Ask a startup founder when they expect to hire a human resources manager and the answer is almost always “when we reach 50 employees.” That’s the tipping point where a blizzard of employment laws kick in and companies cease getting an easy ride from the government.
But if you’re waiting until you reach the 50-person mark, you’ve left it about 45 employees too late.
I recently completed an informal survey with 10 senior HR professionals working in the tech sector and heard some startling insights about what can happen when busy CEOs try to run human resources off the side of their desks for too long. When no one is thinking deeply about onboarding, staff development and workplace culture, staff-related issues are left to fester and talented workers may start eyeing the door. Bad cultural habits, employment risks and diversity debt can creep in—and, if you’ve really let things go, employment lawsuits could be in the works.
In the early stages you should, at minimum, have an HR advisor who has a track record of assisting startups. An advisor can stress-test your assumptions about your founding team mix, help you create competitive compensation packages, begin sketching out an organization design, and define your company’s culture and values.
Leah Rubin, a senior HR advisor for startups in Vancouver, says early investment in HR gives companies a longer runway because “you’ve built the fundamentals of attraction and retention.”
Here are four reasons why hiring an HR leader early on will help your company grow.
1. Recruitment is not a skill to learn on the job
CEOs may spend enormous amounts of time on the interview process, but they’re not professional recruiters. Good recruitment involves: marketing your company in a particular way to attract the right talent; designing creative sourcing strategies; structuring the interview process so it accurately predicts performance; negotiating offers with an eye to market competitiveness and long-term retention; and creating a great candidate experience. In a tight market for talent, you can’t afford to figure that out as you go.
2. They tell you what you need to know, not what you want to hear
Sometimes, the friend you really need is the one willing to tell you the hard truth. In a growing company, your HR leader is that friend. Companies are often a reflection of their CEOs, who aren’t always able to recognize problems within their businesses. That’s why employing a senior HR person who has the confidence and experience to be honest with you about what is bubbling away beneath the surface is vital. An experienced HR leader can predict—and deal with—leaves of absence, employee conflicts of interest, unflattering Glassdoor comments and turnover issues before they happen.
3. You can’t iterate your workplace culture
Build it quick, fix the bugs and move on. The startup approach might work for product development, but as a mindset for creating workplace culture, it’s a disaster. Corporate culture is the cumulative effect of a thousand decisions—or indecisions—and can’t be turned around in a few development cycles if it goes off the rails. You need a seasoned HR leader with the skills, strategies and experience to think two or three years ahead and build some of the fundamental people processes that support sustainable business growth.
4. It supports your bottom line
One of the main reasons the respondents in my survey said HR was not put in place earlier is that CEOs see it as a cost. In reality, it’s an investment. A senior HR leader creates talent strategies for building the business, including determining the kinds of skills and teams needed, ensuring that compensation and benefits are fair and competitive, and creating a workplace that people want to be a part of. That work reduces employee turnover, cuts your hiring costs and ensures that you get the greatest value out of your greatest asset: your people. Ultimately HR can maximize people’s performance and extend their time in your company.
Here are some startups that hired an HR advisor early on
These fast-growing startups invested early on by engaging an HR advisor or hiring an HR leader.
“Hiring the best employees is the number one way to bend a company’s growth trajectory upward. Hiring a strategic HR advisor accelerated our understanding of how to build out a strong team culture, both proactively by building inclusive and supportive programs, and reactively by mitigating the normal challenges that spring up in a corporate environment.” —¬Colin Dickinson, president, Sparkrock
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