Why Your Startup Needs HR
“Done is better than perfect.”
“Stay lean and move fast.”
Startups are often stereotyped with these lines especially tech companies who prize bean bags and ping pong tables — blurring the line between fun and work. Because of this mindset, most startups don’t invest in HR teams early in the business. They don’t want to be slowed down by procedures and heavy policies.
There are a lot of decisions to make when starting a company. And building an HR team should be one of them. Why? Because no matter what industry or stage you are in, every company faces the same problems when running a business:
- Keeping the business on the right track
- Engaging employees
- Cultivating a great company culture
- Hiring and retaining the right talent
- Dealing with administrative tasks such as payroll, time-offs, performance reviews, benefits enrolment, etc.
The Role of HR in Startups
“If your business depends on keeping good people and keeping them productive and happy, you need someone whose job it is to do that. And by an HR person, I mean someone who is the advocate for the employees. You can go to your manager, your friend, or the founder, but those people aren’t the employee advocate.”
– Charles Gray, Gray Scable
While most HR tasks may sound trivial to startups, it is important to establish clear HR solutions for your business right at the very beginning. The role HR covers in startups are the same in larger organizations, just lesser in volume.
1️⃣ Law and regulations compliance
No matter how awesome your products and services are if you don’t comply with local laws and regulations your chances of succeeding is slim. Compliance issues change over time, and as a founder, you don’t have the time or expertise to deal with these. HR helps startups avoid costly lawsuits and big fines. It helps your business stay on top of regulations and out of hot legal waters.
2️⃣ Paperwork and administrative tasks
There are lots of paperwork, even in startups. Employee files, medical files, tax records, benefits, and timesheets — just to name a few. These files must be carefully organized and constantly updated. Clearly, someone in your startup must stay on top of all these papers. And don’t expect the CEO or the manager to have time to do this.
3️⃣ Recruiting and hiring talent
Hiring right is very important and time-consuming. Even though startups have small hiring needs, it is crucial to get the perfect talent right from the get-go. A dedicated HR employee has the expertise in finding the best possible candidate to fill a vacant role in your organization.
With the HR recruiting, screening applications, and setting up interviews with prospective new hires, you as the owner or manager will save a lot of time and money and can focus on other crucial areas of your business.
4️⃣ Employee onboarding
After hiring a new employee, your next step will be to get them up to speed on their role and on your company culture. It’s a big responsibility and chances are, your employees don’t have the time to do it along with their fair share of responsibilities. By investing in a Human Resources team, you can establish an official onboarding and training process in your company to make sure that new hires will be able to work effectively and productively right away.
5️⃣ Employee to management communications
As the founder or manager, you already have a lot on your plate. And the last problems you want to entertain are employees coming to you with all sorts of questions about benefits, pay, time-offs, and other issues. It’s a waste of time, to be honest. And you are not even the right person to address their concerns, anyway. These HR issues require a specific point person or team. When employees know they have someone to turn to when they have problems with their pay, benefits, or schedule, they are more likely to be more productive and content.
6️⃣ Employee payroll and benefits
Your employees’ payroll and benefits must be done accurately and in compliance with existing laws and regulations. Some startups may just outsource this completely and that’s fine. However, it still pays to have someone, most likely your HR, within your organization who know the ins and outs of each one.
There are a lot of HR functions in a startup. Having a dedicated HR team or employee handling the backend of your business will save you time and resources so you and your employees can focus on developing products, providing customer support, and growing the business.
Starting an HR Team in Your Startup from Scratch
Building an HR team for your startup will take some work. Here are some tips to help you get started.
1️⃣ Create job profiles
Start with job profiles for each role inside your startup. Feel free to include any information you want.
2️⃣ Create a hierarchal structure of your startup
There’s nothing like a solid company structure to future-proof your business. Use the job profiles above to create a hierarchal structure of your business.
3️⃣ Create a staffing plan
Who will take care of sales, operations, marketing, or customer service? For a startup, these key positions will seem like a moot point but you’ll definitely need this plan as your business scales.
4️⃣ Take advantage of HR tech
There’s a lot of HR tech available to help you simplify or automate your HR processes. Take advantage of apps that allow you to manage time offs, onboarding, payroll, etc. Using technology in your HR department will greatly improve their workflow and will free up lots of their time so they can focus less on paperwork and repetitive tasks and more on helping your employees become more productive.
5️⃣ Create a salary structure document
This piece of document highlights the salaries of various functions within your startup. Compare, contrast, revise every six months so you stay competitive.
6️⃣ Develop a benefits and compensation plan
Your startup may not have much to offer compared to traditional companies. But you can always get creative. Offering your employees the option to work from home is just one of the many things you can do.
7️⃣ Develop a way to measure performance
When creating job profiles, figure out how to measure performance for each role. What defines success will change as your startup grows. Knowing how your team is doing well is key to keeping your employees productive.
8️⃣ Be clear with employee time off
Be clear about your startup’s time off policy, sick policy, vacation policy, and holiday policy. The best way to manage employee time off in real time is through cloud-based HR software.
HR Challenges that Startups Face Today
While it’s clear that having HR in startups is a huge help, it still has its own fair share of challenges:
❕Lack of support from management
Most startup managements think of HR as an overhead cost or too insignificant. Hence, they usually limit the role of HR to just hiring. The HR must take the initiative and help the management understand how crucial their role is — especially in building company culture.
Most startups think that personnel issues can be handled as they occur. While this mindset makes sense, it’s not efficient. By having fully documented policies, managers can save time and resources in resolving issues.
❕Hiring top talent
Hiring is probably the most challenging issue in this list. Most startups rely on referrals when hiring their first few employees. This will no longer work as the company grows. Also, there are instances of overpaying a certain position, especially when there’s a huge funding backing the startup. An experienced HR professional can help you get the right talent for the right price.
❕Failure to provide professional development
Money is no longer the sole factor to motivate your employees. With Millennials in the workplace, there’s now more emphasis on impact and growth. A dedicated HR professional can give your employees meaningful opportunities for growth and professional development. They can plan and encourage employees to join conferences, cross-training, and networking events such as those offered by Silicon Vikings.
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Startups cannot run their business the same way as established corporations do. But it doesn’t mean startups can’t start putting the necessary systems in place for growth. Having a dedicated HR leader or team and arming them with the right tools (like Sage HR) to simplify their workflow can help your business stay on the right track.
Businesses are more successful when their leaders are proactive, not reactive. So, think ahead and see how HR will matter for your startup as it moves forward.
For companies where people are paramount to success, Sage HR helps businesses overcome the complexities of managing their people, so they can focus on growing their business.