Start-ups And Human Resources:
Love or Hate?
Some entrepreneurs tend to believe that human resource is a sort of G&A department that is needed to manage red tape and paper work with no real impact on the business itself.
I actually have a different view on this and I believe a great HR department is a key function in the building process of any company.
To debate this topic, I asked Gitta Blatt, Head of People at Wooga her opinion on the matter.
Roberto: Gitta, from my experience most entrepreneurs believe that HR is a sort of useless function there only to create a rigid structure and meaningless guidelines. Why such reputation?
Gitta: ye you are right. HR is often seen as the the department used to save some money in negotiating the right (smallest) salaries. Historically, we all had a legal background and our key skill was to ensure that the company would follow the labour law. That’s it really!
But in reality, HR is about precious stuff: driving the company culture and investing in talents. Unfortunately, very few HR colleagues think in this way.
Roberto: I would have thought that there is a fair amount of administration to do in HR. In startups where HR departments are of 1 or 2 people is there really time to do anything else?
Gitta: HR work has changed a lot in the last few years. It is about supporting agility, talent management and managing common sense instead of order and control. Roberto, you need to realize that this is a total shift from the past. The key to enable such shift has been the development of better and better Human Resource Management (HRM) tools. I believe that administration shouldn’t absorb more than 15% of the time of the HR department of a startup.
Roberto: Gitta, let me understand this, are you saying that thanks to HRM tools there is such gain in productivity that HR departments have now the opportunity to allocate their time differently? What are the HRM tools that you would recommend to the solo HR Manager of a typical start up?
Gitta: There are a plethora of tools and I do not pretend to know them all. I can for sure tell you that for hiring for example I like Workable and for for management and data administration including payroll i can recommend BambooHR. They generate all kind of analysis and enable easy access for different type of users (not only HR team but management and employees as well). Also Jobvite and Netsuite are worth a check.
Roberto: Interesting! When do you think is the right moment for a company to hire their first HR person?
Gitta: Let me give you some numbers that you might find helpful. A recruiter is able to handle 10 vacancies at the same time and a HR business manager should be able to support 80–100 colleagues (depending on the needs). Your first hire in HR should have mix skills and be able to do both jobs at the same time. From the size of 10 to 50 employees a single HR person should be able to handle the whole load ( obviously will be using properly some external resources).
Note that if the company has got a lot of international employees the complexity of the HR department increase significantly because will need to deal with: visas, work permits, housing, support in opening bank accounts, insurances etc etc
Roberto: So what is the right suggestion in terms of HR department for a small startup, lets call it STARTUP A, that has just closed a round of $3M and has 5 employees and intends to hire another 20 employees in the next 12 months?
Gitta: In some cases outsourcing the HR department is a great way to start. There are great offers from external parties that provide HR solutions for startups. They basically have structured a menu of services and you can pick and choose what you need. (e.g. payroll, hiring, visa, contracting).
Roberto: What about hiring for the above mentioned STARTUP A? Would you suggest external or internal recruiter or a mix?
Gitta: To add 15 to 20 employees in 12 months, it means that you hire at least 1 new employee per month, coming up to 2 per month. For this volume an external recruiter might work out. However, selecting the right recruiter is a careful choice: this should mean a somebody that knows: (1) your industry; (2) your plans and strategy; and (3) your philosophy. Why philosophy? Because to select the right employee is a lot a lot about fit (in addition to skills).
A good way to deal with this initial hiring problem is to have an external resource dedicated on a part time based. I found this to be the most practical solution: the hiring needs are not large enough to justify a full time hire but a person that works in the office two or three days at week could be the the best possible solution.
Roberto: I know that a key topic for Entrepreneurs is how to create a learning organization. This often means to be able to listen. However, listening organizations are tough to create. Any suggestion on best techniques to create a listening culture?
Gitta: Most important component of any learning organization in my eyes is trust. People speak up if they trust that concerns and fears, as well as ideas and opportunities are treated with respect and solution are always explored.
Often people are scared and worried. Therefore, to implement a honest and open communication with transparent information flow and a healthy failure culture might help. Don’t be perfect, get feedback, talk about mistakes and don’t overrule your experts in relevant topics. If you have to do so, you made a hiring mistake. Otherwise be open to learn from your experts. Try to structure exchange, because all should be keen on learning from each others, but keep meetings short. Last and not least use technology to allow know-how exchange: google doc, hidden facebook groups or easy to adjust intranet solutions.
Roberto: Companies evolve and grow. I am thinking of STARTUP A above mentioned. Let’s assume that we are now 18 months later. Let’s assume that now the company has got 30 employees, has got a product that customer like and some initial revenues. This initial momentum allow the entrepreneur to to close a round of $15M in funding. Next challenge is to hire 100–150 people in 18 months. How do you do that without killing the company culture? How do you make sure that HR department does not become a paperwork machine?
Gitta: Obviously the key in order to go ahead with this type of hiring plan must be to scale the internal HR organization. However and I would say more importantly, must be understood that to add 100/150 people in 12 months is not a job for the HR team only. The CEO and the whole management team must understand that this is a priority for them too. And you also have to consider, that after all these contract signings, the integration work only starts. Scaling from 30 to 120 means a quadruplication of the company. Onboarding can be done through HR, integration and knowhow transfer only through teams and respective colleagues. You might lose speed because of time investment in your new talents. But this is essential.
Roberto: Yes! I agree 100%. You cannot have such ambitious growth plan if the CEO is not 100% behind it. I think that in such small companies the CEO should always meet each single new employee in person. But Gitta exactly what are the skills of an internal recruiter?
Gitta: First of all let me say that I tend to agree with you: in my experience the commitment of the CEO has been key to the execution of a successful hiring plan.
The job of an internal recruiter has been changing with time. At the beginning was all about handling the internal network, stimulate referrals, organizing screening and interviews, set up test etc. etc. In these days a recruiter must be a great advocate for the company toward the outside world: must be comfortable with public speaking and all the different social media tools. The recruiter must have quite relevant standing to manage both the hiring manager and fully understand those needs, and manage the candidate in his/her curiosity, expectations and finally the package.
Roberto: Gitta thank you for your time. I appreciate it. Great learnings!
