Tech startups are synonymous with problem-solving, growth, and the pursuit of turning visions into reality. At Develocity, we understand the importance of people in driving these innovations. As Richard Branson wisely put it, “Take care of your employees, and they’ll take care of your business.” This principle holds special significance for startups, where each team member’s contribution is pivotal to growth. Having HR systems in place from the get go aids in hiring, developing and retaining employees. Good HR practices and ethics can foster a strong company culture, attracting new team members and tackle issues before they arise.
However, HR management and the hiring process often become afterthoughts in the early days, risking a startup’s potential to scale and succeed to its fullest extent. In fact, research has shown that 18% of startups fail due to team problems and other human-resource related issues. That’s why we, as an agency dedicated to working with startups and scaleups, emphasize the value of solid HR practices right from the start.
Core HR Practices for Startups
Good HR practices and and processes can take a backseat in startups and SMEs as they can been seen as “corporate” and “culture killers” that pose a thread to flexibility and innovation – both also key to a startup’s success. However, the absence of an HR function of some sort can do more harm than good. They can create confusion amongst employees as to what’s expected of them which can have a knock on effect on morale and retention, it can also lead to a struggle to hire talented staff if a company is seen to be adhoc about it’s approach to hiring and lacking in a positive working culture.
Companies that show that they’ve give their HR function some thought show they value employees, the business and their future together. It doesn’t take a lot…trust us.
To help startups build a strong HR foundation, we recommend considering the following core HR practices:
1. Legal Compliance: Startups must navigate the complexities of employment law to be fair employers and protected against potential legal issues. Understanding and adhering to legal requirements from the start is essential for smooth operations. It can be challenging to think of everything, from registering as an employer to ensuring non-discriminatory hiring processes, completing the necessary background checks, providing healthcare coverage, making payments for payroll and taxes AND responding to conflicts within the workplace fairly.
There are some great tech solutions like Bambee HR Consulting and Namely that help with the legal aspects of HR and more.
2. Set Up Payroll: Implementing a payroll system, preferably one with automated features and a digital audit trail, is crucial as soon as you start hiring. This system should integrate HR management features to streamline workforce scaling effectively.
3. Forecast Staffing Needs: Create a hiring forecast that aligns with your company’s strategic goals and fundraising plans. Consider the roles you plan to hire for, their timing, and the projected salaries, allowing you to manage recruitment and compensation efficiently.
4. Create a Hiring Handbook with Flexibility: A hiring process enhances the candidate experience and makes talent acquisition scalable. Your recruitment handbook should include guidelines for various aspects, such as where to advertise job openings, which recruiters to use, job application templates, salary guidelines, company information, culture, and perks. It should also outline the roles involved in recruitment, including who screens applicants, who communicates with them, and who has the final decision-making power on hiring. Additionally, it’s important to define interview protocols and culture fit assessments to ensure compatibility with your workplace culture. As a start-up you can have the flexibility to deviate a little from this, but having it in place will save you time and something to work from as you grow.
5. Onboarding and Training: An effective onboarding program is vital for new hires to feel welcomed and quickly become productive members of the team. Your onboarding process can include office tours or virtual meetups for remote teams, providing access to necessary tools, and setting clear expectations for the first 90 days. An employee handbook of some sort (even a one page overview) should communicate your company’s vision, core values, benefits, and feedback mechanisms. We can help you create an onboarding process that aligns with your startup’s specific needs and goals, while also ensuring that new employees have access to necessary training for their current roles and future career progression.
6. Performance Management: Transparent and motivational performance management systems can help align individual goals with your startup’s objectives. Regular feedback and clear communication about performance expectations foster a culture of accountability and continuous improvement – this is particularly the case for software development teams where happiness and productivity work in parallel.
7. Establish Company Culture: The ethos of your startup significantly influences its appeal to potential hires and its overall productivity. A culture that champions innovation, inclusivity, and teamwork not only attracts top talent but also nurtures it. We can work with you to develop a strong company culture that aligns with your values and goals, ensuring that your startup remains an attractive and engaging place to work.
8. Start with One Person: Depending on financial constraints and growth rate, beginning your HR team with one person can be a solid foundation. If they have the right experience and expertise, this individual can handle HR responsibilities effectively. Alternatively, you can contract an external HR consultants to provide the necessary support and get the processes in place for you.
How Can We Help?
Recruitment agencies can also play a significant role in helping startups establish and maintain effective HR practices. By partnering with a recruitment agency like Develocity, you can leverage the following benefits:
Expertise in Talent Sourcing: Recruitment agencies bring a wealth of experience and networks to the table, helping startups find candidates who are the perfect fit for both the role and the company culture.
Cost-Effectiveness: By streamlining the recruitment process, agencies save startups time and money—resources that are better invested elsewhere in the business.
Industry Insights: Agencies provide valuable market intelligence, from salary benchmarks to emerging hiring trends, enabling startups to make informed decisions.
Scalability: As startups grow, their HR needs evolve. A recruitment agency can scale its support to meet these changing demands, offering everything from temporary staffing solutions to executive searches.
At Develocity, we are passionate about supporting startups in building strong HR foundations that drive their success. Our experience working exclusively with startups and scaleups allows us to deliver tailored HR solutions and recruitment strategies that align with your unique needs and goals.
To wrap it up, building a solid HR foundation is essential for the success of tech startups. By prioritizing HR practices from the beginning and following a checklist that includes hiring, legal compliance, payroll, forecasting, onboarding, performance management, and company culture, startups can attract, develop, and retain top talent. Remember, it’s not about bureaucracy or stifling innovation, but about creating a supportive environment for employees to thrive. Seek guidance from HR professionals or recruitment agencies if needed. Good luck in building a thriving HR function that drives your startup’s success!
