HR doesn’t have to be a chokehold for growing startups and small and medium size businesses. There are ways to organize your human resources and hiring, while still being flexible.
Here’s why startups and SMBs should embrace structured HR and recruiting processes:
Why startups need some HR functions
Startup and SMBs rely on a flexible business culture. They need to be able to fail fast and pivot. Structured HR and recruiting practices aren’t the first things they prioritize because executives see them as dreadful “corporate,” culture-killers that threaten innovation and flexibility. So, developing good HR and recruiting processes usually takes a backseat.
But when left unchecked, unstructured HR and recruiting processes can do more harm than good. They can foster toxic work environments, create confusion and negatively impact employee morale and retention.
Businesses that deliberately develop a strong HR function show that they value employees and their business. These companies are better at:
- Hiring employees;
- developing employees;
- and retaining employees.
HR processes help startups and SMBs hire employees
When you invest in HR, you are better at hiring because you’re more likely to:
- Create inclusive job titles and descriptions that aren’t discriminatory. HR staff help you come up with accurate job titles and job descriptions to entice qualified candidates to apply. This is key for startups looking to scale and hire diverse teams.
- Conduct structured job interviews. Hiring the right people is critical for small businesses, and unstructured interviews invite bias into hiring processes. HR and recruiting staff can help startups follow structured interview processes to rate candidates on fair, predetermined criteria.
- Protect businesses from lawsuits. HR staff are the point-people for legal matters – including state and federal labor laws. HR staff help you understand complex legislation and what it means for your business (e.g. how to interpret the Family Medical Leave Act in the U.S.)
HR processes help startups and SMBs develop and retain employees
Startups and SMBs with strong HR practices are better positioned to develop and retain employees, and both are important for business growth. They are more likely to:
- Fairly compensate workers. Compensation and benefits are a huge part of HR. Without HR professionals, conversations about pay increases are fraught and could come down to how managers ‘feel’ about an employee or position instead of what the fair market value for a role is. Fair compensation practices also prevent you from developing a gender pay gap.
- Invest in training managers. Startups are full of people who are “generalists” – employees who wear a lot of hats. These generalists often find themselves in management roles, without any formal management experience. Management training is important because the quality of your managers directly affects whether employees decide to stick with you, or abandon ship.
- Care about workplace culture. Good HR and recruiting departments take the pulse of employees in a way that doesn’t feel like policing. They consider their candidate experience, conduct new hire check-ins and meet with employees regularly. This builds a strong culture that feeds a strong employer brand, which leads to better hires.
- Recognize the need for policies. As businesses grow, new employees may encounter new workplace issues: e.g. how to manage noise, process expenses and manage paid time off. HR departments work with executives to create policies that answer those questions uniformly. This helps manage small conflicts before they become big ones.
- Cultivate career paths. When companies reach at least 30 employees, figuring out how to develop those employees becomes critical to retaining them. HR is the best arm of your company for developing career-pathing programs to prevent turnover, which is expensive and disheartening for employee morale.
How to embrace HR without losing your flexible culture
HR is a reflection of a company’s leadership. As long as you value flexibility, you’ll be able to structure an HR department that is creative and flexible.
Here’s what you don’t need to build and run a successful HR department:
- Jargon. Jargon alienates employees, fosters distrust and diminishes productivity. HR departments should strive to communicate clearly, concisely and in-person, whenever possible.
- Going “by the book” in every case. Startups don’t need to have hard and fast rules that govern every aspect of office life (e.g. formal dress codes are out of fashion.)
- A defined set of ‘corporate values.’ At the corporate level, you might need these – as there are usually many divisions, employees and cultures at bigger companies. But as a startup, corporate values can be limiting, and may change as your company evolves.
- An employee handbook. You need some policies (e.g. sick time, paid time off) but as a startup, you probably don’t need something as exhaustive as an employee handbook. If you really want one, though, here’s how to write an effective employee handbook.
Here’s what you do need to do to develop an innovative HR department:
1. Hire the right HR staff. These employees will be the ambassadors of your company culture, so look for individuals who embody it. Consider hiring people who can serve as both:
- HR coordinators: This person meets with employees on an informal regular basis and encourages managers and employees to resolve issues amongst themselves.
- Recruiters: This person should meet with managers regularly to gain a sense of what qualities they value in candidates. They should also be able to identify each department’s hiring needs, build talent pipelines and create good candidate experiences.
2. Encourage proactive HR involvement. Proactive HR staff do the legwork to meet people face-to-face and learn what drives employee engagement. This fosters trust in HR, instead of fear. Proactive HR employees:
- Conduct regular check-ins with employees
- Meet with passive candidates
- Welcome new hires with flair
3. Empower your HR staff. An empowered HR staff is a group that doesn’t have to run back and forth between executives and employees to gain approval for everything they say. They are free to represent employees and share information with them. Their employee goals might include:
4. Invest in good HR software. There’s a lot of HR software to choose from, and much of it can streamline some aspects of HR (e.g. applicant tracking systems, HRIS and sourcing tools.) Keep in mind, though, that even the best HR software isn’t enough to replace human staff.
Frequently asked questions
What does HR do in startups?
HR processes are critical for the success of any company. They can help you develop and retain your employees, which means that startups with strong HR practices will be better positioned to grow their business in an efficient manner.
When should I hire HR for a startup?
Most startups will hire HR when you hit around 20-30 employees or after a Series A round. At that point, it is advised that companies build and hire an HR department. More people in your business requires full-time attention from one professional who can oversee operations for all aspects of human resources management, including hiring practices.
What does HR do all day?
Human resources is the person in charge of making sure that everything goes smoothly during interviews, coordinating efforts between departments and companies for hiring new employees as well as navigating them through their first day on board.