Top 5 Reasons Your Startup Needs HR
I’ve worked with a number startup companies (including my own), and I’ve noticed a common trend: the human resources function is the last thing anyone thinks about. It makes sense, I guess -- most startups begin with an idea for a product or service, followed by the formation of a company, raising capital, and finally selling your product or service. Resources are usually stretched thin, and developing HR policies is often not a priority. Fulfilling the dream of starting a company and seeing it grow is rewarding. But, whether you realize it or not, the company takes on significant risks the moment “you” becomes “we” if you haven’t prioritized some standard HR practices and policies for your company. Let’s look at the top five reasons you need an HR program:
Ensuring Legal Compliance - There are some fundamental laws you are required to follow when building a business. The alphabet soup of regulations to which even small businesses are subject can make your head spin, but you are still required to follow the law in the end. For example, even subtle changes in employee counts trigger different regulations. Once you hire your 20th employee, you are no longer under the mini-COBRA law but now converted to full COBRA. If you’ve never even heard of COBRA, you've just proved my point.
Policies and Procedures - So I know I’ve just evoked thoughts of Toby Flenderson from “The Office” with this phrase, but there is a great deal of importance in establishing clear expectations through procedures. How do employees request time off? What are the expectations for attire in the office, or when meeting with clients, etc.? Maybe more importantly: what constitutes harassment, and what steps does an employee take when he or she has a concern? Without some basic structure in place, there is a significant risk of local, state, and federal violations and lawsuits that are easily preventable.
Workplace Culture - Company culture changes and evolves with the needs of the growing company, but who’s monitoring it to make sure it is evolving at the same rate of growth? What was once a small team working in one room can become multiple departments spread out across multiple floors of a building. How do you keep the small-team feel that attracted your first employees while welcoming in the additional resources needed to flourish? A growing company needs someone intentionally focused on the culture that can implement a strategy to attract and retain top talent. Workplace culture is not accidental. It needs to be designed, nurtured, and maintained.
Recruiting - Making the wrong hire costs you time and money. Estimates range from 30% of the bad hire’s first year salary to as much as $240,000, depending on the circumstances. Having HR professionals develop good hiring practices not only keeps you in compliance with hiring laws, but also saves you from making costly mistakes. You’ve probably already realized the amount of time it takes to find the right person (or even the wrong person) because of this mind-numbing process.. Let your HR department take care of the sourcing and screening, and that will allow you to focus on spending time with the right candidates.
Scalability - As your company grows, build an infrastructure to support that growth. Since people are the most important asset of most companies, it makes sense to have a HR partner involved in the growth plan from the beginning, rather than trying to retrofit it later. Business plans tend to focus on revenue, and it’s easy to forget about the human element. To quote Clark Griswold's boss, Frank Shirley, “Sometimes things look good on paper, but lose their luster when you see how it affects real folks. I guess a healthy bottom line doesn't mean much if to get it, you have to hurt the ones you depend on.”
A $250 million startup was recently sued by an employee alleging a highly inappropriate workplace culture and what amounts to a lack of policies and procedures to deal with the situation. As I read the article, It’s pretty clear to me that situations like this can be avoided when the importance of human resources is prioritized, and integrated into the business plan at the earliest stages of the company. Make sure to protect the dream you’re building so it doesn’t become a nightmare and make HR an priority.
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Progress City LLC is a recruiting and consulting company dedicated to helping growth stage companies find, develop, and retain top tier talent. We provide a range of services, including outsourced HR and recruiting, and leadership development and training. We are also committed to leveling the playing field for adults with disabilities when it comes to finding sustainable employment. For more information on our services, please contact us at info@progresscity.co, or check out our website at www.progresscity.co.
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