HR Challenges in Startups and the Evolution of Growth

Startups evolve and go through different stages to finally arrive at the stage of a large enterprise. In this article, you will discover HR challenges in startups in addition to highlighting HR strategies for startups and commons mistakes to avoid.

Australia’s own unicorns (a privately held startup company valued at over $1 billion) too were once startups – Atlassian (valued at A$50 billion) was started by Mike Cannon-Brookes and Scott Farquhar while studying at the University of New South Wales in Sydney and Canva (now worth over A$3 billion) started from Melanie Perkins mom’s living room in Perth.

As a small, family run business ourselves we understand the challenges and opportunities that come with starting and managing a small team and will share a few of HR insights with you.

Let´s get started.

Early HR Challenges in Startups for Founders

Typically, founders manage the people business in the initial days of any startup.

What happens often in the early stages is the focus of finding ‘product-market fit’ becomes the main priority.

Can you get the idea to work? Can you get your first customers? Can you hire people?

What is often missed is the forethought of the culture that they’re trying to build. Every company has a culture whether it is planned by design or establishes itself organically.

In the case of startups, there is a sense of building a tribe. If you think of a group of people who have a common sense of purpose and values who share a common vision and interpersonal relationships that can be a very powerful and motivating force when you are trying to develop something new or change the world. By the same notion there is a risk of becoming too closed minded and developing a “group think” mentality, missing out on evolving innovative opportunities.

There is also a risk of internal tribal warfare if the work environment turns negative and so if you can establish the appropriate HR mechanisms where the structure is not too ridged you can scale HR as the company grows.

3 HR Strategies for Startups – Where is Your Startup Placed?

Here’s a summary of the three broad HR strategies for startups which we see commonly adopted in Brisbane’s startup ecosystem.

  • A People Agenda: Ensuring the startup anticipates and prepares for the inevitable effects of long term team work
  • Let´s Wait and See: Whereby the founders are not sure what to do and decide to wait before taking any HR action
  • Head in the Sand: Ignoring or refusing to think about a HR issue at all

Startup mistakes to avoid while adopting a HR Strategy

The HR challenges in startups are different from HR Challenges faced in a large corporate environment. Here are a few useful tips while adopting a HR Strategy for your startup.

A People Agenda

HR at its core is about people development. It’s about helping people grow into the job they are doing now and the jobs which they do later in their career.

A study on HR challenges in startup companies published at Cornell University found that employees are attracted to startups for a variety of reasons – especially responsibility and opportunity.

The best companies are the ones that understand that people are their greatest asset and the most important thing that you’ve got to focus on is people development.

If you don’t have an executive person with a HR focus you may not be hiring the best people for your team.

Let´s Wait and See

It´s important to regularly ask your team (sometimes anonymously) for feedback in order to find out what´s working and what’s not working. Regular one-on-one sessions can be done in the office or even in an informal setting while at lunch or grabbing a coffee together. It helps to engrain feedback and candor into the DNA of the startup to where it becomes a part of the daily company metrics to find out what you need to do.

The most important thing is to obtain feedback regularly to create a culture of open communication and not avoid the hard issues. Ideally you want to create an environment whereby it is possible to sit down and talk about difficult issues such as a team member not delivering on time or not to a high enough quality and that you have a mechanism to have that conversation in a way that is professional and directed, but also effective.

Head in the Sand

Addressing a HR problem is one of the hardest things that startups go through. Sometimes the entrepreneur may be afraid that others will negatively judge them as they made the wrong call so they will tell the team put up with the decision (which can cause the problem to manifest further) rather than addressing the situation front on and in a timely manner.

Common startup mistakes (not reinventing the wheel)

A diverse set of opinions can add to creating a richer experience. Sometimes bringing in people with HR experience who might have been working in the industry for a number of years can help to spot common startup mistakes and help develop best practices so your team can be more effective so it doesn’t need to reinvent the wheel.

You can find professionals that know how to motivate people, how to grow people, how to manage people, how to help people succeed and also how to coach people out from difficult situations.

HR doesn’t have to be a challenge for growing startups and small and medium size businesses. There are ways to organize your human resources and hiring, while still being lean and agile.

Bramwell Partners are a team of HR consultants with over 20 years’ experience in HRM consulting and who know how to meet the needs of small business HR and compliance. Call Bramwell Partners today on 07 3630 5695 to schedule your free first consultation!