In the early stages of a business, most owners and managers focus on growth – almost to the exclusion of everything else. But by spending a little time on your human resources (HR) upfront, and then re-examining where you’re at along the way, you can save a lot of headaches and create a more dynamic, successful and profitable business.
There are many examples of startups where neglect for human resources, led to serious issues down the track. Some of the more high profile ones include Uber’s alleged sexist workplace culture to Twitter’s alleged lack of diversity. And these were startups that had already made it big. More common are the ones whose issues get in the way well ahead of that, hampering the business so that it never reaches its potential
It makes sense to make your HR a priority from day one: the first employees you hire are likely to be the most important ones you’ll ever employ. The culture you build together will be the one that permeates through the whole business and, if it’s the wrong one it can take seriously expensive surgery to fix it.
But it also makes sense to keep reviewing and making sure your people and your policies continue to serve your business the right way all the way through your journey.
With that in mind, here’s what I think you should be doing and when implementing your HR procedures:
1. When you’re starting out
When you’re starting out you’re usually looking for work, so it can be hard to envision the day you’ll be so busy with it that you won’t have time to scratch yourself. But, if you do things right, that’s exactly what will happen. And, if you haven’t put the fundamentals in place now, retrofitting them over an existing business will be trickier. That’s why, when you’re opening the doors, I think it pays to look at:
- The technology and systems you’re using. Set up your payroll properly and invest in software that can grow with your business. You should also consider which human resources management tools you’ll use. The best let you manage everything from leave and training to performance. If you can avoid working with word and excel from the outset, do so. Going paperless now will save you from having to transfer everything to a new system down the track.
- Your policies and procedures. I know you probably want to keep things reasonably flexible and personal when you’re brand new but the day will come when that won’t work. So put the policies and procedures in place that you’d have if you had 50 people working for you, not five. Go beyond the statutory minimums and try to make sure they reflect the culture you’d like to have. For instance, if you’re big on flexible work put down the way you see it working from day one.
- Defined roles and responsibilities. Map out what everyone in it does and let them know what you expect of them. Then spend time drawing up an organisational chart that reflects this. Better still, put together two of them – the one you’d like to have in the future as well as the one you have today. That way, when you do have to hire, you should already have a firm idea of what you’re looking for and be better able to slot people in.
- Recruitment. Employing the wrong people will be the most serious drag on your business. Employing the right ones will be the most important step in your journey to success. So look at recruitment right from the start. Define the kind of employees you want and the core values you want them to have. But don’t leave it theoretical – go out and start looking for them. I’m serious. Even if you can’t hire anyone right now, why not post to uni job boards and similar so that people know who you are, what you do and what you’ll eventually be looking for. Speak to them informally and tell them where you’re at. That way, when you do need to hire, you’ll have a bank of eager graduates waiting to come and work for you.
2. A year or two into your journey
Hopefully, now things are chugging along. And hopefully, also, those HR steps you took when you first started out have helped keep you on track. But you’ll probably be facing some practical issues that you never reckoned on: the employee who keeps calling in sick, the person whose skills aren’t what you thought they were or the star performer who ups and leaves.
Here’s what I think you should be doing about now:
- Review and update what you’re doing. Now is the time to look at everything you did on day one to make sure it’s still working for you. Are your policies and procedures still working? Does your org chart still reflect where you want to be or has the business pivoted? Some of what you look at may make you cringe. Other stuff may make you pat yourself on the back for how right you got it.
- Focus on culture. You’re in a phase of business now where culture really starts to matter. So take the time to assess what yours looks like. Are people happy in their roles, energised by their work and making a real contribution? If not, why not? Is there something you can do to improve things? Is it time for a team bonding day or retreat? Do you need to look at what you’re paying people?
- Refine your disciplinary procedures. It’s about now that you’ll probably have to start doing what you hoped never to do: start performance managing people and potentially even sacking them. This is one of the toughest things a business owner has to do.
- Encourage talent. You’re probably starting to get a feel for which employees will drive your business to the next level and which simply won’t. So this is the time to encourage the people who are making a real contribution to your business. Let them know how much they’re needed. Be prepared to invest in a bit of training for them to help them advance their careers and your business. And start helping them step up where you can.
- Call on outside help. You’re probably also starting to recognise that doing everything HR-related yourself is a big ask. So be prepared to call on outside help when you need.
3. Three-to-five years down the track
By now you’ve grown to the point where it’s simply impossible to be across all the detail for every employee. It’s also when people and culture issues really come home to bite. Here’s what you should be thinking of about now:
- Leadership capability. You’re probably going to need to involve others in the strategy of the business now, as well as in its day-to-day operations. You might even be considering getting in CEO or managing director to take over the running of the show. The biggest decision you’ll likely have to make is whether to hire internally or externally and there are real advantages and disadvantages to each. Generally, a good place to start is to look at what skills you have in-house and what’s missing. Are the things you need teachable? Could any of your existing employees get there with a bit of help or are you better off looking elsewhere? This is when a good lateral hiring policy starts to become vital too.
- Training plans. Tied in with this, I think a more mature business should also take a more formal approach to training. Make sure every person in the business has a training plan which will help them progress to where they and you want them to be.
- Performance appraisals. You should also now have a formal system for assessing performance. Whether that’s a traditional performance appraisal twice a year or a more regular and consistent system is up to you. But it should now be transparent and easy to follow so that staff know where they stand and what needs improving.
- Salary and remuneration. When you first started out this was probably transparent enough – people could see how the business was performing and how their personal remuneration tied into that. Now, it needs some thinking through. If you don’t have a proper profit share or bonus arrangement, especially for key staff, this is when to do it.
4. Once you’re big
It may be tempting to take a breather and sit back but I can tell you that now’s the time you’ll notice everything that didn’t go to plan. How nice it would have been to have had a crystal ball back at start.
This is often the point where businesses change direction, where experiments didn’t happen or when the ground shifts beneath their feet. So it’s also when you often have to start thinking about redundancies and letting people go, not just hiring them.
It’s also when you should probably invest in tech solutions that will help you make things more efficient – not just throwing people at every problem.
Finally, it’s when your core values start to shine through. These should now be the rudder that guides you through growth so go back and look at them. Make sure you still stand for what you said you were going to stand for and then ensure that your people and their metrics for success match these too.
Ultimately, that’s what business success should look like: doing the work you want to do for people you want to do it for without ever compromising what you stand for.