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The Importance of Startup HR Policies: A Guide for Entrepreneurs

Picture of Katya Puyraud

Katya Puyraud

This post was written by Katya Puyraud, co-owner and founder of company formation experts Euro Start Entreprises. Euro Start helps entrepreneurs to start a business in France, the UK and 28 other countries worldwide.
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Startup HR

 

Of all the aspects of starting a business, human resources is at the back of most entrepreneurs’ minds. The first weeks and months of a startup make it or break it, and the main focus in terms of employees is hiring the right people to carry the business forwards. Yet as with so many things, failing to put the right structures and processes in place from the outset will make it harder and harder to manage over time.

 

A fledgling startup may not need an entire HR department, but it should have HR policies in place for the benefit of everyone in the business. Doing so will not only provide clarity and security to employees, but will also protect the business if an HR issue occurs. Here are the main things you need to know about startup HR to achieve this, and to nurture a healthy working environment.

 

The danger of neglecting HR in startups

Culture is one of the most overused words in business circles, but it’s particularly valid in startups. Where the idea of reforming or imposing a company culture can fall flat in a corporation, as the business is simply too big for it to permeate, startups feel it much more keenly. A good startup culture is important for several reasons: it attracts staff, keeps staff, and ensures staff perform at their best.

 

In many ways, this is the fundamental purpose of HR. It exists not to impose culture, but to regulate it, and ensure that well-meaning ideas around leadership and employee responsibilities don’t get out of hand. It can prevent or address abuses of power; resolve employee conflicts and disruption; and contribute towards a culture that brings people to the business, and retains talent that might be attractive to bigger competitors.

 

HR isn’t just about managing the staff you have, however. HR can also play an important role in growth, particularly in a startup, where both the pace and direction of growth can be difficult to manage. HR policies provide structure and formalise relationships, improving communication between employees. They also codify the responsibilities and expectations of employees, helping them to work more efficiently, and with greater clarity and purpose.

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Neglecting HR policies in your startup jeopardises all of this. Without a good employee handbook, new hires may face uncertainty about what their role encompasses, what their rights are, and what the direction of the business is. Without a clear mission statement and guidelines on workplace culture, employees may face difficulties integrating, and may misinterpret the culture in a way that creates unnecessary disruption and other issues.

 

Tips for implementing effective startup HR policies

A better startup HR culture starts with the desire to change. By making an effort to implement simple policies and changes for the betterment of your employees, you can foster a healthier working environment, and keep your business comfortably within the bounds of the law.

 

Start with the basics

Even before hiring your first employee, you should be thinking about writing your essential HR documents: contracts, job descriptions, and an employee handbook. Templating these documents will not only make hiring and managing employees easier, but provide you with additional structure for growing the business beyond your business plan.

 

These documents can (and often will) evolve as your startup grows. While it’s common for startup owners to feel that processes don’t need to be formalised early on, doing so doesn’t inherently make your business environment more corporate, or impose more rules that might put people off. The certainty of knowing where you stand as an employee is an attractive quality for prospective hires, and offers certainty and security for all parties.

 

Work with an HR professional

If you can fit it into your budget, it’s always worth hiring or consulting with an HR manager, even if this is just to draft documents and processes. All businesses in many countries will be subject to certain HR requirements, and will face the same legal repercussions if they are breached or ignored.

 

Health and safety is another area that startups often neglect because they feel their working environment is inherently low risk, and that the chances of an incident are small. But with both, when an incident does occur, it can be ruinous if you haven’t planned for it, and don’t have any evidence that you worked to avoid it. HR isn’t something to mess around with, and  an expert opinion will be invaluable in helping you navigate its complexities.

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Keep abreast of labour laws

Employment laws vary by country, state, and sometimes even cities. When you’re starting a business in Europe, EU laws may apply as well as local ones, while federal laws and state laws are both relevant in the United States. These can change the way you advertise for and interview candidates, as well as employment laws once you’ve hired them.

 

Keeping yourself abreast of all of these laws is crucial. With foreign countries often lacking complete documentation in English, this is the area where company formation specialists can be the most helpful. They will provide you with the relevant information and connections needed to stay on the straight and narrow, and find and maintain the best talent.

 

Invest in training

It isn’t always possible to hire experienced heads as a startup. It’s likely that your role when looking for candidates early on will be identifying potential, and looking for skills and qualifications that could be transferable. A qualification or prior job experience that may not be directly relevant to your industry could suggest that they will be capable in yours.

 

Training is an important element of developing and upskilling these employees. Individual training and seminars can help employees to develop into key roles, while regular or introductory training can help employees to understand your company’s policies and culture. Training also has the benefit of making employees feel valued, and giving them a sense of progression and personal development.

 

Create an open feedback culture

When you lack a formal HR department and processes, it is doubly important to create a culture of open dialogue. Employees should feel comfortable sharing any concerns, and confident that they will be taken seriously.

 

This can be done through regular 1-on-1s, anonymous suggestion boxes, or feedback tools. Whatever the method, ensure that employees how to voice concerns and who to approach, whether this is the CEO, an appointed HR representative, or a manager.

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Mitigate your shortcomings

It isn’t always possible for startup salaries to compete with the biggest players in your industry, which is why it’s often necessary to hire less experienced talent. But as you train your employees up and enhance that talent, they will inevitably ask for more money, and you may face difficulty keeping them in the business.

 

It’s here where perks are often necessary. The more relaxed culture of a startup helps, but so do benefits such as a flexible remote working policy, paying for equipment such as laptops, long lunch breaks, and office entertainment. Even a separate space for lunches or a good coffee machine can make the working day more enjoyable, and keep people sticking around for longer.

Assess and update your policies

Policies can help guide your approach to HR, and the evolution of your startup, but they should also evolve with you. As you take on more employees and the makeup of your workplace changes, it’s likely that your HR policies will have to change to accommodate this. Eventually, you will need an HR department to manage employees effectively, which will demand a complete overhaul of your processes.

 

A health & safety policy should be checked and updated annually, as well as after any change that might invalidate part of it – and the same principles apply to HR policies. Make sure to read through and amend them on a regular basis, but also after any change to the workplace or workforce that you think they might not cover. Staying aware of your HR policies and needs could stop you from losing staff due to dissatisfaction.

HR is fundamentally unexciting, but it’s the backbone of any successful startup. Employees are ultimately your most valuable resource, and having HR policies that maximise their potential can be a differential factor.

 

By establishing strong HR foundations from the beginning, entrepreneurs can protect their startups from potential pitfalls, be they legal issues or leaving workers. With good HR fundamentals, you’ll cultivate a more vibrant workplace culture, and one that drives you towards long-term success.

 

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