HR Challenges for Startups

“Every company has a culture, whether you design it or not; whether you articulate the values or not,” says Robert Siegel, venture capitalist and lecturer in organizational behavior at the Stanford Graduate School of Business.

“That’s why the best companies have HR as an executive position and a seat at the table,” Siegel goes on to say in an interview with Stanford Graduate School of Business. “The best companies are the ones that understand that the people asset is the most important thing you’ve got to focus on.”

As we mentioned in this post (Startup HR Checklist), when it comes to HR for your startup it’s about creating HR plans, policies, and processes that meet short-term needs while taking into account long-term plans. Having those items in place will do wonders when it comes to preventing HR challenges.

It also helps if you consider potential challenges in advance, which is why we’re providing a few HR challenges for your startup to avoid:

Failure to provide training and development

To facilitate employee growth (and in turn retain employees), make a commitment to their training and development. If you wait too long, you risk losing employees to another employer who provides training and development opportunities.

Solution: Training doesn't need to be expensive or elaborate, but you need to offer development opportunities to your staff on a regular basis. Examples include a mentoring program, cross-training in a different job, in-house classes led by internal subject matter experts, or conferences. One thing startups do really well is network, so ask your VC or founder to think of external people that can be introduced to members of your team to talk shop and share ideas.

Failure to collect and provide feedback

Feedback about what's working and what's not working is critical if you want your business to run efficiently and if you want your employees to deliver results. Startups run into trouble when they don’t take the time to gather employee feedback. Likewise, they run into trouble when they don’t have a system and process in place to provide performance feedback to employees.

Capturing feedback—both positive and corrective—will help demonstrate your process and rationale in the event that you choose to promote or terminate an employee. If questions are raised about equitable treatment, these records may help you defend claims regarding a “biased” promotion or involuntary termination.

Solution: Use a variety of methods to gather employee feedback and insight about what is and isn’t working. Talk to your people – one on one, via anonymous surveys, or in group “town hall” meetings in which people can ask questions and get answers. Make sure managers are also having regular conversations with staff to provide coaching about their performance. At a minimum, use an established, annual process to identify and document celebrations and challenges related to an employee’s performance.

TinyPulse is great for this, but even if you don't use a dedicated tool, make sure to make the effort to collect feedback, even if it's with a simple Google form or email.

Failure to document policies, process, and performance

Yes, startups move fast. When you’re moving fast, it’s easy to leave documentation for another day. But that day never comes and then when you need documentation—of a policy, process, or performance conversation—you don’t have it. And, when you fail to give your team a place to look to understand your standards for how to conduct business (policies), the way to complete tasks (process), and how they are measured (performance), you’re even more likely to end up with an HR issue on your hands.

Solution: Documentation doesn’t mean you must write a novel to explain every element of your business. A three-page employee handbook (here's a free template), a diagram that illustrates the flow of how your business works, and a standard, one-page template to document employee performance, might be all you need. The important thing is to document your policies, processes, and performance feedback methods and make them available to employees as needed.

Failure to scale recruitment and onboarding

In the beginning, startup founders often hire employees by reaching out to their personal networks. Once someone is hired, onboarding might consist of “here's your laptop, good luck!" and an invitation to lunch on the new employee’s first day. But as the business grows, this approach isn’t sustainable. When you need to hire 5 engineers or 10 salespeople, your personal network and a “welcome lunch” won’t cut it when it comes to finding and onboarding new employees.

Solution: Recruiting and hiring might seem simple (post a job on LinkedIn and see what happens!), but doing it well (and saving time in the long-term) takes some HR experience. That’s why it’s important to have a plan for how you’ll recruit, hire, interview, and onboard at scale. Consider looking for a consultant that understands your business and can help you outline the process, and work with you to hire, interview and select the right candidates. Then establish a method for onboarding new employees—from the very first day you want to make them feel welcome and convey the core purpose and values of your business. Additional recommended reading: New Hire Onboarding: Compliance, Clarification, Culture, and Connection.

Failure to terminate

Most employees want to be successful contributors to an organization. And, by providing regular feedback, you will reduce the need to terminate employees. Unfortunately, some employees may not meet your expectations. In a small organization terminating that employee can be difficult. But, delaying that decision can make for a disaster. When employees don’t meet expectations, it causes productivity problems, makes for morale issues, and can negatively impact the customer experience.

Solution: If performance issues are identified and communicated but still continue, it’s time to terminate the employment relationship. Make sure that the decision is prompt, performance-based, and documented. There are many things you can do related to HR, but by addressing the above four issues, you're more likely to avoid the HR challenges that many start-ups face. As your business grows, there will be new HR challenges. But when you start with a stable foundation in employee development, a system for gathering and providing feedback, a commitment to clear documentation, and an understanding of how to handle terminations, you're better able to address challenges when and if they arise.

As Joseph Fung, CEO and co-founder of TribeHR says, “For new ventures, a little preparation can mean the difference between creating a culture of success, or becoming completely bogged down by people problems at a time when you can least afford to make mistakes.”

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