Why Startup Companies Need Structured HR
Free Book Preview: Unstoppable
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Growing startups and small and medium-sized businesses often view HR as a chokehold. This, however, doesn’t have to be the case. You can strategically organize human resource and hiring in your organization and remain flexible.
Why Startups Need Relevant HR Functions
Small and medium-sized enterprises and growing startups depend on flexible business culture. This means they need to be able to fall fast and pivot with no serious concerns. Therefore, they don’t prioritize structured HR and recruiting practices. Executives tend to see these as corporate culture killers that threaten flexibility and innovation. Because of this, developing good HR and hiring processes in SMEs and growing startups is sidelined.
However, if unstructured and recruiting processes are left unchecked, they can be dreadful and do more harm than good. They create confusion, foster toxic work relationships, and negatively impact employee morale as well as employee retention.
Developing an active HR function in your business show that you value your employees and their business in your enterprise. When this is achieved, the business becomes better at:
Hiring and retaining employees
Structured HR Helps Growing Startups and SMEs Hire Employees
When a company invests in HR, it becomes better at hiring. They are at an advantage because they are more likely to:
Create Comprehensive Job Titles and Descriptions that are not discriminatory. With structured HR, you come up with accurate job titles and descriptions that entice qualified candidates to apply. This is critical to achieving, especially for startups looking to hire diverse teams.
Conduct Unbiased Job Interviews. Hiring the right people is very important in small businesses. Unstructured interviews invite bias into the hiring process. The process becomes flawed, and the hires are often inexperienced or unqualified. HR and the recruiting staff help startups follow the structured interview processes that rate candidate on a predetermined criterion that is also fair for all.
Protect Businesses From Legal Problems. When it comes to observing state and federal labour laws, structured HR and staff are the point people. These are crucial legal matters that you, as a company, need to understand. The HR staff helps you understand the complicated legislation and how it applies to your business to avoid lawsuits. For example, how does the Family Medical Leave Act in the US mean for your business? The HR staff can better interpret and implement policies to see these laws are observed by other staff.
How do Structured HR Help Startups Develop and Retain Employees?
The development and retaining of employees are two fundamental aspects of business growth. The startups with structured HR practices are better positioned to achieve this taking their productivity to the next level. These companies are more inclined to:
Compensate Their Workers Fairly. Benefits and compensation are a huge part of HR. Without strong HR practices and HR professionals, conversations about a pay increase, and other payment benefits to employees are fraught. These often come down to how the top managers feel about a particular position or the employee instead of what the fair market value for the role is.
It is the responsibility of the HR department to assess the position and determine whether a pay hike is worth it or not. If you develop fair compensation practices, it also prevents you from developing any gender pay gap, which is more likely to happen when the role is left to managers.
Eliminate Generalists. Startups are often full of generalists. These are employees who wear a lot of hats; it becomes confusing. The generalists find themselves in management roles without any management experience. When you eliminate generalists, you can invest in training managers. The quality of your managers directly affects the decision of the employees, whether to stick with the company or abandon ship and look for opportunities elsewhere.
Understand the Need for Policies. The HR department, together with the executives, come up with policies that help answer questions from employees and manage small conflicts. As the business grows, new employees often find themselves encountering issues like how to process expenses, how to manage noises, differences in view, and how to manage paid time off. The policies created help solve these issues before they start affecting the productivity of the employees.
Care for Workplace Culture. Adequate HR and recruiting departments take the pulse of their employees in a way that doesn’t feel regulatory. They conduct new hire check-ins, consider the experience of their candidates, and meet with their employees regularly. This, in turn, builds an influential culture feeding a stronger employer brand leading to better quality hires.
Cultivate Different Career Paths. When a company hits the 30 employees mark, developing the employees becomes critical to retaining them. If not done, the employees feel like they are stagnating in their careers. The best arm of the company that can develop these career pathing programs is the HR department. This prevents turnover, which is incredibly expensive and negates the employee morale.
How do You Embrace HR Without Losing Track of Your Flexible Work Culture?
The company’s entire leadership is reflected in their HR department. To create an HR department that is flexible and creative, you have to value flexibility.
Here is what you need to build and run a strongly structured HR department:
Zero Jargon. Jargon fosters distrust among employees, alienates them, and diminishes productivity. To avoid this, HR departments should do their best to communicate clearly and in person if possible, to eliminate misunderstandings.
No Hard and Fast Policies. Going by the book in every aspect of the company, especially for startups, is outdated. As a startup, you don’t need to have hard rules that govern every aspect of the employee’s office life. For example, going hard at employees for formal dress codes is outdated.
A Set of Defined Policies. Take an example of corporate values. When you get to the corporate level, this is the only time these can apply. As a startup, corporate values are limiting as they evolve as your company grows.
You also don’t need the employee handbook. There have to be policies such as paid time off, sick time, and others. However, you don’t require a complex employee handbook.
What do you do to Develop a Flexible and Creative HR Department?
1. Hire the Right HR Staff. These are the employees that reflect the company’s work culture. Hire people who embody it and consider hiring individuals who can serve as HR coordinators and recruiters.
2. Encourage Proactive HR Involvement. Active HR strives to meet employees face to face to understand what drives employee engagement. This develops a sense of trust and not a feat for the HR staff.
They meet with passive candidates, conduct check-ins with employees, and welcome new hires.
3. Empower the HR Staff. This is a group that doesn’t require running up and down, back and forth between employees and executives for approval of everything they need to say. They have employee goals, and they are also free to represent and share information with them.
They aim to actively cultivate the office culture, measure employee engagement, communicate with employees about what goes on in the company, and be competitive with benefits and compensation.
4. Invest in the Best HR Software. This helps streamline some of the aspects of HR, such as sourcing tools, applicant tracking systems, and HRIS. However, no HR software can replace human staff.