One of the biggest challenges for startups is encompassing all the key operational functions of a business within a small team that must be ultimately focused on bottom-line revenue. For startups and small businesses directly employing an HR professional is often a goal on the long-term horizon. But, startups need good human resources practices and processes from day one as much as larger companies need comprehensive HR operations every day.

It’s the team that turns a startup into a successful enterprise and that team’s culture that drives future fortune. Laying the right human resource foundations for a new team to protect against later problems is vital. As is developing a recruitment strategy so that new hires are a perfect fit to the existing team dynamic and don’t disrupt essential workflow and revenue generation. In a small team every micro and macro impact is felt more heavily than in larger companies where, for example, a bad hire might not even have met every colleague before they move on.

 “Make something people want” includes making a company that people want to work for.”

Sahil Lavingia, founder of Gumroad.

CB Insights analysed 101 failed startups, conducting postmortems to assess the reason for failure and came up with the top 20 reasons. As many as 23% of startups failed because they didn’t have the right team and 13% because of team or investor disharmony. Other HR issues were right up there too, including a lack of passion at 9% or lost focus at 13%. Though these latter issues may stem from founder’s, motivation for everyone is won or lost via team dynamics.

Investors and startup incubators and accelerators too prefer stable teams rather than small companies with high turnover.  A stable team is much more likely to go the distance and high staff retention is a sign of good and inspiring leadership. HR practices are needed for retention, from overseeing training and development to dealing with issues that crop up and regular evaluations. Generally, employees today expect the HR support of a conglomerate from any sized business.

Employment legislation and good practice is an area that requires expert handling. Startups don’t always put in place the right contracts and employment terms up front and coming to this later in a business life cycle or when facing an issue has serious implications. Laying out terms of employment and expected employee behaviours up front gives employees a known foundation for their working lives, career paths, and colleague and management interactions.

Effective onboarding of a new employee takes time too, startup CEO’s might be inclined to skimp on this process due to time constraints. As growth happens without a dedicated HR function, new employees can be left trying to settle into new roles without complete company buy-in or enough knowledge to perform at their utmost.

There’s also the danger that an enthusiastic founder may oversell company or career prospects or hide the fact that they are in an uphill battle and really need someone with the same commitment as they have to drive the business forward. Presenting a startup accurately but including its potential is important as is communication throughout both a startup and an employee’s journey.

Startup HR is a challenge. Without HR expertise within a new business wearing an HR hat along with every other task a CEO needs to perform just might be too much. There is, however, a solution. Hiring a specialist HR consultancy for startups, or a startup recruiter, ring fences one startup challenge with trusted expertise. It may seem like an investment that can wait but when one considers the importance of team and culture to startup success, and the implication of HR conflicts, then outsourcing HR is an investment that pays long term.

Next, at Silverton HR, we’ll be talking a little more about the importance of getting startup recruitment right and how an HR consultancy and startup recruitment specialist like ourselves can help transform startups into success stories.

https://www.entrepreneur.com/article/241928

https://entrepreneurhandbook.co.uk/hr-for-startups/

https://www.cbinsights.com/research/startup-failure-reasons-top/

https://insights.som.yale.edu/insights/even-small-businesses-need-corporate-governance