Start-up: HR challenges
The Start-up business is a unique opportunity
but a faces many challenges. In this day and
age of information economy success or failure
is determined by the quality of people that a
start-up attracts, retains and incentivizes to
align their efforts with business objectives.
This by no means is easy. HR Strategy needs
to grow and develop in lock step with the
business strategy. But a good HR strategy can
mean the difference between success and
Start-up HR Strategy focus
Roles and responsibilities
Performance Assessment and Review
General Policies and procedures
A company’s culture will get created regardless of
whether its creation is consciously crafted from the
values that the founders hold dear or it
automatically emerges from the actions of founders
and early employees
Define what is the vision that founders have for
What values does the company hold dear and
what all is secondary
Do incentive structures, internal communication &
policies and procedures accurately reflect
A startup is in a unique position where the requirements for
the team do not remain constant from one stage to
Team staffing needs to be a balance of skillsets. More
generalized skills are necessary early on and then move
towards specialization as the products/services take
Only technical skills and past experience should not be the
criteria for selection. Entrepreneurial mindset, team
skills, perseverance and willingness to learn are critical
traits for early team.
The recruitment process has to be able to:
Attract right talent
Roles and Responsibilities
The start-up has to organize its internal chaos, so that
it can deliver products and services to market
The team has to split roles and responsibilities with
clear boundaries to ensure minimal overlap.
Each team member has to understand his/her role in
the team. At the same time space needs to be
provided for initiative and innovation.
HR has to design the basic organizational chart and
introduce the basic split of key roles and
responsibilities in the start- up business.
HR has to introduce simple and clear job descriptions
for employees as they focus on key deliverables.
HR needs to create compensation structure such that an
individual’s motivations are aligned with the company’s
HR has to design the packages and standardized offers
for employees, as the package does not demotivate new
HR has to introduce the basic leveling of job positions as
the internal equity is reached, and employees have no
reason to complain.
The package consists of:
Base Salary + Performance related Bonus
Stock Options and Shares
HR has to balance all components such that first failure
Start-Up businesses always changes priorities
and tasks; the internal communication helps to
keep focus on key priorities of the team.
HR should share the responsibility with the start-
up founders to set up the regular communication
Transparency: Information sharing and taking
team members in confidence is quintessential. so
as to minimize employee-management
disconnect. Unlike large firms, startups have far
fewer options to brush the details under the
carpet. Creating a culture of openness, helps
dealing with challenges, when they arise.
Performance Assessment and
Due to the uncertainty in almost every area of
a start-up’s business, trying to force fit
traditional methods of performance
assessment and review doesn’t work
Individual performance assessment needs to
be contextually aligned with the overall
company performance as interdependence of
various functions is very high.
Eg. A salesman can only bring in orders in a sustainable
manner if the product/service solves a customer need at a
price that the market would bear.
General Policies and
Trying to define very strict HR policies and procedures
in the early stages of a start-up may be an overkill
given the uncertainties around the business as well as
the team and structure.
So, HR needs to work in close coordination with the
business to ensure that all legal requirements are met
as well as employees are clear about the boundaries
of their activities and behavior.
Some key policies to include:
Employment policies: Hiring, Firing, Code of conduct,
Trainings, Promotions, Job enrichment & enhancement,
Transfer, Grievance redressal.
It all needs to be in