc shared in onboarding and all-hands

• Offboarding checklist

• Low Priority

• Career paths and role leveling

• Full HRIS system

• Engagement surveys

• L&D programs

As startups grow past the early chaos of founding teams and first hires, one thing becomes clear: you need structure. You need consistency in how people are hired, onboarded, paid, and supported—and that’s where HR comes in.