HR for Startups

The Startup's Guide to People Operations and HR

By George Dickson on December 02, 2015

Building a startup is one of the greatest challenges you'll ever face, but that's why you've convinced some of the most brilliant, capable people you know to join you.

Now that they have joined you, it's absolutely crucial to provide an environment that encourages them to stick around, while helping them perform at the top of their game.

And that's where many companies fail — they focus too intensely on other metrics, when it's the people that really move the meter in the first place.

Why now?

Sure, there are a million other tasks nagging at you that all seem quite urgent, but bear with me here:

Even a small amount of employee turnover, a tiny drop of toxicity, or a single bad hire can change the face of your organization. That's why strong people operations principals are crucial to have in place early on, rather than as an afterthought.

Volatility is a way of life for many startups.

Things can and do change very quickly, and each hiring decision, each onboarding process, and each retention strategy will have a tremendous impact on the organization.

The early days are your chance to build and solidify that admirable organizational culture that attracts the best people, and keeps them around long-term.

That's why to succeed reliably, your people operations strategies need to be exceptional.

How do I fund this?

The Cost of Employee Turnover
Unless you just raised an enormous round of funding  and even if you did  finances are probably tight. This is not the year 2000, and investors aren't handing out blank checks like party favors.

That's okay though. You don't need massive funding to build a great people operations strategy. Believe it or not, the cost of good people operations is nearly always offset by the amount of resources it saves a company.

Here's an easy way to calculate how much you can save by recognizing and retaining great employees:
Cost of turnover calculator

The financial costs really only scratch the surface  there are a multitude of additional costs associated with turnover that you might not even have considered.

It's natural to have some turnover, but as Suzanne Lucas explains in a recent Inc. piece,

"If people are booking it out the door in six months, it's not because Silicon Valley is a tough market for keeping good people. It's because your management stinks. Sorry. "

Where am I going to find the time?

Time is scarce — particularly amongst founding teams and small companies. But as someone who's had the privilege to grow along with a great company, I'll just lay this out there:

Time will always be scarce. How you choose to invest it determines the trajectory of your team.

Isn't this mostly relevant to larger companies?

Yes, it's highly relevant to larger companies. But it's also highly relevant to every company with employees. You don't need over a hundred employees to start thinking about how you can make them feel fortunate they work with you. All you need is one.

Here's all it takes:

Although it may seem daunting to build people operations practices into your strategy, it's actually incredibly simple. I'm going to break it down into three simple steps:

1. Build a great team. 
2. Keep that team happy and engaged. 
3. Do amazing things together.

There's really not a whole lot more to it. Most of the breakdown happens in planning and execution.

Building a great team

Teamwork
Building a great team starts with your hiring processes. You don't want to keep a poor performer or a less-than-perfect fit on the payroll — in most cases, it won't really be much of a choice anyway  you're not going to be able to afford to. Employee turnover can be back-breakingly expensive  but it doesn't mean you should keep employees at any cost.

Your hiring process is the first line of defense against losing like time and money to turnover.

You won't get it perfect every time, but you can dramatically improve the odds with a few best practices.

Hire for passion, not just experience

Practical experience is important, but it's not the most crucial trait to look for in an early-stage employee. Sure, they'll need to be proficient in some specific areas, but resume bullet points don't equal impact. Passion, problem solving, and a sense of ownership are supremely valuable traits that can often overshadow technical prowess.

Create technical assessments or 'homework'

Hiring for passion doesn't mean throwing out technical skill as a factor. The person you hire needs to know how to solve problems in the area they're being hired for. A quick homework assignment or project can give you some quick insights into how a candidate approaches challenges.

Depending on what type of position you're hiring for, that project could look like an engineering problem, or a mock campaign.

Ask for expert assistance

Having a technical founder or cofounder is an incredible asset in any startup. If you're hiring for a technical position, but you're not technical, you're already facing a major challenge. At the very least, make sure you have someone who is an expert in the field who can help you with the interview process.

Understand what makes a great manager

A brilliant software engineer won't necessarily be able to lead a team as brilliantly as they code. This is one of the most common mistakes companies make early on  giving a talented developer the reins when they haven't really shown any talent (or any interest) in management.

Implement a hiring structure

The sooner you can start bringing structure into your hiring process, the sooner you'll be able to achieve repeatable success. This doesn't mean adding unnecessary rigidity to your processes, but a messy haphazard hiring process isn't going to reliably win you the best candidates, even if you do get lucky now and then.

By building a great hiring process, you can make your own luck.

Start thinking about your processes in terms of how you're structuring them. If one part of your hiring process consistently is going really well, use that to your advantage by including it in the structure of your hiring process.

Improve candidate experience

This is the first cultural impression you're going to make on your future star employee. Make it a good one.

Engagement starts with candidate experience. Even candidates who haven't made it onto the team deserve a great experience. They're the ones who will go on to tell their friends and colleagues how great, or how awful it was to interview with you.

Make sure you're treating every candidate as you would treat a respected colleague.

Thoughtfully design onboarding

Onboarding is a hugely important element of hiring. It's also one of the first opportunities for you to inspire engagement, and express to new employees what success in their position looks like. If you don't know, how are they supposed to?

Provide new hires with the proper tools and information they need to do well in your organization.

Keeping your team happy and engaged

Mastering Employee Engagement
Once you're past the hiring and onboarding phase, it's time to focus on keeping employees happy. LiveChat shared a great article about why this is so fundamentally important on their blog.

To add to that, let's cover some of the things that employees in almost any industry need to be happy and engaged in their work.

Recognition

Great work that goes unrecognized is less likely to continue. That's why employee recognition is one of the most essential elements of employee engagement. To inspire the emotional commitment required for genuine engagement, it's crucial to frequently recognize great work. Check out our Guide to Modern Employee Recognition to learn more.

Ownership

Employees benefit from a sense of ownership and autonomy over their work. Ownership is the difference between being held accountable, and embracing accountability, which is an immensely powerful and positive motivator.

Purpose

Finding true purpose in your work can be a wellspring of motivation, and purposeful work is an increasingly important factor for attracting and retaining modern employees.

Mastery and Development

Encouraging and supporting an employee's professional development and skill mastery is an investment that will nearly always pay off. Skill mastery is a great motivator for employees, and there are a lot of ways to support it. As employees develop their skills, the organization benefits from their improved output.

Additional Resources

I want to share a list of books and presentations I've derived a particularly large amount of value from. If you haven't read them, get started. Each of these is fascinating if you have a genuine interest in building an awesome team, and helping them to achieve at the highest level.

Dan Pink's book Drive provides an excellent foundation of knowledge around what motivates people to do amazing things. He also gave an outstanding TED talk on that subject.

Laszlo Bock's new book Work Rules is an excellent resource for building an outstanding company culture from the ground up, or improving an existing culture.

Alfie Kohn's Punished by Rewards is an excellent exploration into the interplay between rewards and motivation.

Dan Ariely's TED talk, "What Makes Us Feel Good about Our Work," is another great resource for understanding motivation.

No time to read? One word: audiobooks. If you want to build and maintain a high-performing team, you're going to need to know a bit about human motivation — particularly in the context of work. The means you use to absorb that information are less important than just getting it done.

Tools

SaaS Tools
There are many tools and services you can use to make this job easier. Each has its own unique benefits and drawbacks. The key is finding what works for you.

Third party

Professional Employer Organizations (PEOs) can be attractive to startups because they enable companies to operate under an arrangement called "co-employment."

Co-employment can allow startups to offer enhanced benefits while minimizing reporting and compliance obligations. Under this arrangement, people who work at the startup are considered employees of both the startup and the PEO. The startup directs employees, and the PEO handles the administrative side of the relationship.

TriNet is one of the largest PEOs, but several smaller PEOs exist  many of which specialize in specific industries, like tech. If PEOs sound like an attractive approach, check them out.

In house

The key to managing HR and operations for your organization is your people operations stack.

What's a people operations stack?

Just like a software stack, or marketing stack, people operations can benefit greatly from having a set of modern, complimentary tools, or a 'stack.' The primary elements of a people operations stack, plus a few examples of your options in these areas are:

Recruiting
ZipRecruiter is a great tool for hiring, screening and even onboarding employees. Instead of posting manually posting your job across countless boards, you can post once to Ziprecruiter, then let them take care of the rest.

AngelList is a network of startup founders and talented contributors. It's the perfect place to find employees who are already startup veterans to join your team.

Payroll
Zen Payroll is a cost-effective tool for managing payroll and everything relating to it. They keep track of things like paystubs and new hire reporting.

Benefits (healthcare, etc)
Zenefits is an all-in-one tool that can help you track and manage hours, payroll, and health benefits.

Gravie is a tool that empowers employees to choose their own health plans. You decide how much to spend, then Gravie helps your employees secure a plan.

HRIS/HRMS
BambooHR and Namely are both intuitive, cost-effective tools for managing and keeping track of human resources tasks.

Employee Recognition and Rewards
Bonusly is a platform for peer-to-peer employee recognition and rewards. In a matter of minutes you can be on your way to building a culture of recognition and appreciation.

Professional/Skill Development
Lynda and Udemy are both excellent sources of high-quality training programs on an enormous, yet still growing number of topics. This is a great way to help employees expand their skill sets.

Performance Management
Small Improvements is a great tool for modern performance management. Its flexibility allows users to hand craft a performance feedback process to fit their culture perfectly.

Do amazing things together

Tracking Progress
Once you have your people operations strategy in place, you'll have an easier time doing the amazing things you and your team are destined to do together.

Need more help building an amazing place to work?

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Written by George Dickson

George Dickson

George manages content and community at Bonusly. He's dedicated to strengthening organizational cultures through thoughtful leadership and frequent recognition.