As a start-up, looking after your small workforce is incredibly important. As a smaller company, a start-up’s boss has the opportunity to create great relationships with their employees and to get to know them well and what they want out of their work. But it’s not enough to just hope for the best. There needs to be the offer of HR in place so employees know things like their annual leave allowance, for example, and what rights they have.
By offering a supportive HR function, there is better employee wellbeing and this contributes to the company’s growth. If employees are happy, then the company has the right staff to help it grow. At the beginning, it can help smaller companies to focus on a particular area of HR to make sure it is done well. For example, increasing employee wellbeing. Smaller companies could then outsource other processes, like onboarding.
Budgets are smaller for start-ups so the HR probably won’t compare to the larger enterprises, but this doesn’t mean it can’t be effective and helpful. There are now plenty of options of HR apps, which can be affordable to SMEs and take some of the stress out of the HR function. This way, founders can manage it all online. Within this, there are a lot of options for automation.
Other areas which need to be considered are employment law – do you understand it and are you aware of the different polices? For example, in the UK, a new flexible working law has just been introduced which means new employees can request flexible working from day one, whereas before they had to be working for the company for six months before this request could be made.
Employee benefits is also another area which SMEs need to think about. Even though the budget is smaller, it doesn’t mean that benefits cannot be offered. It just requires more thought and it also helps to talk directly to employees to see what benefits they would like to receive.
In today’s world, there are lots of options for SMEs with regards to HR. Automation and apps have made things easier, and then start-ups have the added benefit of knowing their employees well. Three experts on the following pages outline their thoughts on what start-ups should be looking for when putting together a supportive HR function.
Matt Monette, UK Country Manager, Deel:
Most start-ups don’t have the same spending profile as established players. To combat that and ensure they are prioritising in the right areas to generate growth, they need to be smart with where they spend and what resources they invest in.
Money can be tight. So when it comes to cutting costs, saving money on the tech stack – including HR software – can initially look appealing. And this is where many start-ups tend to settle for a basic HR function, covering leave management, managing employee data and document storage.
The challenge with this, however, is that if start-ups make the mistake of going with cheap services of DIY solutions that help with their needs ‘right now’ ultimately they’ll likely end up with a complicated tech stack that is ineffectively cobbled together once they grow. This means missing out on efficient operations in the long run and creating a frustrating experience for their employees.
The good news is, there’s no need to sacrifice quality to be cost-efficient. There are lots of options on the table. One option is to adopt a cloud-based, automated HR system that houses all employee data and can be seamlessly integrated into existing or new systems as the business grows. Companies should aim to find a solution that fits their current needs as well as a future state, keeping consolidation and multi-service partners at the top of their lists.
According to Asana, employees spend only 27% of their time on skills-based tasks, while 60% spend it on processes that can be easily automated. For HR professionals, this translates to countless hours spent on recruitment, collecting employee information, making manual payroll calculations in Excel and reviewing local legislation to ensure they stay compliant. This process is even more inefficient for start-ups, who likely don’t yet have a dedicated HR team who are solely responsible for this function.
That said, without supporting HR technology new businesses don’t only pay the price of inefficiency, they open themselves up to potential risks. For example, manual data transfers between multiple systems leads to errors, duplications, inconsistencies and delays, preventing them from operating with real-time data. But if a cloud-based tool is adopted, a start-up’s HR system can smoothly integrate with existing capabilities, minimising errors. This can free up employee time to focus on business growth.
Thanks to constant innovation, building and scaling a start-up isn’t as complex as it used to be, but knowing where to begin can be tricky. By using supportive HR technology, start-ups can now embrace flexible working styles, implement virtual communication and collaboration tools, ship and manage office equipment, hire and retain top talent, deal with visa applications and so much more.
Alison Filkin, Co-founder and Chief People Officer, Responsible Resourcing Agency:
Good people practice is vital for any business, but perhaps most of all for SMEs. If small companies lay down strong foundations from the outset, allowing them to build the teams and grow the culture they will need as the business expands, they won’t need to painfully unpick or course-correct further down the line.
HR has undergone a transformation in recent years, from a support function to a strategic necessity geared to driving workplace culture, fostering a positive work environment, promoting employee morale and achieving business objectives. The early years of a growing business can be an amazing adventure for a team, if they are well supported.
Getting the details right is critical. Employees in any workplace need to be provided with employment contracts and onboarding materials that clearly outline key company information and role expectations. Beyond that, invest time and thought in ensuring the workplace is safe and inclusive and give all staff a point of contact to go to with concerns.
At all times, consider your culture. The way your team works together early on will become embedded in the business very quickly. The great news is you are a small business, so you can use this to your advantage. Do it any way you wish to – the time is now. Eat lunch in the park? Encourage everyone’s view in meetings? Have walking meetings once a day? Culture is more than a few value statements on a page. Creating a positive environment from the start is very often fundamental to a business’s success.
Start-ups are dynamic environments, so listen to your people and their needs. Keep asking for feedback and don’t be afraid to pivot. When things start to accelerate, grow the team in a responsible way, with all that entails. Take on diverse candidates, not carbon copies of yourselves – people with different, complementary perspectives will help you grow and form your unique culture in the future. Diversity leads to happier employees, more innovation and a stronger desire among staff to remain with the company – all of which improve the bottom line.
Look for specialist advice from experts that care about the same things as you do. As you grapple with the challenges of growth, recognise that HR in this evolving, complex world is a specialist discipline, and it is worth finding independent, specialist collaborators who share your values. You’ll save time and trouble by reaching for flexible, fractional, affordable support, not only for recruitment but for all people-related business, from employment policies to managing ongoing.
Lastly, remember to enjoy the process – and mark the milestones of success as you go.
Dominic Monkhouse, Management Consultant and Author:
Start-ups often require significant HR support as they build their culture and look to create a strong team, but they often lack the HR resources of more established businesses. The attitude and experience of candidates can significantly impact an employer’s brand, so getting the HR process right at the beginning can deliver huge benefits in terms of attracting, optimising and retaining talent at this crucial stage. Hiring top talent is the single most important difference a start-up can make.
However, many start-ups struggle with successful recruitment at scale. Most cannot afford an HR function, and it typically gets done by whoever has the time, potentially even the founder. A better alternative is to leverage technology such as AI to help source and screen candidates, analyse resumes and job applications, conduct pre-employment assessments and even predict candidate success and cultural fit. Once you have a pool of ideal candidates, you can dedicate some of your A-players to review all AI output, making the process much faster and better for your team and candidates.
Secondly, many consultancies offer outsourced HR services, which might seem expensive but can save money on bad hires or staff attrition. Consider hiring a fractional HR specialist who can create and execute the strategy but works part time. This can be a cost-effective solution for a start-up that needs HR expertise but doesn’t have the budget for a full time HR staff.