Should startups have an HR function?

For those who’ve worked for or are working at an early-stage startup, you’ll be well-versed with the idea of ‘ain’t no task too big or small’. So a designer occasionally seconds up as an SEO manager, or the CFO has to help out with content marketing – you just pitch in when beckoned to the call of duty. It’s just the nature of startups, where roles and responsibilities can be very fluid. But one role that all members of a nascent startup play without fail is that of an HR professional.

When your startup is bootstrapped to the bare minimum and has no angel funding in sight, HR is one department that probably features at the bottom of your to-take-care-of list. But times change. Your angel funding eventually comes through, and the operation starts to gather steam, with interest developing in the market. The good times are finally rolling in, and you have enough money to finally set up that full-fledged HR department. But do you really need to? We discuss the pros and cons of hiring HR experts in order to give you a clearer picture.

Aye to HR

Here is how having an HR can help you and your company:

Simplification of guidelines and process

Human Resource (HR) management is a complicated domain and one that must reflect the culture of the brand while protecting the employer and employees from any pitfalls. HR is a must-have if you have a startup with more than 15-20 people because managing pay-slips, implementing policies such as Vishakha Guidelines and late/leaves policy, mismanagement or IP theft, etc., can become a hassle when you have employees playing dual roles. This is where HR comes handy and adds value to the organisation.

Keen eye to find talent

When you’ve met a thousand job-hungry applicants, you become an expert in sieving out the adept from the inept. It might just seem as simple as scrutinising forms and undertaking basic phone interviews, but there is more to hiring than meets the eye. A seasoned headhunter can tell if an applicant means business or is just looking for another leg up. This simplifies the following rounds of an interview as you weed out the chaff from hay. It’s one less headache for senior management, freeing them up to pursue other tasks that need their attention.

Point-person for all admin-related tasks

Whether coming up with engaging activities or onboarding new employees or streamlining office culture and processes, HR personnel can take a massive chunk of weight off the shoulders of startup management. Rather than wasting your time checking up on office affairs, you can concentrate on the operational part of the business. This also helps create a process-driven culture that new employees get immersed in immediately after joining. HR professionals can bring about a method and process to the madness of startups.

Having one source of information or policy dissemination can even help keep the company’s objective, mission, and vision in check.

Nay to HR

However, be wary of issues and pitfalls – sometimes, it might be a good idea to put off building a formal HR function. Here’s when and why:

Determining competency

Organisation and people management are the two basic and key skills expected of HR personnel, but what happens when they fail to meet both? Hiring an HR professional isn’t just about the experience they bring – you can get stuck with someone who twiddled their way through the previous job. As a CEO, you need to ensure that your HR team is thoroughly conversant in all aspects of their role, from a legal standpoint and from an organizational behaviour management standpoint.

Angel funding is great, but is the team growing?

When the initial ecstasy of investment runs out, you might realise that the team has grown to a sizeable number. Now there is likely to be no further growth spurts for another few years. In such a situation, is it be advisable to hire headhunters? Well not really, until you want an HR department that is little more than decorative office furniture, adding to the office ambience. Also, remember the point about dual roles? It is unlikely a specialist HR professional can pick up coding or social media marketing, rendering them a waste of resources if there is little need for an HR function in your company.

There are a lot of tentative factors that you as a CEO need to take into account when building your company’s HR function. For example, if your company jostles with company legal matters on a day-to-day basis, then some HR expertise can come in handy, even in very small teams. However, setting up an HR function for a nascent-level startup which is going places but only needs a small team just doesn’t make sense. So, be sure to consider your unique situation carefully before taking a call, and these points will help you understand if you need a specialist HR professional in your organisation or not.