Startups don't have an HR firm for the longest time, one reason being that there are not too many HR activities like hiring and managing to do in the beginning. Another critical reason is that startups can't afford to invest in an HR team, at least in the first few years of their operation. However, when a company doesn't have an HR team the responsibility of hiring and other HR activities falls on the partners and founders, which eats into their precious time that they can dedicate to more important affairs. Also, while a partner will do his or her best to hire the right professional, there might be a few misses if they aren’t familiar with the correct process of hiring.
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In case you find your company in a similar situation, here's what you can do:
HR is not required when the employees are limited to founders, partners, and a few team members. It is alright for partners to look into the hiring process as long as they stay focused on their specific functional roles like marketing, business development, and other important departments. However, as the team grows and there is an increase in HR activities like training and development and looking into compensation and benefits, the partners need to start getting the work done by a team of HR professionals. An HR unit helps the company expand its internal team, which in turn can help the organisation set and achieve higher goals.
Hiring a full-time internal HR team can weigh down a startup's budget. This is why many companies opt to outsource important HR functions. Skilled HR professionals have a deep understanding of local employment laws and regulations. They are also aware of hiring rules, the recruitment and training processes, and have the resources and ability to find the right candidates to suit your staffing needs. Some HR managers also oversee other crucial activities like managing legal issues and looking into payroll, which can take a huge chunk of responsibility off the shoulders of the partners.
When a company has a head count of up to 10 employees, partners can take turns to handle the HR activities. But when the strength of the company exceeds that number, it is best to get an HR team on board. While recruiting an HR team on a tight budget, startups might have to settle for employees who lack expertise. On the other hand, when the HR arrangements are outsourced, companies enjoy stability, flexibility, and a team of professionals who are skilled to hire and perform everyday functions. Outsourcing also ensures good management of your most valuable asset – your employees, and allows the partners and founders to concentrate on expanding the business.
All said and done, founders are in the best position to decide when their budding company needs an HR unit and whether to hire an internal team or to outsource the arrangements for the same.