#SAPRadio What You Missed – HR for Startups: More Important than You Think?

Here are highlights from the fourth in a 13-week series of broadcasts on HR Trends, a special edition of Coffee Break with Game-Changers on the business channel on Voice of America Internet talk radio. Industry experts discussed a variety of topics that are trending in HR today, such as this one on HR for startups. 

How important is HR to startups? That was the topic of this week’s radio broadcast where panelists Mark Stelzner, founder and manager principal of IA, and Laurie Ruettimann, The Cynical Girl, shared their expertise. They were joined by Natasha Loeffler-Little, leader of product management for small and medium businesses at SuccessFactors, an SAP company.

The bottom line – bring in HR early – and often

Startup companies often grapple with how and when to add HR into their organizational structure. In this radio broadcast, the experts on this panel reiterated the importance of HR and offered key insights for startup executives. Here are a few of their thoughts:

• Lead well. Like in any company, success is a top-down endeavor. It’s important for the leadership of startups to invest time
  in creating a mission, vision, and values, all of which should be based on a good set of morals and ethics.
• Hire a seasoned pro immediately. Many startups make the mistake of relying on an admin or someone else that has bandwidth to handle HR tasks. Not a good idea, say the experts. It’s important to bring in someone who’s well
  versed in all aspects of HR, from hiring and compliance, to retention and offboarding. 
• Make HR strategic from day one. In today’s world, startups must be ready for anything, and a key part of this is focusing on human capital in a strategic way, especially in terms of talent management and acquisition. HR should be added to the executive team, as this function will in essence help shape the organization and its personality.  
• Create a formalized structure. A company’s most important asset is talent and without a formalized HR structure in place, things can start to get hectic (especially in a startup) and people will start to quit.
• Be compliant. According to the panelists, this is a big one because there are many governing bodies – such as the U.S. Department of Labor and the Internal Revenue Service – that require many things of companies of all sizes, including startups. There are hundreds of municipal, state, federal, and international regulations, many of which change dramatically each year. It’s important to keep up on these regulations and follow all the rules – or else it can come back to bite a company in a fairly significant way.
• Lean on third party experts. While an experienced HR person on staff is great, in reality, one person can’t handle all many the tasks – such as employment law, talent acquisition, payroll, and benefits – that are under the umbrella of HR. The panelists recommend outsourcing the transactional part of HR, and go to the HR experts as needed in other areas. As one panelist shared, this is a necessity, not a luxury, especially for compliance.
• Ensure good hires. This one is probably a no brainer, but worth mentioning. Small businesses can’t afford to make a bad hire. Investing in this part of the human capital value chain, with a focus on talent acquisition and retention, is critical and will produce a high return on investment.

For startups that aren’t convinced that they need a dedicated HR person – here’s a formula to follow. When a company reaches $1 million in revenue or has 10 or more people on staff, it’s time.

The crystal ball: What will HR in startups and small companies be like in 2020?

• Stelzner believes that the world is evolving into a borderless economy, so startups will need the flexibility and elasticity to go where business takes them. This means assembling people where and when needed. And he says to expect the same issues that HR has been dealing with for three decades – they will still be there.
• Ruettimann predicts that there will be a new era of leadership at the helm (with Hillary Clinton in her second term as president). With this will come initiatives around diversity, inclusion, fair pay, and equal treatment, with a greater work and life balance. She also sees HR defending their decisions with data, as she believes that data-driven decisions will be a new trend for the next 5-10 years. As more data is collected and patterns emerge, there will no longer be a need for the “gut” decision making that is prevalent today.
• Loeffler-Little predicts that the companies who figure out that HR is a strategic partner will disrupt the enterprise landscape. In addition, she expects there to be an interesting migration of the work and that people will be leaving larger companies and go to startups, which will disrupt the enterprise space. And like Ruettimann, she thinks data will be pivotal, allowing for quick decisions.

You can hear the full broadcast on HR for startups here, including more on the role of leadership in this challenge. Listen to other recent HR Trend Radio Shows, including ones on what baby boomers want, workplace collaboration, and technology’s role in the workplace here.