Getting started with HR | The case for building early HR foundations in start-ups
Starting out in business can be both exciting and daunting. There are so many decisions that need to be made that shape the future pathways of the business. Often you find yourself wearing many hats – founder, people manager to all, bookkeeper, marketer, SEO specialist, office manager. Potentially even dog-walker and dishwasher too.
Often the need to make people decisions, good or bad, happens early in that start-up journey too. There are many schools of thought about when to hire the first HR or people & culture headcount and what that function should look like. These different ideas tend to be born out of the perceptions of the function either being a strategic business enabler, or sometimes more negatively being viewed as a blocker to free-spirited culture and growth.
Build it early, before you need it
Often the early people decisions tend to be focused on hiring the people needed – often at speed - to help build and scale the business. However, hiring shouldn’t be the only people focus. Done well, recruitment and onboarding lay the all-important foundations for the future culture. The human resources infrastructure are the building blocks to those foundations.
In terms of recruitment, often the first few hires of any start-up will be the people you know or are connected to through various degrees of separation through your existing network. They have likely bought into the business concept and potentially have a deeper connection to playing a role on your rocket ship.
Whilst this approach often works out well, at some point, you will need to pivot and deliberately branch outside your usual networks to source the in-demand talent that perhaps has no prior knowledge of your brand and little incentive to leave their existing employer. These hires can be make or break for the success of your business, or at least your speed to success. Creating that incentive to join - your employer value propistion (EVP) isn’t easy and requires a deliberate planned approach.
What’s more, taking a backseat or unstructured approach to HR and recruitment can negatively impact employee morale and create inconsistent management practices that leads to confused internal messaging and ultimately toxic workplace cultures.
By thoughtfully planning out your HR foundations – such as a new hire onboarding program - early on in your business’ journey, you actually own the opportunity to set the tone and create the storytelling that enables you attract and retain only best and repel the rest. In turn, you can avoid the potential future landmines that may stifle your culture, damage your employer brand or cause compliance risks that require tedious unpicking and leave a bad taste in everyone’s mouth and a hole in the pocket.
So back to the other decision, what should HR look like in those early days?
What type of HR or people function you can build may be entirely dependant on your budget, but it shouldn’t just come down to money.
Before making those decisions, there are some important considerations:
1. To call it HR or People and culture?
The term HR is nowadays often viewed as traditional and transactional. Rightly or wrongly it is nowadays perceived as being focused on ensuring compliance and mitigating risks.
On the other hand the trendier People functions (E.g. people & culture, people operations) tend to be more focused on maximising the value of your people through employee experience, talent attraction and management, and strategically shaping culture.
Whilst the traditional compliance-focused HR function may have lost its mojo, it still serves a very important role in setting up businesses to succeed. In 2018-19 The Fair Work Ombudsman issued almost half a million dollars in on-the-spot fines, secured $4.4 million in court-ordered penalties and conducted nearly 3000 workplace audits.
Regardless of what you call the function, what is key is having a top-down approach. Unless the founder and leaders believe in the value the function brings, the business and its people are unlikely to reap the benefits.
2. Do you build it or buy it in?
If you can afford to have a budgeted headcount on payroll then it’s likely more attractive to do so. Be mindful of the importance for that internal resource to take an agile approach and read the audience well – too much too soon can sometimes achieve the opposite of what is intended, stifling the culture.
Alternatively, engaging a consultant or external provider to act as your trusted HR or people advisor - whether based remotely, onsite or a blend of both - can mean you can flex it around as the business requires. Dial up the support and guidance you need when you really need it and steadily build the right foundations at the right time.
Overall, what is important to consider, is that leaving HR as an afterthought may leave you with a legacy of mismatched talent. Businesses that invest in HR early on, demonstrate to their most important assets - their people - that they are valued.