Get HR Right Before Your First Hire
Throughout my career as an HR executive, whether as Head of Human Resources for a private company or as an outside consultant, I have often been the first “real” HR professional brought into a new or growing company. Prior to hiring me, the company either had no dedicated HR support, or more frequently, the support was limited to its basic administrative and operational functions such as processing payroll, tracking vacation time usage and planning employee events.
Most companies are usually able to operate like this for a while…that is until things become unmanageable or some crisis arises. For example, a lawsuit or an audit letter, because a toxic culture has developed, or employee issues are draining time and energy. Resolving these types of issues will come at significant cost, not just dollars but also the time and effort required to make the changes that will truly stick. What many business owners do not realize, is that most of these problems can be avoided by engaging an experienced human resources professional while your business is in the planning stages and certainly before making your first hire.
To be clear, I am not suggesting that you hire a full-time HR employee before you need one. Quite the contrary. Instead, think about HR in the same way you would a lawyer or an accountant. You would never consider starting or operating your company without their expertise and they generally do not need to be full-time hires in the early stages of your organization. Ultimately, the timing of your full-time HR hire will depend on various factors, including your growth plans and company goals. However, if success is one of your goals, there are plenty of reasons to make sure HR is in the room right from the start.
HR Shapes Strategy
You’ve got a great idea. You have already thought about your strategy for growth. You may have even already secured your first round of funding. You know you how want to create value for your customers. Now your goal is to think about the best way to deliver that value and to make sure your people are fully equipped to succeed. Getting it right includes knowing what knowledge, skills and abilities are necessary to create that value you want to deliver. Which behaviors are necessary for success in your organization? How will you motivate your employees to perform? Do you have the right leadership in place? The right structure?
Having an HR professional in the room from the start will help to answer these questions holistically and guide your strategy for growth. Once you’ve answered these questions, you will be able to identify the right set of practices to drive the desired employee behaviors and to make sure you have the right skills in place to execute and ensure direct value creation.
HR helps to define your culture
“Culture eats strategy for breakfast” – Peter Drucker
Read any business book or talk to other business owners and you’ll hear over and over again that having a great workplace culture is the secret to success. It is. The right culture can be difficult to create and easy to get wrong. Academia defines culture as the way [your company] does things. I’d take that one step further and say that culture is not just the things you do, but also the things you don’t. Certainly, it is more than providing free lunch everyday (that’s actually a benefit) or allowing employees bring their dogs to the office (that’s a perk). It is about identifying and articulating your company’s mission, vision and values. It is identifying which attributes are important to your organization, making sure that employees are aligned to those values and know how to behave. It is about making sure all leaders embody and adhere to those values as well. And finally, it’s about communicating and reinforcing those principles at both a macro and micro level.
Get Recruiting Right…Immediately
Unless you are hiring a friend or a family member, your first hire can cost you a lot in terms of time and money. For an unknown player, you would have to find someone who is willing to take a risk on you and your vision. There are plenty of people out there who fit that profile. There are far fewer people who are willing to take that risk, who also have the right skills and are right for the culture you are building. A lot of employers think they’ve hit the jackpot when they come across a candidate with the perfect resume only to be disappointed when the employee’s values or motivations are not aligned with the company’s goals.
The initial work to shape recruiting can be as simple as crafting the most effective job ad or as complex as developing and defining your employer brand and becoming a desirable place to work. At minimum, employing an HR expert can help you to see cost savings in your recruiting efforts. Rather than spending 25-30% of your employee’s first year salary on an agency, your consultant may be able to assist in your recruitment efforts for a fraction of the cost.
The Right Programs to Motivate
You’ve got people, you’ll need to pay them, at the very least. Chances are you’ll need to provide benefits as well. Recent trends show that younger (though I’d argue most) employees have come to expect certain perks. Setting the right compensation and rewards strategy which not only supports your current business goals, but is scalable, requires someone with the knowledge and experience in these areas. It is more than the benefits or perks. Most employees will want to know how they can grow or develop in your organization and some will want that answer before they join you.
Compliance
That’s right, from the moment you hire someone, you have compliance responsibilities. While compliance can be a scary word to consider… it is a simple fact of doing business. With your first hire, you’ll need to get the right insurance in place and withhold and pay payroll taxes. There are labor law posters to put up, policy and procedures decisions to be made and handbooks to distribute. Depending on the number of employees you have, many of these compliance activities will not need constant attention. You can review these on at least an annual basis. But you want to make sure you’ve done it. I promise, that you do not want to be on the other side of the phone with the state because you have not purchased worker’s comp insurance.
You want to be Successful
Finally, if I haven’t been able to convince you, maybe Stanford will. An eight-year study conducted during the dot com boom of the 90’s shows that the companies that brought in HR the quickest went public faster and were less likely to fail.
Build Early, Move Faster
Besides the above, there are a few additional benefits to working with not just an HR expert, but with a team of advisers during the start-up phase of your company. As an entrepreneur, it helps you to get used to seeking and incorporating differing perspectives into your strategic thinking and planning. Extra points if the advisory team is diverse and resembles a functional leadership team – something you will need in place as you scale. Additionally, you begin to develop the trust required to properly delegate sooner rather than later – a particularly difficult skill for most people leaders to develop.
Peale Piper can help you set your HR strategy right from the start. Contact us with your questions.
