The early days of a tech startup are filled with excitement, energy, and passion. You have a core team of founders who don’t mind working 20-hour days, because you’re driven by a common owned vision.
With a bit of luck and a tremendous amount of hard work, your idea becomes a company. Your product is viable and you begin to make sales. Now it’s time to start scaling the business, and you hire additional people to help your company grow. You’re transitioning to the second stage of your startup.
As your business begins to scale, your company enters its first set of organizational challenges and growth pains. Human resources plays a crucial role in your ability to navigate those challenges successfully. It may seem too early to think about HR, but now is a critical time to invest in human resources services.
Let’s take a look at the ways HR services help your tech startup successfully scale.
Culture Cultivation
When your company is just starting, you’re probably staffed with passionate people you know well. You share a common vision and purpose, and that’s enough to keep your work aligned.
Culture issues come into play when you start hiring people you don’t have a shared history with. And culture will happen, whether you plan for it or not. Most startups don’t think strategically about their culture until they see the wrong culture starting to develop.
HR services can help your leadership team talk about the attributes that will make your company successful, so that you purposefully hire the people who display those attributes — whether it’s innovation or a focus on teamwork or a certain passion. Being intentional from the start is important for a healthy work culture.
Operational Success
It’s also key as you grow to be intentional about your talent strategy — who you’re going to hire, and when. At the beginning of your startup, your team might include your roommate or your best friend from college. As you scale, you need to hire people who have specific skills that will meet the new needs of a growing company.
Your company no longer exists merely to fulfill an exciting vision — it also needs to be a well functioning system of people, processes, and operations.
As your company grows, you need people with particular skills and expertise in their domains. You need effective people managers and process managers, because at the second-stage your company will deal with issues around building out structures and processes that can be repeated as you grow.
Hire people who are experienced in those scenarios. You need to professionalize your business if you want to grow. Be intentional about processes, standard operating procedures (SOPs), and key performance indicators (KPIs).
At this stage, you might consider using business frameworks such as the Entrepreneurial Operating System® or Scaling Up. Whatever system you choose, this is the time to address people, processes, and cash flow management.
Your human resources services are the hub of your talent strategy. Without the HR function, you won’t have a plan in place to ensure that you hire the right people with the right skills at the right time.
Making Leadership Adjustments
At Amy Cell Talent, we’ve seen startups hire for the skills they need right now, without thinking about how those roles will evolve as the company scales. As a result, their personnel don’t have the skills to grow into the new demands of their roles as the company grows.
- Product development will face a new set of challenges as you gain more customers.
- Salespeople will need to have a greater skill set as you go after larger accounts.
- Financial operations will need to move from tracking your spending to becoming a strategic driver.
Some leaders excel at the earlier stage, but when the company grows, they don’t have the attributes that are needed to address new business challenges at the next stage.
Often, startups need to make difficult decisions about the leadership team that’s already in place. Maybe your best friend isn’t the right person to run sales. Perhaps your company leader should move from the CEO position to the CTO position, because they’re more of a technical person than a business person.
A strong human resources presence can help you think through these essential leadership issues and identify where your existing leaders fit best.
Leadership Support
When you don’t have the right people in place, it usually falls on your CEO to fill the gaps — whether it’s a sales, finance, or managerial need. Your CEO often has the passion and the knowledge to fill those roles, but they’re the last person who should be doing them.
Ideally, the CEO’s job should be to set the vision and make sure everyone else has the resources they need, and to reward and recognize the team. They need to focus on the vision and step away from the day-to-day minutiae.
Getting to this point can be difficult for the founder that needs, or wants, to wear many different hats. However, with a strategic people and growth strategy, most of these hats can be given to the leadership team that is being built, and they can be worn more comfortably and fit better.
We’ve seen startups with leaders who never get on top of their skis. The owners don’t bring in the right people, or they don’t let go of lower-level responsibilities. When they can’t (or won’t) delegate, the company becomes stymied and growth stops.
Your company’s leaders should be looking to HR services to lead the way for finding, developing, rewarding, and retaining the talent that will support your leadership so they can lead.
You Don’t Need a Full-time HR Director (Yet)
At this stage of the game, you probably don’t need a full-time HR Director, but you will need several different HR skills — compensation expertise, recruiting expertise, organizational and structure expertise, among others. To benefit from all those skills without full-time personnel, many second-stage startup companies hire an outsourced HR services company, or a fractional HR service.
A fractional HR service can provide that critical people lens for your business strategy. Outsourced HR firms will typically look at your sales goals, productivity goals, and product goals, and help you determine the people resources you need — now, and in the future.
Fractional HR can develop a recruiting strategy and a workforce staffing plan to help your business grow smoothly. They’ll help you map out your needs in light of your goals. For example, what does it look like from a staffing perspective if you want to go to market in six months? What key hires do you need to make in your sales, leadership, and production teams?
Outsourced HR services partner with you so that, during this hectic time where your business leaders are focused on running the business, you can have someone else help you with recruiting and finding the right people for your culture. They’ll be intentional with the leadership team about what values you want and how you want your culture to evolve.
With a strategic human resources partner at the second stage of your startup business, you’ll position your company to grow in a strategic, organized, and stable manner. You’ll have more control over your company culture, and you’ll have confidence that you’re hiring the right people at the right time, for the right positions.
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