From building for scale to layoffs and governance, T N Hari draws insights into these nuances of building an organisation
Culture becomes a tad bit more important in startups than in larger and mature companies. As startups are yet to have their own external identity, brand or reputation, an internal identity that could rally everyone together becomes important for the business to go well. But written policies, espoused values, etc. don’t really constitute culture. It is the behaviours that founders or a few other leaders in the company demonstrate on a day-to-day basis.
T N Hari, former head of HR,, Co-Founder of Artha School of Entrepreneurship, and author, explains that one cannot avoid setting the culture as well because whether a founder cares or not, they bring a certain set of culture with them. And for early-stage startups, founders equal culture. Whether they want to or not, the organisational personality becomes equal to the founders' personalities.
"As you begin to become a larger company, you can’t always have founders’ behaviours drive culture because people don’t get to see the behaviours. Then they need to be embedded in the form of some documents. Policies, after a point of time, begin to reflect culture. In the beginning, they may not, but as the startup grows, it gets embedded into policies. Irrespective of whether you define it or not, you are going to bring culture into your startup,” says Hari.
Dos and don’ts of hiring while looking to scale up
When it comes to hiring for senior leadership roles in a company that is looking to scale up, founders need to take one crucial thing into consideration. People who manage scale may not necessarily build for scale. They are two different things and it’s important to recognise that. Managing a scale environment is relatively easier because you get a lot of support and you don’t have to do everything by yourself, you have a large team to handle the grunt work for you. But when it comes to building for scale, in a startup, you may need to roll up your sleeves and be more hands-on with all the things, right from the very beginning.
“I think while building for scale, you need to look for a lot of first-principle thinking. You need to look for an ability to solve problems by asking very elementary questions and the child-like curiosity to understand something,” says Hari.
"I think when you interview people for senior roles, you should ensure that you figure out whether somebody is going to fit your work culture or not. Will they be able to respect the kind of work that you’ve done so far and the people who brought your startup to where it is today? Will they be able to gel with them or will they think that these guys are too execution and they themselves are extremely strategic? Therefore, very different. Will they be able to respect, and will they be able to earn respect?" he says.
How to let go of people thoughtfully
Dealing with layoffs starts much before the downturn hits—that is where hiring needs to be done more thoughtfully. If hiring is done thoughtfully, then there won’t be any need for reckless firing. So, T N Hari suggests that, while building an organisation, one should spend time figuring out if what they are doing is unsustainable in the long term. He explains it with an example, “If you are a startup that has raised a $400-million round, you are cash rich and, because you are cash rich, you go on a hiring spree, trying to deliver what you promised to investors. When you go on a hiring spree, you’re also burning, let’s say, capital, to be able to create a market. Market creation should be sustainable, but let’s say you’re burning a lot of capital to create markets. Both of these are unsustainable.”
Though when a company has a massive opportunity and is well funded, it should definitely take its chances. But when the layoff situation arises, it should be done with transparent and honest conversations.
You can listen to the full episode here
02:30: Culture is the identity of a startup
07:00: When to ‘document’ culture
16:00: Building for scale is different from managing scale
21:30: Dealing with a downturn and taking big chances
27:00: Founder belief and good governance
34:00: Diversity and harnessing dissent
Edited by Swetha Kannan