Our UK tech startup clients often ask us “When should our tech startup hire its first HR person?”, so in this article we explore when you might consider hiring a dedicated HR professional.
Dana Schierhout, an HR consultant and global tech sector specialist at Bolt Talent Solutions, shed some light on this topic.
“I work with large corporations as well as tech startups, and I’m often asked this question by founders. When startups are still in the early stages of development, founders tend to focus more on product development, sales and marketing, and accounting, leaving recruiting for later. In order for them to grow, they need to attract and retain the right talent, and for them to attract and retain the right talent, they must grow.
I recommend founders firstly rely on a good HR company/talent provider, to start pooling resources, because time-to-hire for tech roles can reach 45 days or more. Then when their staff count hits about 15-20 employees, I believe it’s time to hire a dedicated HR person.”
As startups grow, managing the recruitment, onboarding, and ongoing HR processes will become more difficult. A small team of employees can initially handle recruitment, onboarding, and ongoing HR, but as teams get larger, this will become more challenging. “When your HR is taking up more than a few hours a week, it’s time to hire in some tech startups HR support”, says Schierhout.
Tech startup with 1-15 employees
A COO or perhaps CFO could likely handle HR in-house at this level. Additionally, HR can be assigned to office managers or administrative roles as an additional function.
Tech startup with 15-30 employees
This would be considered an established tech startup, and will need to have one person who has HR as their responsibility. A startup that is capital constrained can either hire a part-time HR support person or outsource their HR to a consultant who can provide the employee management that the business needs.
Waiting too long to get an HR person for your tech startup will cost you
It’s crucial to get the right HR support in place at the right time for tech startups. The concept of “tech debt” is often discussed in tech circles, which implies that products build up technical debt if they aren’t consistently maintained. In the same way, companies can create HR debt that can be very difficult to recover from if you wait too long. By waiting too long to hire HR support, you could risk violating employment laws, having inefficient and ill-defined processes, or losing control over your company’s culture.
The importance of the first HR hire for a tech startup
Schierhout explains that the first HR hire at a tech startup is extremely important because they will set the tone for the role HR will play at the company. “He/she needs a strategic seat at the table with the senior team to help create policies and culture which the company will live with for years.”
Typical responsibilities of an HR person at a tech startup:
- Recruitment, onboarding and employee contracts
- Payroll and benefits, supplier relationships with benefit providers such as pension scheme, employee assistance programmes and wellbeing.
- Health, safety and wellbeing
- Learning and development
- Employee relations, disputes, grievances or disciplinary issues
Earlier, Schierhout explains why getting the right HR person at the start is so important. Because they face a variety of decisions that would greatly benefit from HR involvement:
- Should we have an inbound or outbound sales person, and what could their remuneration package look like, i.e. a basic salary plus commission? What is the industry average package for this role?
- How could we structure employee divisions and titles?
- Our company needs to create a handbook that explains what it means to be an employee. Are there any reasons why candidates should join us or our employees should stay with us?
- We need to manage an underperformer out of the company. How do we evaluate future employee productivity to be more proactive on this issue in the future?
Why not speak to us to help you assess whether or not your tech startup is ready to hire an HR person?
Although we don’t partner with any specific outsourced HR Startup Companies, we can guide you in the support you should expect to receive. Head over to our accounting for tech startups page for an overview of our accounting services, or browse our client stories to see how we’ve helped tech startups survive and thrive.
Dana Schierhout is an experienced and effective Global Talent Acquisition Specialist adept in all aspects of recruitment support and solutions. Bringing forth global experience and expertise in talent sourcing, screening, interviewing, and placing in Global Markets. Equipped with a diverse and promising skill-set, conducive to providing optimal support to HR Business Partners, Organisations, and Hiring Managers.