Startups are known for a culture of “get it done and figure out the rest later” — that doesn’t change when it comes to implementing procedure-based departments like Human Resources. In the chaos that often surrounds launching a business, it can be easy to forget about issues like compliance, compensation and benefits packages, and the hiring process. Many startups don’t realize the power that HR has until they need it.
Despite the negative connotation HR has developed over the years, a really exceptional HR plan brings a lot to the table. Firstly, they keep your hiring goals on track. Secondly, they ensure that you’re offering industry competitive compensation and benefits. Lastly, they are the foundation of the company culture.
The tech industry has disrupted many of our day-to-day norms and, not surprisingly, HR is another area of business they’ve transformed. The simple act of changing the department title from Human Resources to “People” or Talent” has made a huge difference.
There’s a reason the People title makes sense— HR has always been about people. When a company puts its people first, the positive effects are endless. According to Fast Company, an engaged employee is 44% more productive than a simply satisfied one, and an inspired employee is 125% more productive. So, why wouldn’t you invest in engaging and inspiring your people daily?
No matter what stage a startup is at, having an HR plan should be high on your list of things to do. Why is it so important? Here are some common pitfalls startups experience when they don’t have an HR plan in place.
The 5 Most Common HR Pitfalls
Startups are usually behind the curve when it comes to implementing an HR plan. A report by Payscale says that startups with 100 or fewer employees have half as many human resources professionals compared to other industries. The lack of resources and strain on current employees can cause several significant problems.
Here are the five most common pitfalls a startup faces when they wait too long to put an HR plan in place.
A Reputation for Bad Culture
The topic of culture is everywhere. Startups go out of their way to make sure prospective employees see their culture as innovative, collaborative, and transparent. However, without an HR plan, culture is one of the first things that fall apart.
The HR function is responsible for creating the foundation of a company’s culture. If we’ve learned anything in the past few years, it’s that it’s hard to come back from a bad reputation.
Just ask Uber. After a harrowing year of ignored harassment claims and discrimination lawsuits, the company has had a hard time bouncing back. Even reshuffling their executive team and hiring new talent didn’t help. Even worse? It’s affected their bottom line in the face of an IPO.
Set your culture, and your employees, up for success by having an HR professional there from day one.
A Lack of Employee Support
Nothing builds a toxic environment faster than when employees feel like they don’t have a voice. Giving employees a partner to voice their concerns to creates a sense of trust. When your employees trust you, they’re more likely to stick around.
The last thing any startup wants to do is wait until they’re 50 employees in without a single HR person the ground. When Twitter went through its hyper-growth stage and was in the midst of a game of executive musical chairs, it experienced its own HR-related issues. Founder William Evans faults himself for not hiring experienced people to handle their growth. By the time he realized it, it was too late. Twitter’s hiring funnel slowed to a standstill, and their workload was extensive.
Startups can learn a lot from Twitter. It’s essential to have a team that can support growth and anticipate the needs of an organization long before a crisis hits.
Slow and Disorganized Hiring Practices
Having an ineffective hiring process can do damage to your talent pool and your budget. The truth is, exceptional talent doesn’t wait around. On average, a top candidate has found a position within ten days. When the average time-to-hire is 44 days, that means you’re wasting both your time and resources to interview candidates that may end up withdrawing completely.
Nobody likes to get excited about a position only to wait for weeks to hear back. Having an experienced person to define your hiring practices makes life easier on everyone. More importantly, they can help ensure you get the talent you need on a timeline that makes sense.
Inability to build the right team
In the early stages of a startup, building your team is imperative. If a solo entrepreneur doesn’t have the network or resources to find the right candidates, it can impact the development of the product.
Additionally, finding the right candidate goes beyond talent. Without a clear idea of the values and skill sets that will shape your culture, you might end up hiring personalities that don’t necessarily work well together. HR professionals know how to screen for behavioral problems or incompatible attitudes, and build teams with collaboration in mind.
It takes focus, an understanding of key differentiators in work styles, and a vast network to find the right people. Even if an entrepreneur can handle the job, chances are they have a lot more to focus on, and hiring goals will fall to the bottom of their to-do list.
No onboarding process or employee resources
When Kim Rohrer, Head of People at Disqus, started her job as an office manager, it was immediately apparent that employees lacked essential resources. Some employees were showing up on their first day without any formal training process or even a computer at their desk (something she ended up ordering herself on day one).
Because they were a small team, the CEO was trying to handle everything himself. With so much going on, the little things like office supplies and onboarding fell through the cracks. The downside? A lack of resources can dramatically reduce productivity.
Some startup cultures might view HR as a roadblock in getting things done, but the truth is that they are there to help structure and organize processes so they can move forward. Not stop them in their tracks.
Onboarding comes with many challenges. The last thing any company wants is an employee showing up on their first day without a computer or desk to work at.
So, Why is HR so Important?
It’s clear that many issues arise without an HR plan in place. From hiring to onboarding and supporting your employees, HR plays an essential role in the very foundation of a company.
As Human Resources has evolved into People, it has also updated the way we view the roles and responsibilities. The People team serves as the gatekeepers of the companies culture. From educational experiences to team events, HR shapes how employees feel appreciated and respected.
A great startup treats itself more like a community than an office space. By giving employees the chance to interface with one another, providing transparent values and a unified mission, and delivering on a “people first” promise — startups have changed the way businesses treat their employees. HR teams, from Google to Netflix, have been the pioneers behind this change.
Take a page out of the success stories of tech’s most influential companies and put your HR plan into action sooner rather than later. That said, if you’re having difficulty meeting your HR needs, you might want to see if outsourcing HR makes sense for you.