पाठशाला Pathshala · दल Dal, The team · Lesson 25 · Scale
When to hire a head of people and what they should own
HR becomes a function when the people work outgrows the founders’ spare hours. How to see that moment coming, what the law hands the function first, and the order in which its first leader takes on the work.
Pathshala, The Founder Library · 11 October 2026 · 7 min read
Every company has a people function from its first hire. For a while it lives in the founders’ evenings, a chartered accountant’s payroll run and a shared folder of offer letters. The question is not whether to have one but when it needs an owner, and what that owner should take on first.
This lesson sets out the three stages the function passes through, a way to count the work so the moment is visible before it arrives, what Indian law now asks of an employer, the order in which a first head of people should take on the work, and who that person should be.
Three stages, not one hire
The people function grows in three steps. In the first, up to twenty or thirty people, it is administration: payroll, statutory registrations, leave, insurance and letters. A part-time administrator or an outsourced payroll provider handles it, and a founder signs off. In the second, it becomes operations: a hiring process that several managers use, onboarding that does not depend on who the new joiner’s manager is, a handbook, and the first questions about levels and pay. A people operations manager or generalist runs it. In the third, it becomes a function with a leader who sits with the leadership team and owns the systems by which the company hires, grows, pays and parts with people.
The common mistakes are at the edges. Some founders hire a senior head of people at fifteen people, who finds no system to lead and spends a year writing policies nobody asked for. More hire too late: at a hundred and twenty people the company has four ways of making offers, no record of who was promised what, and a manager layer that learned management from whoever it happened to report to. The [leadership team lesson](/library/building-leadership-team-first-vp) has the general test: a function needs a leader when a founder has become its bottleneck.
The signals that the founders are the people function
Four signs say the work has outgrown its part-time owners. Offers wait for a founder, because nobody else knows what was paid last time. Managers ask a founder how to handle a poor performer, a leave dispute or a resignation, and get a different answer each time. Joiners in different teams describe different first weeks. And the founders find they cannot say, without opening three spreadsheets, how many people the company employs today, at what cost and on which contract.
Each sign is a symptom of the same thing: people decisions made one at a time by whoever is nearest, with no record and no rule. The [compensation bands lesson](/library/compensation-bands-for-startup) describes what that does to pay. It does the same to hiring, onboarding and exits.
Counting the work
The moment is easier to see in hours than in headcount. A company of seventy growing sixty per cent a year with twenty per cent attrition makes about fifty-six hires a year: forty-two for growth and fourteen to replace leavers. If each hire costs forty hours of everyone’s time across sourcing, interviews, the offer and the first month of onboarding, that alone is more than two thousand hours. Add fourteen exits and an hour a month of administration for each person and the company is spending about sixty-six hours a week on people work. That is close to two full-time people’s worth, spread across founders and managers who were hired to do something else.
Set your own numbers in the figure. The line shows how the load rises with headcount at your growth and attrition; the dashed line is one full-time person.
Read it in two ways. The point where the line crosses one full-time person is roughly where a people operations hire pays for itself in founder and manager time. And the slope says how fast the problem grows: a company growing quickly with high attrition reaches the line at half the headcount of a steady one. Growth drives the load more than size does, which is why a company of sixty that doubles in a year needs a head of people sooner than a company of a hundred and fifty growing ten per cent.
What the law hands the function first
Indian law has made the function’s first job larger. The four labour codes took effect on 21 November 2025, replacing twenty-nine central laws. Among the changes the government lists: appointment letters are mandatory for all workers, wages must be paid on time, information technology and IT-enabled services employers must pay salaries by the seventh of each month, and workers above forty are entitled to a free annual health check-up. The Industrial Relations Code raised the threshold for certified standing orders from 100 to 300 employees, so most startups will not need them until well past the first head of people, but a company of 250 should be preparing.
The second statute is the Sexual Harassment of Women at Workplace Act, 2013. Section 4 requires every employer to constitute an Internal Committee by written order, presided over by a senior woman employee, with an external member from an organisation committed to the cause of women and at least half its members women; workplaces with fewer than ten workers route complaints to a district Local Committee instead. The committee files an annual report, and failing to constitute it is punishable with a fine of up to ₹50,000 and more for a repeat. Many companies of sixty have a committee on paper whose external member has not been contacted in a year. A working committee, trained and known to every employee, is the first thing a head of people should check. The [labour law lesson](/library/labour-law-pf-esi-gratuity-thresholds) has the provident fund, ESI and gratuity thresholds. Rules checked 11 October 2026.
What the first head of people should own, in order
Give the first head of people five jobs and an order to do them in. First, the record: one employee database with contract, pay, equity, leave and documents for every person, and a compliance calendar for the codes, the committee and the statutory filings. It is dull and it is the foundation; every later system reads from it. Second, one hiring process: a scorecard per role, a structured interview, a single offer approval and an offer log. The [interviewing lesson](/library/interviewing-for-judgement-not-pedigree) has the method.
Third, onboarding and training. Ben Horowitz argues that training is among the highest-leverage things a manager can do, using Andy Grove’s arithmetic: twelve hours of preparation for a course taken by ten people who will work 20,000 hours next year pays off if it improves their output by one per cent, or two hundred hours. He also reports that exit interviews at Netscape found people left for two reasons, a manager they disliked or not learning anything, and that training answers both. The first programmes are functional, what each job requires, and then management: what the company expects of every manager in one-on-ones, feedback and goals. The [onboarding lesson](/library/onboarding-first-thirty-days) has the first month.
Fourth, levels, bands and the review cycle, which together decide pay and promotion; the [bands lesson](/library/compensation-bands-for-startup) and the [reviews lesson](/library/performance-reviews-that-do-not-waste-a-month) have both. Fifth, the mechanics of culture: the values written down, used in interviews and reviews, and kept current. The founders own what the culture is. The head of people owns making sure it shows up in every system that touches a person.
The people function exists from the first hire. Give it an owner when its work outgrows the founders’ spare hours, and give that owner the record before the culture.
Who to hire
The first head of people at a company of fifty to a hundred and fifty is a builder, not a keeper of policy. Patty McCord, who ran talent at Netflix, argued that people leaders should think like businesspeople and innovators first and like HR people last, and that their work is not parties and T-shirts but making sure every employee understands what the company needs most and what high performance means. Look for someone who has built these systems once, at a company a little larger than yours, and who can describe what they built rather than what they ran.
Three details matter. The role reports to the CEO, not to finance or operations, because the decisions it shapes are the CEO’s. Do not promote a recruiter into it because recruiting is the loudest part of the work; recruiting is one of five jobs, and the others need different skills. And use the [first VP checklist](/library/building-leadership-team-first-vp): act in the role for a month, write the thirty and ninety-day targets before the search, and take the references yourself.
The quarterly people review
Before the hire, once a quarter, the founders count the people work: hires, exits and hours, against the figure above. When the count passes one full-time person and is rising, open the search; it takes three to four months. After the hire, the head of people brings one page to the leadership meeting each quarter: headcount against plan, hires and time to fill by role, regretted and unregretted exits, offer acceptance by level, the compliance calendar with anything overdue, the Internal Committee’s cases and training, and the one system they will build or fix next quarter. Once a year, the founders ask whether the function is still led at the right level for the company it has become.
Hours per hire, exit and person in the figure are illustrative; log your own. Nothing here is legal advice.
Sources
- Press Information Bureau, Government makes the four Labour Codes effective, 21 November 2025
- Press Information Bureau, India’s Labour Reforms: Simplification, Security and Sustainable Growth, 21 November 2025 — Standing orders threshold raised from 100 to 300.
- The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, India Code — Sections 4, 6, 21 and 26; checked 11 October 2026.
- Ben Horowitz, Why Startups Should Train Their People, a16z
- Patty McCord, How Netflix Reinvented HR, Harvard Business Review, January–February 2014