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Do start-ups need a HR team?

By August 31, 2021September 20th, 2023No Comments5 min read

Deciding whether your start-up needs an HR team can be complicated. When you’re still a relatively small company, there are fewer employees to manage and you can get away without an employment expert. HR teams can be costly and the HR Tech available can do a lot of what a traditional HR expert’s job description entails.

The first thing to decide when working out your stance is to define what is needed to be actioned by your HR team. Traditionally, HR covers everything to do with employees and their employment; from recruitment to payroll, and policy updates to managing disciplinary actions.

Startups are generally more agile and quick to adopt technology than more established institutes, so some of the roles (payroll, onboarding, holiday, or benefits management) can be easily outsourced to make time for things needing more human touch.

As a company grows, there will be difficulties that only the HR department can truly resolve.  Therefore, in short, yes, start-ups require an HR department, but no, they don’t need to be called ‘Human Resources.


Why do you need an HR team?

Most start-ups have a flexible business culture. They need to be able to make mistakes and learn from them quickly. HR teams are not initially the first priority because they can be seen as a threat to the flexible and innovative culture. To change this mindset, think about re-naming your HR team to reflect their responsibilities.

Early on you need to determine which members of the team oversee the following:

  • Hiring employees
  • Training employees
  • Employee salary and benefit packages
  • Handling disciplinary issues and employee complaints
  • Upholding and cultivating the company culture
  • Organizing internal processes
  • Maintaining compliance with labor laws.

Hire a Learning & Development expert, an internal Talent team, and a Chief People Officer; specialists that excel in building innovative cultures, scaling businesses, and driving the company values from within.

Start-ups that invest in a strong People team usually excel at attracting and retaining employees. People sustain your business, so finding the right employees and managing their productivity is essential. You can organize your People strategy so that it creates a flexible environment that allows your company to operate the way you need it to. HR’s primary responsibility is to create and maintain a healthy, safe, and productive workplace.

When should you invest in your first People hire?

There’s no clear-cut answer as to when a start-up should hire a People team. Depending on a company’s industry, growth pace, strategic planning, and workload, the window can change.  These indicators can assist in helping you to decide when it’s the right time to hire your People specialists:

1) When business roles become specialized

As start-ups scale, employees who are all hands-on deck and concentrate on general activities can transition to more specialized positions and, eventually, focused departments. At this point you will find that the Founder or Operations lead can no longer pick up the ‘People tasks’ and it would be more beneficial to hire a specialist.

2) When the business grows to a certain number of employees

There is no specific number of employees at which you must invest in Human Resources. Your rate of growth is the more important element. Is the team expanding at a rate of one person per month or ten? The faster your company grows, the more sense it makes to hire L & D and Talent professionals to assist you with employee attraction, development, and retention. According to some studies, start-ups with 50 to 100 full-time employees should seriously consider expanding their People team, but it is entirely up to you.

3) When focusing on revenue over HR tasks could boost the bottom line

If your leaders spend too much time on HR responsibilities instead of building your start-up, it may be time to employ a specialist team. You can focus on other aspects of the business to enhance growth by putting in place a competent People team, and the money generated could outweigh the cost of resources.

How technology can complement People teams at start-ups

Technology has allowed start-ups to wait a bit longer before creating a full People team. There are Human Resource Information Systems (HRIS) that aid in automating transactional HR functions like onboarding, payroll, administrative tasks, tracking compliance, and benefits that would previously have required at least one HR employee to manage.

The nature of the role is such that technology will never be able to replace a full People role but should be used to complement them. Hiring and managing employees is fundamentally a human activity and it shouldn’t be automated. These tools enable human employees to perform faster and more efficiently, which means you may not need to hire as many People experts at once. HR Tech can be utilized as a toolset, but it won’t completely solve problems on its own. What matters is how you use the tools.

Looking to hire a People or HR expert? Get in touch. Our specialist consultants have an expansive network of highly skilled specialist talent ready to drive your company’s culture and growth forward.