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HR Infrastructure for Early-Stage Companies: The Golden Rule

Posted by Early Growth

July 26, 2012    |     5-minute read (813 words)

If you’re an early-stage company, you’ve probably started to think about the question of human resources. And, if you haven’t, you should. What kind of HR processes do you need to have in place? What kind of legal documents? Recruiting strategies? Policies? There’s a lot to consider.

My HR recommendation for early-stage companies is simple: I believe in the “don't be an ass” approach to HR. Obviously this golden rule is a bit tongue-in-cheek, but it’s also undeniably true. If you treat your employees fairly and with respect, you will stay out of a lot of trouble.

But HR is not just about putting in place and enforcing the rules and regulations that keep you out of trouble. It’s much more than that. HR, done well, plays an important role in your overall business strategy, helping to attract, recruit, and hold on to the talent you need to create a thriving culture and successful business.

So beyond the golden rule of not being an ass, there are a few other things to bear in mind as you build your HR infrastructure.

Employee Documents

- Make sure you run through all of your important employee documents with your lawyer. There are many such documents, but the most important ones include:
  • Offer letter
  • Confidentiality agreement
  • Option agreement
  • Employee handbook
You should also consider creating some simple policies and procedures to establish your HR structure. For example, what is your vacation policy? Do you offer any formal training? It’s important to think through these policies and procedures and to put them into writing from the outset.

Building Your Team

- There’s a reason why HR is now commonly referred to as “human capital management.” Humans aren’t just your resources (that is, “human resources”); now they are thought of as business capital. It’s a slight semantic shift, but an important one. Your employees aren’t just warm bodies; they are a capital investment of your company.

HR is a tool to help you to build and develop your team, from recruitment to retention. To attract top talent, you need to benchmark HR data and develop a competitive compensation strategy.

If you need HR compensation data or other HR support, contact Early Growth Financial Services.

Creating Long-Term Culture

- When you think about HR, you’re really thinking about what kind of company you want to be—what values do you aspire to? The policies that you set will have a strong impact on your company culture in the long-term.

So what does this mean, exactly? Well, take a look at a company like Netflix who decided to take a pretty revolutionary approach to HR with a notable lack of “rules.” At Netflix, supposedly, quality is valued over quantity; experience is valued over young, eager newbies; and employees are treated like adults (imagine that?!), with the ability to manage their own hours, advancement, training, and vacation time.

Opinions are mixed in response to these HR policies (or lack thereof), and not everyone (including current and former Netflix employees...), is convinced of their effectiveness. And, admittedly, this kind of flexible approach may not work for all early-stage companies. But it’s a good case study to show the power of HR to set the tone of a company —if they are empowered to do so.

Outsource HR

- Rather than finding your way, as an early-stage company, through the maze that is employment law and compliance, you may choose to hand over the responsibility to an HR outsource company. Hiring an HR outsourcing company certainly has its advantages. They offer an expertise that you are likely lacking in-house and their experience can be invaluable in terms of HR best practices. Depending on the outsource company, you can get assistance with everything from employee handbooks to training to benefit plans to compensation insurance to payroll processing.

Figuring out what kind of HR infrastructure you need for your early-stage company is an extremely important issue—the importance of which is often not acknowledged. Once you start seeing HR as the backbone of your company culture, you’re likely to give this issue the kind of thought it deserves. And, while you’re figuring it all out, remember that it never hurts to go back to the HR basics: just don’t be an ass.

How are you establishing your HR infrastructure? Let us know in comments below or contact Early Growth Financial Services for HR support.

David Ehrenberg is the founder and CEO of Early Growth Financial Services, a financial services firm providing a complete suite of financial and accounting services to companies at every stage of the development process. He's a financial expert and startup mentor, whose passion is helping businesses focus on what they do best. Follow David @EarlyGrowthFS.

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