Hiring Best Practices

Why Hiring an HR Team for a Startup is a BAD Idea

Startups are the most raw and original form of a business. They are hard because they face uncertainty and lack of resources.

They know their destination but the direction and the way towards the destination changes each day. But, they grow as they move.

Hiring, candidate sourcing and growing your people along with the company is one of the toughest challenges you face while growing a business. HR is one of the most challenging and ignored aspect of running a HR. Why it is ignored in the initial years?

One should not hire a full-fledge HR team in the initial years because of the size of their business. Startups are small and they don’t need and afford a specialized team in order to manage their staff. However, these are not the only reasons to not hire an HR team for your startup. Following reasons will further clear my point.

Startups are inherently goal oriented

What is the purpose of hiring an HR team? They do not get numbers for your next quarter. Then, what? The purpose of an HR team is to measure the overall performance of the team and train them according o their potential. They provide strategic thinking to the leadership and support them in their Human resource related decisions. Apart from this, they perform the duties of recruitment. Basically, they are aligned towards the goals of the company. All these point are invalid in the case of a startup.

All these functions are done collectively till the count of the employees reach 50. The whole team remains together in the compact office size. All the potential and strategic thinking is done on the products and marketing. Startups are already goal oriented and they do not need any HR team to direct them towards the goals and orientation of the company.

PEOs provide the backbone

It is the back office operations of the HR that are crucial. They perform the duty of paying salaries, deducting taxes, benefits and withholding the funds. Startups also need to perform all these duties and that’s why they pair up with Professional employee organizations (PEOs).

Instead of creating an HR platform, they outsource all these duties to the PEOs. Outsourcing payroll, health insurance and other things is quite cost-effective and you end up paying nothing as compared to the cost of HR team.

A PEO enters the startup in such a way that it becomes it HR, payroll, benefits employer of record, takes the responsibility of employment tax and every other responsibility of HR. The other day-to-day aspects of the employees are taken care by the startup itself. In this way, the big company benefits are extracted from outsourcing by spending just an inch of money.

Why employees join and stick around

An employee joins a company and lasts there for three particular reasons:

  • The salary and the economic returns they get.
  • Their learning and building process
  • To have fun

Inspite of well-settled and established companies, Startups optimize all these three requirements. And this is why the traditional companies need HR to sell their jobs and buy employees. HR needs to market the benefits of having jobs in traditional companies in order to retain these employees.

Startups are equipped with solving bigger issues and one solution returns in magnificent economic returns. Money does not remain a trouble in such cases. The learning is also a constant process because it involves the things that are new and needs to be established. And the employees have lots of fun in order to create these open-floor plans and implement them.

Startups have people with enormous energy who work in pre-assumed direction with all their dedication. They do need anyone to manage their energy or channelize them because they already do much more than their capability.

Their stamina and enthusiasm simple ends the need of an HR. They do not need voices around them because they keep too busy in listening to their extinct and colleagues. You and your team remain accountable for everything. Their behavior accounts and contributes to the vision of the company.

Each of the duty of the HR can be easily outsourced. It will save you from expanding your space and funds both.

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