Bureaucracy tends to be a dirty word in tech hubs like Silicon Valley, a place where startups and their admirers value the efficiency of a lean team. As a result, Human Resources—a department associated with process and compliance—often ends up on the back burner.
Antipathy toward HR can leave startups woefully unprepared to handle typical workforce challenges, such as rapid growth or harassment (situations recently faced by Twitter and Github, respectively). But aside from poorly handled workforce crises, ignoring HR in early-stage tech companies may even lead to lower rates of success: An eight-year long study, the Stanford Project on Emerging Companies, conducted during the first dot-com boom found that companies that tended to bring in HR expertise first were the fastest to go public and the least likely to fail. Along similar lines, notable venture capitalist Marc Andreessen has included "refusing to take HR seriously" as one of the top 10 ways to damage a tech startup.
So, just when should a startup start taking HR seriously? We sat down with David Norris, partner at venture capital firm Forward Partners, to discuss how startups should develop a talent strategy from day one.
Why is it important for startup and small business founders to think about talent and HR from the start?
It's important to establish early on who on the executive team is responsible for making sure that people are hired well, the culture is thought through and that internal processes are organized. The way you do things needs to be thought about proactively — at first, it's the CEO, but maybe your COO or one of the cofounders has a lot of empathy, the organization skills or the interest to take on HR as a subset of what they're doing.
If you focus on treating people right first and foremost, then everything else falls into place. Oftentimes, people are focused on the commercial, and the people side of things is what they come to last. But it should probably be the other way around. [HR] can be a real competitive advantage, because it helps you hire better. It helps you retain people better. It helps you have a better dynamic within the company.
When do you advise founders to make their first dedicated HR hire?
A huge factor in terms of deciding when you need to have somebody dedicated purely to HR is your rate of growth. If you're at 10 people or 20 people or 50 people or 100 people, that actually doesn't matter too much. What matters is the speed at which the team is growing — is it growing at one person a month, five people a month or 10 people a month?
When I was COO of HouseTrip, we were at 25 people when I decided it'd be a good idea to bring on someone to focus on HR. We were hiring five people a month. The focus was 80 percent on recruitment, but because we had a manager dedicated to the role, we could also start to think about putting some basic building blocks in place for the HR infrastructure we would need for a larger company.
Even then, [the HR manager] should really be working in partnership with one of the members of the senior team. That person's job is going to be made more difficult if the company hasn't even thought about HR until that point.
Beyond talent acquisition, what strategic role should HR play in a startup?
HR has been a loaded term in recent years, because it's associated with times when things go wrong — when somebody doesn't work out as a hire, when somebody's not performing well or when there's a conflict between two people on the team. But the emphasis needs to be on making things go right. How do you proactively create a great working environment and a great team, instead of focusing on the what-ifs?
Large corporations have lots of what-ifs. They have probably 30 or 40 policies and procedures, employee handbooks, all sorts of processes and protocols, none of which actually create any value for the organization. They're really just risk mitigation. I would encourage startup founders to focus on HR as being a force for good instead. How can you improve happiness? How you can improve teamwork? How can you improve the wellbeing of people at work? There's a lot to be done there, and if you do that well, then you don't have so many what-ifs to deal with.
I see hiring and managing people as very much a human function. You can't actually automate that, but you can build lots of tools that help humans to do it faster and easier.
For example, we use an applicant tracking system, and it's very helpful, because it means we've got all of our candidates in one place, we can search it and we can easily check where we are on each open position. But the system is not much use unless people are putting in good information and making good decisions from it. I really see HR software as a toolkit that in and of itself doesn't solve anything. It's what you do with the tools that matter.
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