Why Startups Desperately Need to Hire Human Resources

In light of the recent scandals at high-growth startups like Uber and Thinx, we need HR in our organizations from small startups to large corporations. However, HR isn’t just there to be the fashion police or for the purposes of compliance; they are the foundation for all things related to talent and human capital.

Startups, in particular, get mixed messages as to when and how a company should add human resource functions. If you have a 50-person company and the CEO is still the primary interviewer or your COO is the author of your non-existent employee handbook, you definitely skipped a step in the process of building your company org chart.

HR and ROI

HR today is more involved in business forecasting, establishing business ROI and executing progress that is directly tied to future and current business success, so the role of the HR professional has evolved into something more than it intended to be. HR is your company’s strategic business partner invested in the success of organizations that goes far beyond hiring, firing and traditional hiring advisory roles. This is where the HR ROI Scale developed by Paul Kearns (seen below) comes into play.

HR ROI Scale
The HR ROI scale demonstrates how vastly different at organizations the role of HR is. However as talent remains a top five factor of focus for CEOs, combined with an increasingly competitive talent market, companies need talent experts on their executive teams to build strategy, select supporting technologies and help plan for the organization to grow and evolve.

Startup Mentality: Move Fast and Break Things

This is how startups see the world. Innovation first, policies later. As a result, tech startups with 100 or fewer employees have half as many HR professionals as same-size companies in other industries, according to data from PayScale.

And that’s why it’s so easy for fast-growing startups to make huge HR gaffes, numerous in the tech startup industry. Moving fast and breaking things is great for your engineering team, but it can hobble your HR pro – assuming you have one. Since there isn’t a hard and fast rule about when to hire HR for your company, it should be anything but an afterthought. And you don’t want your HR person or team breaking anything. Moving fast? Sure. But that depends on what kind of investment you want to make in putting a human resources team in place.

Where to Begin When it Comes to HR at Your Small Business

At the least, once the company has a founder and more than two paid employees, your third employee should be an HR manager. This person must be highly experienced with HR compliance, strategic hiring, and work culture and structure. In other words, don’t try to save money by hiring a less-experienced, “trainable” HR newbie. First, who will train this person? Second, who handles a scandal? And finally, hiring an experienced HR professional might be an expensive line item, but how much does bad publicity cost your company (from public social media flubs to Glassdoor reviews to potential lawsuits)?

The bottom line: Hire a pro now and let him or her do what they’re best at, from compliance to company culture. You can bet there are at least a dozen startups out there who wish they could turn back time and do the same.