Human resources capability can be a low priority for start-ups.
But dedicated HR resource does more than just hiring and firing. It can improve productivity, boost morale and provide crucial staff training and development, whilst being aligned with the strategy of the business.
If you operate in a highly-regulated field, you’re likely to need HR support early on to help with compliance issues. Growth rate, industry, culture and personal preference all play a part in your decision on when to recruit a HR manager.
We have outlined some key warning signs that indicate that the time to hire a HR manager is imminent.
You’re drowning in admin
Taking on HR responsibilities is time-consuming. But what is your time really worth? Should you be focussing on things that someone else could do? It can make financial sense in the early stages, but if you are growing fast and recruiting heavily, then it can be a sensible investment to bring in a HR manager. Remember why you started your own business; are the cost-saving benefits of focusing on the admin now worth the risks?
Employee turnover is high
Your ability to attract, hire and retain the most talented workforce is crucial to maintaining a productive and successful business. There is much more to hiring than posting an ad. Reviewing CVs, interviewing, testing and verifying references come before you’ve even considered an induction pack. The hiring process could be much smoother with a dedicated HR person to attract and hopefully retain talent for longer periods.
Poor staff retention is a red flag in your growth plan. HR managers can help you identify any trends in why employees are leaving. They can implement effective solutions through training and morale boosting. These initiatives should make it more likely that employees will stay, and enjoy working for your company, if issues can be addressed and resolved before they make the decision to move on.
High attrition is ultimately a big cost for businesses, whether this is due to duplica tion of time and resources in searching for, recruiting and then training new staff, or in defending or settling employment claims. If employees are leaving, this could be because of deep-rooted employee relations issues; HR managers can take steps to identify and manage these risks, including conducting focussed exit interviews, which can make a significant difference to the bottom line.
You feel out of touch with the team
People often join start-ups for the culture, so establishing and maintaining a well-defined company culture should be a strategic priority. No matter how big your company becomes, communication is vital. Have you ever tried an impromptu Q&A on your company policies? Is the policy or culture even written down? Do you have a mission statement?
If you’re struggling to stagger staff holidays, or to remember who is joining the team next week, it may be time to consider recruiting a HR manager. An HR manager can be your ears on the ground and keep you updated on staff morale. All useful intel to enable you to make the right decisions for the future of your business.
You struggle with appraisal season
Feedback is a key part of the employment relationship; for both parties. It can help you understand what went well and what could be improved, whilst building goals for the future and helps manage employee expectations too. HR managers are trained to deliver good and bad news, in the right way. If you find it difficult to set objectives or implement and track goals arising from the appraisal process then it’s probably time to consider hiring a dedicated HR manager. A HR manager can also help you develop a positive working environment by helping identify clear career development opportunities.
Failure to tackle poor performance head on l ultimately stores up problems for later. When it comes to dismissing an employee (with the requisite 2 years’ service to benefit from ordinary unfair dismissal protection) for poor performance, one of the key questions will be: was this individual made aware of his or her poor performance at an early stage and given an opportunity to improve? A robust appraisal system is the starting point for effective performance management.
You can’t answer staff questions
Are you confident of both your compliance and best practices? The fines for non-compliance with employment law procedures can be large, and the laws are frequently changing. Questions around employment law and employee rights, health & safety regulations or benefits and payroll can be managed by a HR manager who can draft and implement policies.
You are considering your next funding round, or an exit
For all the reasons mentioned above, an HR manager will be an asset to prospective buyers or investors. If you are considering an exit, then prospective buyers won’t need to worry about staffing issues, employment contracts, HR policies, or the transition of your team into a merger.