Thursday, December 31, 2009

Do start-ups have HR?

Recently, I've been talking with lots of entrepreneurs and start-up founders here in the New York area. A main goal was to dig - to discover what HR 'stage' they are in, what their challenges are, and learn about their HR strategy. I found, and what I'm now feeling is the norm, there were no HR plans. No thoughts about HR. No concerns. Yikes.

This is worse than I thought. I could have guessed most biz plans didn't include a dedicated HR hire until 50+ employees. Am I right? It's one of those functions that doesn't shout look at these bottom line deliverables. It might be difficult to demonstrate the ROI? It's just easier not to think about HR.

Who does the hiring, I asked. Who picks and administers benefits and insurance and that stuff? The CEO responds "me, and it takes loads of time." Just for items like this, I wonder why seeing HR more strategically isn't obvious. Does compensation planning, training (as a benefit and as a legal protection), facilitating communication/employee relations, or putting the minimal legal employment compliance in place help put the justification for HR over the edge?

Well, I said it. 'HR at startups'. It should not be a stranger to the sharp, forward thinking start-up.


  1. Who picks and administers plans and such? Easy: Paycycle and a load of similar services. Set once, run forever. $50 a month sure beats paying for an HR drone with fake excitement on their face.

    Training? is that where corporate drones need to listen to morale while picking their noses?

    Facilitating communication? if you need to do that, you are in a deep sh*t, and no paperpusher HR with motivational meetings is gonna help.

    And most of all - who does the hiring: You better pray you don't let your HR who doesn't understand what the business is really about have any say in that matter.

    I run a successful startup. We try to follow a simple policy: hire no idiots. It works. Try it.

  2. Thanks for your thoughts Anon,

    It sounds like you have had plenty of fruitless experiences with someone on par with an HR clerk, perhaps at a larger company (where you wanted to see change and improvement). A clerk that had no power (or desire), mindlessly processing the legally required and pointless company processes. If this is the image you have of HR then you are right - there is little pleasant and nothing strategic in this function.

    My point is that you should be embracing how HR functions take a company to the next level. There is a reason HR exists and it's worth remembering that companies heavy in HR practices, like Google or Zappos, have done well.

    Yes, a "paper pusher HR" won't help facilitate communication. However, I'd be willing to bet good dollars your employees don't tell you what they don't like about you - the areas that make them considerably less productive than they could be and the reasons why they might be quitting 9 months from now.

    A 'simple policy: hire no idiots' reeks of mediocrity. At a start-up its essential to 'hire excellent people' - smart, with a breadth of skills, and with a great attitude. Then work to keep them happy. One less than engaged, poorly skilled new hire and you have a cascading, detrimental risk. And, of course, every hire (from admin, HR clerk, engineer, to CFO) should be expected to understand what the business is about - and exactly how their job fits in. Then, yes... training sounds and often is horrible, but the right kind, documenting that employees understand your fair employment processes (done in a short, non-drone sort of way) could protect you against a lawsuit. That's a real reason to do it.

    Strategic HR consideration means not letting your benefit plan 'run forever', but assisting folks with accessing their benefits and improving benefits as you grow or as renewal comes up. It's planning and knowing the risks when you set compensation, and taking time to reward employees and set expectations.

    There is no reason to hate good HR.