Ask executives in an organization what they think of its Human Resources department, and the answers will run the gamut from “professional and indispensable” to “inefficient, bureaucratic and a source of frustration.”

Why the big difference in perspective? While it is commonly accepted that once a company reaches a certain size, it needs a Human Resources department, in my experience, it is far less clear to employers exactly what type of department they need, who should staff it, and how it should operate.

Part of the confusion stems from the fact that there is no one, standard “right way” to structure a Human Resources function that will work for every company. While larger companies have the resources to hire large HR staffs, with a variety of “specialists,” smaller companies often need to create peak HR effectiveness on a limited budget. If your organization has a small Human Resources department, or is considering hiring its first HR staff, if you carefully weigh your needs and objectives before committing your precious resources, you will stand a better chance of developing an HR function that is an asset for employees and helps further your business goals.

Who to hire?

The most common mistake I have seen in growing companies establishing their first Human Resources department is to promote a current employee with no previous HR experience—such as an executive secretary or an office manager—to the position of HR manager, and set them adrift in their new role without extensive training or external support. As a result, the new manager is overwhelmed, and employees are underserved.

Promoting an employee from within to fill the HR role can be advantageous for some companies, as this employee is already familiar with the personnel, operations and culture of the company. However, since even the most seasoned HR professionals are challenged in keeping up with the myriad of changing laws and regulations that govern the employment relationship, it is unfair to expect a total novice to jump in and assume this important role without significant help.

If you do decide to promote an employee without an HR background into an HR role, do not expect this individual to “go it alone.” Be prepared to offer extensive, ongoing training to familiarize your new manager with the basic requirements of the position, and how to recognize potential problem areas where help will be needed. Assist this person in developing and using effective outside resources, such as consultants and attorneys, to help build HR systems and programs, act as a sounding board and avert legal exposure. If you are not prepared to offer this assistance, you are better off hiring an experienced HR professional.

Department size

Although the HR function brings with it considerable paperwork and record keeping requirements, more HR professionals do not necessarily make a better department. Most small to medium-sized companies can operate effectively with a small HR staff, provided that they hire the right people. According to a survey conducted by the Society for Human Resources Management, the average U.S. employer employs one HR professional for every 100 employees.

It is usually much more productive to hire one outstanding individual with a demonstrated track record rather than two or more less experienced, lower-salaried staff. An experienced professional will understand how to effectively outsource projects when necessary and you will likely achieve better results.

Generalists vs. Specialists

Some companies struggle with the decision of whether to staff their single person or small HR department with generalists or specialists. For example, a company that has significant recruiting needs might be tempted to hire a professional recruiter as its first HR manager.

The Human Resources function is comprised of several practice areas—recruiting, compensation and benefits, employee relations, compliance, etc.—and usually, it is a mistake to sacrifice broad, general knowledge for greater experience in a narrow area. The company with critical needs in a specific area will generally enjoy greater long-term HR success by hiring a generalist with significant experience in the area of need.

Other organizations, believing that they need HR personnel with experience in their specific industry, forgo hiring potentially excellent candidates from outside the industry and unnecessarily limit their pools of candidates. Don’t restrict yourself with such short-term thinking. While industry experience can be an asset, a capable professional will learn your business quickly, and will bring new ideas culled from other types of companies.