Human Resources for Start-Ups: Winning Associates Online

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It is only in recent times that a Human Resources department has become a more firmly established presence in small to mid-sized companies, but for internet start-up executives, the concept and need for HR are still new.

I have had the opportunity to study and interview with about seventy-five start-ups over the last four months. Why? Because I work for start-ups both as a consultant and in full time placement in Human Resources and Business Operations. And being the organized and obsessive sort of personality that HR is famous for, I have studied every single company within a twenty-five mile radius of my home, in my quest for employment.

I have practically inhaled these companies, interviewed with many of them, read their job descriptions, learned about their revenue models and business plans. I've probably made the Guinness Book of World Records for the highest number of Non-Disclosure Agreements signed.

They are becoming quite a bit clearer to me. But I remain an anomaly to them.

I'm that complex and mysterious entity known in modern business lingo as as an HR Generalist. Or as a Senior HR Executive. Or as VP HR. Or as the person who handles all the stuff that no one else wants to. If I held a cardboard sign, it would say, "Will work for the first start-up that knows what I do and who I might report to."

[Of course the problem with that motto is that many of the start-up entrepreneurs and some of the established business executives who interview me do not know who they report to, either. But that's where I eventually come in].

If astronauts in outer space were to look down on the planet for an overview of start-up organizational structure and development, it might go something like this: "Houston, we have a perfect view of Earth from way up here. Over".

"Roger that, Apollo 29. Can you see who the Human Resources personnel in those start-up companies all over America report to? Over."

"No sir, unclear, sir. Over."

"Can you zoom into corporate America for a closer look? Over."

"Have done so, sir. Camera sightings show random HR Division placement all over Org Charts, sir. One shot showed HR personnel listed in Finance, one in Operations, one in Marketing. And one shot showed several HR departments screaming for the exit after complicated Organizational Development meetings. Over."

What any new Human Resources employee does in a start-up environment is a little like helping to build the boat at the same time that the boat is sailing at a thousand knots on a raging sea. We establish hiring plans and expansion structures and are the writers of job descriptions. Yet until we are on board there is no one to place us where we belong or to write our job description!

Some of my interviewers are sure that an HR Generalist is really a Recruiter and that all they need is for this Recruiter to find them several engineers and programmers and all will be well. I tell them, "Yes! I will recruit the best staff you can get!" Then I ask them, "And then what will you do with them once you hire them?"

Silence ensues.

Some of them are sure that an HR Generalist is really a Benefits and Payroll Administrator. I tell them, "Yes! You need this kind of person on your staff! But who is going to handle the employee who is disgruntled about his hours, compensation, co-workers or supervisor?"

Again, silence.

Some of the start-ups just want "systems" put in. Handbooks, legal stuff. "Systems are vital to a smoothly functioning organization," I say to my interviewer, in my fresh out of the Goody Two Shoes School for Proper HR Representatives voice. "But neither man nor woman can live by systems alone," I suggest from my perch on a bean bag chair in their retrofitted industrial office space. Then I explain. "A Generalist is aptly named. In a start-up, we do it all." They beam, relieved, and say, "Oh yes, that's what we meant! Do it all!"

We are right in the middle of organizational development, forecasting, recruiting, compensation and benefits design, training, conflict mediation, handbooks, and orientations. We establish prediction, retention and persistence. Stable retention creates predictable production, which in turn contributes to profitability. All these buzz words boil down to this: we predict, administer, and oil the human gears of the corporate machine.

So now we have a simple idea of what a Generalist does. But where does HR belong on a corporate Org Chart? Who's our boss? What division do we include ourselves in? Or is it just an anthill where everyone races in and out?

The current rage is the "flat organization." But if the organization is flat, why are the CEO, Chairman of the Board, and Vice President of Important Things sticking out of the pancake? Why don't they all call themselves General Office Workers?

Whether or not it is agreed with and whether or not it written down in company policies, here is a simple fact: There is a boss and there is a worker. And they are not on the same level of responsibility or compensation. And, for example, even in the least complex of start ups, there is a division of the company that makes the product, and there is a division of the company that sells the product. So that means there is a divisional structure of some kind. With these two givens, it would make sense that much grief could be avoided by simply letting the staff know what division they belong in and who their boss is.

All the fanciest business methods in the world are useless unless they validate experience, and provide easy application and workability.

Here is what I have found workable. First, let's assume that some Divisional structure has been established. Let's say those divisions are something like:

  1. Executive/Legal
  2. Marketing and Promotional Publications
  3. Operations/Administration
  4. Finance
  5. Production/Technology
  6. Quality Control
  7. Sales/Contracts

Of all these divisions, HR belongs in what is usually called the Operations or Administrations Division. That is, if Operations and Administrations does not include Finance.

HR is not, I repeat, not part of Finance or Treasury or Banking. The commodity of HR is people, not money. Even though employees are given a paycheck from payroll, HR is still not in Finance, any more than Marketing falls under Technology simply because Technology is marketed.

HR belongs in the same division as Organizational Development, Office Management, General Administration, Business Ethics and Policies. Compensation and Benefits design belong in HR...but get this...actual administering of the benefits, forms, costs, insurance coverage in general...all belong in Finance. Before you throw a tomato at me, consider this: benefits are a form of compensation. Distribution of all compensation belongs in Finance.

Of course HR must liaise with Benefits Administration and the Payroll Manager in Finance. But then HR goes back to their little cubicles and we carry on with the business of staff forecasting, hiring and orienting people, helping management and staff to become competent, confident, evaluated, trained, protected, and informed.

I know it isn't fashionable to use such simple logic in the face of all the serious management methodology out there. And I do expect quite a few heads of lettuce aimed at my head for voicing this point of view. But please, before you throw your leftover vegetables at me, walk a mile in my high heels up the corporate ladder. Once there, we can mix some metaphors together in a tall icy glass, and toast to our success.