When you start a business – you (the promoter / founder) are everything for the business. You are expected to don multiple hats – CEO, CTO, CFO, Receptionist, Runner, Cleaner etc. As you move forward, the concerned responsibilities can be shared across co-founders, founding team members till you are ready to hire dedicated resources for the concerned functions.
How to plan an HR function for your start-up?
Human Resources is a key priority area and needs a good deal of time and commitment from the founder(s), however at some stage a decision needs to be taken to offload some aspects of it in a planned manner. The timelines or the headcount where you need to take respective decisions related to setting up an HR function will depend on your business plan, as well as industry realities, however a general idea about how to go ahead planning your first and second HR hire is discussed in this post.
Your business model and your manpower plan will help you decide the need for a dedicated HR resource. If you want to maintain a lean team – for first few months / years – yourself and your co-founders or early hires can each contribute to hiring and augmenting the team, employee onboarding etc., Additional HR aspects in terms of HR policy, processes & documentation can be outsourced as a onetime activity, and payroll administration can be supported by your in-house accountant or outsourced to an accounting firm. Annual performance appraisals, on going review and feedback can be coordinated and supported by the co-founders, and senior team members.
When to hire your first HR resource?
In an organizations early stage (< 30 – 50 employees) – the HR role, is mostly about recruiting and on-boarding new team members. The other aspect is compliance, which can be supported by external consultants / accountancy firms etc. As the business grows and new team members keep getting added up – additional HR requirements start becoming relevant.
The day you realize the need to hire regularly – and your own time takes prominence towards delivering on core activities, technical activities, and business priorities – you may want to consider adding up your first HR resource with recruiting / hiring as a key skill set.
Recruitment is not just about interviewing and on-boarding people. A lot of time is spent on coordination, job posts, reviewing applicant profiles, researching prospect talent pool etc. While the founders and key team members may still need to contribute to the process – the sourcing, coordination, follow-up, and prelim profiling can be supported by the recruiter. Someone needs to sit on the applicant tracking platform, the excel dump and maintain a dump of all applicants resumes, to be used for present or future requirements.
The recruiter can also support with job postings at various paid as well as free job boards, hire interns, coordinate with placement coordinators, and maintain social media sharing of hiring requirements etc.
What if we engage a recruitment firm?
At this stage, you may also want to consider engaging a recruitment firm – however, depending on number of hires, and available budget you may need to decide if you want to completely depend on a recruitment firm. I would suggest – hire an inhouse recruiter, who may also deliver on other HR roles till you need to add another head count in the HR function. The concerned hr recruiter may use one or more recruitment firms on a contingent basis. This also helps you optimize your hiring budget.
When to hire your second HR resource?
Going further, once you exceed 50 employees and you must plan for future growth, you may need to think of addressing other HR priorities in a focused and better manner – for example – employee engagement, handling employee performance management, managing exit and separation process, career progression and planning, employee grievance handling, supporting need-based training etc. At an early stage – for most small companies HR function also end up supporting some aspects of admin and facility requirements.
At this stage you may evaluate the need to add another HR resource, this time again – the core skill sets need to be hiring / recruitment (as this will take prominence over other activities for some more time) but someone with an understanding of other HR processes. If you assess your existing recruiter ready for growth, you may want to upgrade him/her as a generalist HR resource and hire a front-line HR resource with recruitment as core skill set.
Do you need an experienced HR consultant for your early-stage start-up?
I have personally been associated with some small businesses and start-up’s, as an advisor on a short-term basis and I don’t see this as a real “need” if you and your senior team members spare some time and are able to brainstorm and work out creative solutions to your people related challenges. However, this may really help if you want an external perspective about your challenges and specific business needs from an experienced professional.
Once your start-up has been in place for some time, a basic team is set-up and you start observing challenges related to people, you may have a need to engage a mid/senior level HR resource in form of a part time consultant / advisor. This may not really be needed if you and your senior team are able to brainstorm and find creative solutions to your people related challenges,
This also does not exempt you from hiring your first HR resource as has been advised earlier. This will complement your existing HR function by bringing in industry experience from similar or other large businesses with relevant insights towards addressing people related challenges that a growing business faces.
The consultant can support you and hand hold your key business team members as well as your HR team with advice and insights on processes, policies. Having an experienced professional allows you to bounce your ideas, get relevant advice on planning your way forward and leveraging appropriate talent strategy to build your business.
Praveen is the Founder & Principal Consultant of KHEdge, a boutique HR & Business Process Advisory firm. Over last 15 years he has advised & worked with promoters, founders, business leaders, HR leaders in areas of - Business Strategy, HR Strategy, Organisation Design etc.