Do Startups Need HR?

Do new growing startups need HR department within their organisation? What are the HR functions required by startups? Why do startups need HR? For startup founders, it needs careful consideration to determine whether their new business requires HR professionals to aid employment and human capital efforts.

On one hand, hiring HR professional means investing money for smooth technical operation within the internal divisions. It also means to put more concerted efforts on the improvement of human capital, rather than investing more money into product development, marketing, research, and sales to ensure company growth.

However if a startup does not have HR department, the conflicts between workers can inflate through time, if it continues to remain unresolved by an intermediary authority. Additionally legal issues related to government regulations as regards labour and employment laws allow scope for vulnerability for companies that do not have HR function.

Given the fact that startups usually consist of small number of employees towards the beginning of the business, most founders would argue that having their own HR department is not an urgent call. Indeed, some teams even underestimate the HR function as they assume that ‘Google will always help’ to find answers to the problems that might eventually arise, such as harassment claims, employee complaints, or wage and hour issues.

While at some point it might work out fine, there are cases that need to be handled by real and direct experienced professionals rather than soliciting an online advice channel.

Furthermore, one of the nature of working at startups is that one person should be able to multitask on a variety of functions, including HR. Instead of spending money on hiring people to do payroll, startup leaders prefer to delegate this task to other division which sometimes has no relation with HR at all. It also implies for other HR functions such as recruitment, in which managers prefer to directly carry out the recruitment activities of a business.

While this might sound like a win-win solution, most fail to realise importance of the presence of a HR department, which is more than mere administrative tasks and paperwork. Towards the beginning when the startup commences operation, the employee headcount can be numbered  and co-workers issues can be easily resolved. When the team size is small, it is fairly easy to track the root cause of issues, understand situations and come up with solutions.

However, as the business grows and expands, there needs to be a specific strategy to regulate the existing human resource. When the number of employees reach more than 50, it is time for a startup to invest into hiring in-house HR professionals.

Not only does this ease manager’s workload, HR professionals can help ensure that the workplace remains productive, free of clashes and conflicts, while maintaining strategy aligned with long-term business goals.

An alternative for startups who would like to streamline their departments, while saving on time and costs without ignoring the importance of HR is to take advantage of latest recruitment and payroll technologies.

Latest advancements in HR technology have proved to be of great help to small businesses such as startups to perform HR tasks without the need to hire in-house professionals. HR transactional functions that were once done by humans, can now be delegated to machine and system, such as managing payroll, candidate screening and onboarding functions. Even better, these HR tech services can be used at very low cost or even free at all.

Zenefits is an example of HR tech suitable for new startups to help automate the HR function. One of its main features is to systematise hiring and onboarding processes by sending a direct offer letter and employee handbook to the new hire. Additionally, Zenefits also helps manage payroll functions including time-off and employee attendance, benefits, compliance, and even business intelligence report.

 

Article first appeared on HR in Asia.