8 Pivotal HR challenges faced by startups – Freshteam Blog

In a startup, the HR decisions play a significant role which involves – roping in top talent, managing employees record, creating foolproof HR policies, enabling organizational learning, intentionally nurturing a culture in the company and so on. None of these however are accomplished without passing a number of hurdles.

Today we discuss practical solutions for such common pivotal HR challenges faced by startups.

Challenge #1 Recruiting the right candidates for senior roles

Problem: While recruiting for senior roles, several companies are cautious in finding people who are good at what they do but cannot assess how well they can lead a team or engage employees in a vision. Leadership skills, or the lack thereof, come to the fore only after the employee needs to manage a team on the job, either directly or indirectly. In extreme cases, it reflects in team disharmony and attrition, a common HR challenge.

Solution: During the interview process, find out if candidates for your senior roles are proven leaders. Make it one of your interview objectives. Here are some sample questions you could ask.

  1. Who are your favourite business leaders and why?
  2. How do you define success?
  3. How do you approach decisions in uncertain situations or when you don’t have enough information?
  4. When was the last time you resolved a conflict in the team and how did you do it?

You need people that can lead from the heart because people management skills are mandatory for senior roles, even if they don’t have direct reports at present. Find passionate people that have goals and motivations beyond self-interest, and you’ll earn the loyalty of the teams that function with them.


How to set up the first team in your startup


Challenge #2 Sourcing great talent, especially in the early stages

Problem: Startups have multiple challenges when it comes to attracting talent. In the initial days, there are not many people that know about the company, there is usually no dedicated HR personnel, the management is hesitant to invest in an ATS or recruitment software, there is a slight lack of clarity in the roles one is hiring for and the list goes on. According to Recruiter Daily,

23% of startups fail because they don’t hire the right people at the right time

Solution: 1) Referrals work magic for startups! Get your employees to talk to the people they know. There is no one better than your own employee to tell your story and rope in another one. Reward referrals. Create a process that is transparent and make sure people can see what the status of their referrals are. 2)Be open to hiring and investing in people.  You may not find the perfect people for your roles but you can always hire passionate and smart people that are willing to learn and grow. 3)Invest in the right tools to help you reach the right candidates, manage them and give them an impressive candidate experience.

Overcome HR challenges and source great talent for startups with Freshteam

Challenge #3 Creating foolproof policies

Problem: Startups don’t focus on drafting or communicating policies as much as they care about building their products and getting them to the market. They always tend to think it can wait. However, policies on time off, sexual harassment, equal opportunity, expenses and the like are the invisible fabrics of the culture you are trying to build.

Policies are however very vital and tell your employees what you stand for and how you’ll function collectively need to be a part of the foundation. In a moment of conflict, you can always turn to your policies to have them justly resolved.

Solution: There is simply no shortcut. Create them! Once you start creating them, you’ll actually realise they don’t take much time. There are so many templates available online. You can always invest some time in perfectly tailoring them to your needs. Run it by a lawyer or your legal team to ensure they comply with the law. If they do then you are immune to all legal and compliance risks.

Challenge #4 Communicating company policies to employees

Problem: Company policies, even if they exist, are mostly invisible. 

Solution: Make them visible. Show your employees where they can find the policies and make it accessible at all times. The best way to communicate your policy is by practising it. In many companies policies are there just for the sake of it. What happens when somebody doesn’t comply with them? What measures have you taken to ensure that every employee is completely aware of them? Have they been genuinely drafted in the interest of the company and its people? Ask yourself these questions. A little reflection can always help.

Challenge #5 Building and maintaining your culture with company growth

Problem: The biggest problems around startup culture are the assumptions and myths.

  1. Top management assumes that their values become company values and culture too.
  2. Culture will form on it’s own.
  3. You pick something that sounds fancy and has nothing to do with your convictions as a company.

Your culture affects your employee’s choices, decisions  and performance at the workplace, the public’s perception of you and your customer’s trust.

Solution: If you don’t intentionally build your work culture, it is going to form on its own and when it does, it will mostly be chaos. Culture is more than just posters hanging over water coolers and stickers on laptops. It’s the set of values that each employee in the company agrees to never compromise on. Communicate your company’s values time and again – before, during and after the hiring process. Go the extra mile and evaluate candidates on their ‘value fit’ with your company during the interview. Reward employees that uphold your values. You can also make the value-fit a part of your yearly performance evaluation criteria.

Challenge # 6 Handling terminations with grace 

Problem: In startups, there are several course-corrections that might be needed to sustain the business in the long run and some of them include layoffs or terminations. In small teams, employees tend to be close to each other. This makes it uncomfortable or bitter when you have to let an employee go.

Solution: There are so many things you can do to help them make the transition with joy and dignity. Give them a heads-up, no one wants to be fired out of nowhere. Be honest about why you are doing it. Write them recommendations. If they are leaving for a better opportunity, one you’d never be able to offer, then wish them luck.

How you treat your leaving employees says a lot about how much you care about the employees that still work for you. 

Challenge #7 Efficiently managing time-consuming HR routines

Problem: HR personnel spend almost 60% of their time doing redundant tasks like follow ups, coordinating interviews, doing paperwork, etc. All this time could actually be used in more strategic planning to gain a competitive edge.

Solution: Invest in the tools and software to create efficient processes, early on. Some companies dodge software-buying decisions until it becomes an absolute necessity. This is the wrong approach.

Smart tools like an ATS help streamline the end-to-end recruitment activities and even automate recurring tasks like screening and follow ups and free up time that is spent on mundane routine tasks.

This saves a lot of time for recruiters that could be spent on more important things like crafting strategy, aligning employees with the organizational vision, employer branding, etc. People take time to adapt to processes and tools. So, the earlier you invest in software, the better

Challenge #8 Onboarding new hires 

Problem: Onboarding is usually done casually at startups. It begins and ends over giving them a laptop and taking them to lunch. As the business grows, this informal approach doesn’t scale.

Solution: Define measurable objectives for your onboarding and ensure that it’s achieved for your new hires. Startups attract a lot of referrals. Due to this, there is a high possibility that people never make close connections beyond the people they already know. So create opportunities for them to know their team.

It’s good to let them explore things on their own about the product, process of the company but there should be some structure and plan to it. That’s the only way you can ensure a healthy time to productivity. Give them all the help and resources they need. Communicate their responsibilities and clear all ambiguities. Check on them as often as you can.

Read how SunPower by Hooked on Solar, a solar company in Northern California, used Freshteam to save their recruiting time and onboard employees in less than 15 minutes:

SunPower case study - Freshteam


That’s a wrap!

The right HR decisions and strategies in the early stages are a part of the strong foundation on which the company is built. They should never take the back seat. Hope the practical solutions listed in this article enable you to overcome these common HR challenges in a Startup. Let us know which challenge you face often in the comments below.

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