Do Start-Ups Need an HR Department?

By Matt Cholerton Wednesday, June 27, 2012

What differentiates a tech start-up from any other type of small business?

BeatBeat wrote a piece on this not too long ago.  I think usually the term ‘tech start-up’ is used broadly, and utilizes the internet and/or technology as a core aspect of the business.  Loads of ‘tech start-ups’ simply use the internet to acquire new customers or to distribute their product (like yelp or Living Social), and others offer a technological utility (like dropbox or evernote). In all cases, the hope is to leverage your tech use to scale.  I’d say this scaling makes strong talent imperative to get the technology in the right place, and also often biased towards a work environment focused on fun, perks and culture to attract and keep talent.


What is your perception of the tech space here in NYC and why so few have in-house HR staff?


Start-ups in general need to operate lean. Tech start-ups perhaps even more so, as they want to focus on their technology and not operational overhead and process.  Any staff can be a liability when you need to pivot or when you need to scrimp and save over lean months.  HR is often seen as an unnecessary cost, something hiring managers and other leaders can take on and doing so more effectively.


What are some of the advantages of this reality?


Ultimately, I think if these tasks can be done effectively with current key staff they should be.  You have a true lean, mean machine. Obviously, you can save money on headcount but also business units will be more intimately connected with how the hiring process is going, ensure onboarding is smooth, and be guardians of efficient work conditions, performance, feedback, etc... If you are getting by without HR, all the power to you! If it’s not broke don’t fix it.


What are some of the disadvantages?


Like many things in life, reality doesn’t always work out the way we’d like.  People are, and should be, busy with their core duties. Taking the CEO, lead engineer, or sales person away to post a job and screen applicants or enroll someone in the health plan is not the best use of their skills, time, or interest.  This is especially true if you are scaling.


How can HR pros do to better to understand the needs of those in the tech start-up space?


Most often the first HR member is brought in for recruiting, so you need to be creative, resourceful and bring in recruiting structure and best practices. You should spend time learning about emerging and relevant technologies.  I think strong HR generalist experience is also important.  You should know how to select benefit plans, manage equity offerings, administer payroll, handle exits, give opinions and guidance on feedback systems, handle employee relations and compensation strategies.  It’s also important to understand the fast paced and changing needs of start ups - be prepared to multi-task, change course, and pick up tasks outside of your comfort level.

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