Startups have a flexible culture. Startups with their ambitions of making it big in the world generally administer executives with dual roles of managing people at the nascent stage with 5-10 people. As soon as the workforce starts to grow, managing the workforce becomes quite a task and who other than HR can manage them. Recruiting, onboarding, background checks and employee woes – for all these problems, HR is the person to go to! The importance of HR in a startup increases manifold as they are responsible for making the workforce up from scratch and thus have to make sure that they hire correct people who will give their all for the firm and help it grow.   

When should a startup hire its first HR personnel?

Hiring the first HR for any startup is a very crucial decision. It will set the scene for how the HR department will function in the firm. The HR will take crucial decisions with the firm’s senior-most people and decide on policies, the culture of the workplace and the environment that they want to set for the workforce and will live on with the firm for years to come. Thus, hiring the first HR in any startup is a strategic decision that must be well thought off and carefully executed.

For hiring the first 10-15 people of the startup, HR is not necessary. Since, during this stage, the founder is the person handling all the decisions, he/she might want to hire people similar to his temperament and values. So, the first few hires need to be done by the founding members themselves. During this stage, HR’s policy of hiring may or may not coincide with that of the founder’s, and this is the difference of opinion that the company should not deal with at this nascent stage. But varied opinions and depending upon the kind of startup it is, the first HR should be hired once the firm hits 25-40 employees, as managing this workforce smoothly requires an HR.

What is the importance of HR in a startup?

The importance of HR in a startup are manifold. Let us have a look at that:

• Development of a good culture and healthy work environment: Creating a positive workspace right from the beginning is one of the most important factors for attracting and retaining the right talent. Good work culture is desired by every employee and fostering it right from the beginning, where the employees can have frequent interactions with the HR and thus can share their problems, is a good practice to follow right from the start.

• Development of the firm’s VMO statement and policies: Every firm, whether big or small, has a specific vision, mission and objectives statements, which makes the entire workforce aligned to a specific goal that they need to work upon. HR plays an indispensable part in formulating the VMO and the rules and compliances which needs to be adhered to by every employee of the startup.  

• Looking after all the regulatory and compliance requirements of the startup: Every country has its labour laws that must be complied with if the firm wants to avoid any legal hassles. The founder might not be well-versed with all these, so an expert on the subject matter of hiring, work laws, firing and legal frameworks must look after these and here, none other than HR comes to the rescue. Thus, HR protects the firm from facing any lawsuits even before its inception.

• Hiring and retaining candidates that align with the startup’s ideologies: Starting your business with the right kind of people makes the foundation of the startup strong. So, no mistakes should be made during initial hiring as the employees make up the culture as they increase in size. Retaining the right people will give an edge to the firm and will help the startup to move in the right direction and achieve goals faster.

• To create inclusive job titles and conduct well-structured interviews: Creating clearly explained job descriptions would entice the correct candidates to apply, and thus the hiring process can run smoothly. Every startup looks for a diverse set of employees who can help the firm in every situation that arises. So, hiring the right set of people for a startup is a must. So, having a well-structured interview process can help examine the candidates correctly on the skills required and thus help judge them accordingly.

• Formulate appraisals and compensation structure for the workforce: Having a fair compensation structure, which is well researched and matches the industry’s standards, is a must for building a stronghold on the employees. The HR does this job efficiently and also makes sure that the startup does not make mistakes like the gender pay gap. Thus, making sure that the employees have a “fair” pay structure and the firm is not on the way to a lawsuit, and HR does its job to perfection.

• Develop proper training schedules for the workforce: In the initial phase of any startup, it is filled with generalists as they can don multiple hats and can work efficiently in cross-domain projects. But as the firm grows, these generalists need to move on to specific management roles, and without having the proper training and experience, they can fail miserably at their task, which can be a huge drawback for the firm. So, having good managers has a direct impact on the firm’s performance, and thus the HR must churn out good quality managers.

• Help the employees to have specific career paths right from the beginning: As soon as the employee strength starts reaching 30, it is imperative for the firm to have a critical approach regarding its employees’ career paths, so that there is least attrition rate and employees can work in the correct direction of their career paths. HR provides career pathing programs that help the employees in ensuring that they are taking the right decision. 

As discussed above, an HR’s role in a startup is multi-fold. Having a good HR team since the beginning of a startup can help build a great culture, hire and retain talents required by the firm and thus can set a positive tone in notion for the firm. As the workforce makes the backbone of any firm, so it is mandatory to have the authority in place that manages the workforce, i.e., the HR. Although investing in HRs can seem a huge investment right from the beginning, it is sure to reap benefits in the future and save a lot of time for the founder.