Don't sidestep HR in start-ups and small companies LINKEDIN | 11 MAY, 2016

The role of HR in a small or medium enterprise and start-up companies is often underestimated. One assumes that the key man or woman builds a team around him or her, often mobilized from siblings, uncles, aunts, roommates and maybe friends and college graduates. Many of them probably work without pay and take up sweat equity. It would be several years and several phases later that start-ups look outside their familiar circles. Is this the future model? How much of professionalism is useful (and perhaps necessary) in the formative years? Does an entrepreneur benefit from having an alternate voice in the team? Our clichéd picture of an entrepreneur is one who does not brook dissent or an argument. He or she is a super (wo)man, knows everything and can pretty much oversee all functions. Nothing could be further from the truth. So, where is help available?

Unfortunately, management literature and textbooks are large-firm centered and the stories of how successful start-up companies coped with HR issues in their formative years are not chronicled well. A number of questions spring up: What is a good mix of the familiar faces and unfamiliar, professional ones? What are the rules of freedom and authority in such a set-up? Should the ‘main’ player stick to his or her core competence? How much of multitasking is desirable or detrimental? What should be a handy pack of HR advice that we can give to entrepreneurs whose success will not just depend on their ‘ideas’ but how well the team executes them? What are the best forms of appraisal in the formative years, especially in the incubation or launch periods when efforts and results are not matched? What employee satisfaction measures should small companies embrace? There are no categorical answers but here are some guidelines:

1. It is helpful, as a first step, to acknowledge that no star-up can be the effort of a single person. A complement of skillsets is inevitable.
2. The start up entrepreneur needs to assess honestly what his or her personal strengths and weaknesses are. This would include experiences and knowledge. As a follow-up assessment, competencies that could be learned with some ease should be determined. A technical person (who normally would have a good feel for mathematics) maybe able to ‘learn’ product costing, but branding and marketing maybe a steep climb. Honesty is key to this assessment.
3. He or she needs to map out the value chain for his proposed product or service – one that determines what are the critical components and therefore what are the ‘high stakes’ functions that determine success or failure.
4. He or she must seek the best competent talent to steer these high stakes functions, as a first choice. Trade-offs maybe necessary if cost is an issue. This could include staggered hiring or postponed or non-cash compensation or short term or long term outsourcing of the activity.
5. The entrepreneur needs to layout the rules of the game governing responsibility and authority as lucidly as possible. All vetoes must be spelt out. Start-ups usually suffer from lack of ownership of the outcome, due to fuzzy or non-existent rules.
6. The team should self-train rapidly on areas identified as adjacent and learnable skills. This may even include signing up for part-time programs, which will signal commitment to learn. MOOCs provide some easy opportunities. It is important to formally measure contributions and performances of the different individuals in a start-up team or a small company, not just for determining changes to compensation, but to make changes in roles if necessary. Shying away from this will lead to wrong self-assessments. The performance measurement process and templates could however, be simple and tailored to the situation.

It is perfectly possible to imagine that a start-up entrepreneur is no more than a conductor of an orchestra who depends on specialists to play the instruments, while retaining the vision and accountability for the overall outcome.