How Much HR Does My Firm Need?

May 20, 201510:00 am487 views

Entrepreneurs have a lot on their minds. They’re thinking about product development, marketing their brand and funding their ventures. They focus on projects like hiring a sales team and getting good people in the door. They don’t think of these activities as HR functions, for good reason.

Most people don’t associate the ‘people’ activities that take place in a startup with Human Resources, and most people haven’t seen a startup HR function that’s involved in more than the payroll and benefits. That’s a shame. Virtually all of the important issues and challenges that face a new organisation are human issues. Not sure which design to follow as you build your first release?

Your people will figure that out–the brilliant people you’re able to attract and snag because somebody took the time to think through the combination of ‘hard’ and ‘soft’ attractors that the talent market requires, to design appealing job ads and to create networks that will bring the best talent directly to you. Those are HR functions.

The typical evolution of a startup’s HR support looks like this:

  • A startup CEO launches a company and gets by with the minimum HR support–often a bookkeeper processing payroll and health plan enrolments–until the last possible moment.
  • At the point where people issues are becoming a drain on the CEO’s time, s/he hires a junior HR person to handle them, and gives the same person responsibility for the ‘quant’ HR functions like HRIS, compensation and benefits planning.
  • The poor overburdened, junior HR person is told “In your spare time, make this a fun place to work, and keep up with our recruiting needs.”

This is a recipe for high costs, unhappy employees and a highly stressed leadership team. In short, it creates a toxic workplace environment that erodes the value of your organisations human capital and negatively impacts the business operating system (i.e.think of the set of assumptions and protocols beneath our businesses, how we motivate people, how we apply our human resources) of your company.

Building an Organisation

Building an organisation is a design problem, no different from product design. The more thought and planning that goes into the front end, the easier everything else will be. We know this, because when we design a manufacturing system, a supply chain or a sales strategy, we start with a high-level view.

Why wouldn’t we naturally do the same thing in planning the people side of a new venture? Your need for a strategic view of the organisation you’re planning to build is greater at the outset than your need for someone to track vacation hours. Luckily Silicon Valley and other startup hubs are well-populated with seasoned HR consultants who can give a startup leadership team the guidance it needs on a ‘by the drink’ basis.

One of the first recommendations a well-traveled HR consultant will give you is likely to be “Outsource the spreadsheet part of HR.” If you have a junior, embedded HR person on your staff, that person’s job is to listen to the team and keep the energy moving in your workplace–not to sit at a computer updating employee records. There are dozens of firms who’ll be happy to take the payroll, benefits, employee health plans and reporting functions off your hands, and you’ll be smart to let them do it.

That doesn’t mean you don’t need HR support. Startups are crazy places. Emotions run hot and cold. Conflicts arise and subside. Who will your team members talk to about those energy waves? Who will keep tabs on the team’s well-being, run interference between you and them (because it gets harder and harder to talk honestly to the CEO over time) and keep the team’s mojo uppermost in mind?

That’s your HR person’s job. As a young HR person reading Tracy Kidder’s amazing book The Soul of a New Machine, I learned something powerful about innovation and teamwork. People get excited when they have the opportunity to contribute to something grand.

Their excitement increases when their opinions are valued, their day-to-day needs are attended to and their concerns are addressed quickly. None of that activity happens on its own. A sharp, ear-to-the-ground HR person on your startup team will be worth his or her weight in gold, before your first product ever ships.

This piece was by Liz Ryan, the CEO and Founder of Human Workplace. It was published in Inc.

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