5 things every leader must know about building their HR team
[Source Photo: Getty Images]
Over my 25-year career in recruiting, I’ve seen startups come and go. Here’s how to create a people team that’s much more than just traditional HR.
So many things have to go right for a startup to succeed. Product-market fit, funding, timing, product-development velocity, founding-team chemistry, and a little luck.
These are all crucial success enablers, but every successful product or service company has one ingredient in common: talented people who bring it to life.
Over my 25-year career in recruiting, I’ve seen many startups come and go, from the noun.com hiring bonanzas of Web 1.0 in the late ’90’s, to the rapid expansion and contraction we’ve seen over the past 24 months.
Earlier this year, I joined business school IESE’s School of Founders as a guest faculty member and led a session on the keys to building the People side of your startup.
To prep for this, I tapped into my global network of chief people officers and collected their wisdom in a 75-page playbook on how founders should approach this critical step in business-building. (You can download the playbook here.)
If you don’t have time to read 75 pages, here are the five key things every founder should know about building transformative people teams and capabilities:
1. Your company’s culture and values are two different things.
The term “culture” is firmly embedded in startup vernacular, but it’s often misunderstood.
No, I’m not talking about “culture fit.” You shouldn’t be, either, for a range of reasons.
Culture is used interchangeably with “values,” but in reality, they’re distinct and should be viewed accordingly.
Culture is fluid. It changes with every hire you make.
Values should be firmer, as they’re the foundation of your organization. They shape who you are, who you aspire to be, and how you behave.
“Think proactively about what values and operating principles will help your company succeed and consciously incorporate those into how you lead from day one, says Daniel Illes, VP of people at online secondhand-clothing marketplace Vinted. “Make sure you codify and re-codify your culture.”
Once you have your values, operationalize them and weave them into how you hire, develop, reward, and retain your employees. That’s what makes them stick.
For example, let’s say one of your core values is “growth mindset.” You should be designing interview questions to probe candidates’ curiosity and desire to learn and problem solve. Your executives should be role models for learning by sharing what they’re learning (or want to learn) in town halls or the company. Learning goals should be tracked and incorporated into performance and salary reviews.
These actions operationalize your values, making them more than just posters on a wall.
2. Prioritize getting your initial hires right.
Few things make or break a startup like your ability to recruit successfully. Quickly finding the right hires and avoiding mis-hires can set you on a unicorn growth trajectory.
After the widespread tech layoffs we’ve seen over the past 18 months, FAANG companies are not the sure career bet they used to be. Once considered a safe place to “rest and vest,” Big Tech companies now carry something new: perceived risk. This is one of the reasons that it’s a great time for startup hiring.
Many startups lean into their immediate peer networks when hiring. Then they’ll expand out to tap into VC and peer networks. If those don’t work, they’ll usually engage third-party recruiters.
There are pros (validated talent, speed) and cons (cost, lack of diversity) to each approach.
The first dozen hires for your startup are crucial, so make hiring excellence a priority early on:
Build a structured interview process with specific assigned skills, capabilities, or values to probe. Be sure all your interviewers are assigned specific topics in advance so you’re not having redundant conversations.
Prioritize candidate experience. You’ll meet more people you won’t hire than those you will. Build your brand and reputation with exceptional candidate experience.
Speed wins. Build an efficient recruiting process that maximizes hiring velocity and allows you to move faster than your competitors.
“Start with hiring excellence: Invest all your people energy initially into hiring the right people,” says Illes. “Mis-hires will distract you, cause you sleepless nights, cost you an arm and a leg, and possibly derail your company before you even find product-market fit.”
3. You’ve got to find the right head of people.
Let’s zoom out before zooming in. The field of HR has been carrying the collective weight of the past three years—particularly in leadership roles: The pandemic, social-justice flashpoints and trauma, political upheaval, geopolitical tension, war and conflict, and equality are under fire.
The constant stress and volatility have led to experienced leaders transitioning out of the field, high levels of burnout, and an increase in companies hiring less experienced people leaders due to the shortage of senior talent.
Despite the current economic headwinds, the demand for heads of people remains very high. You’ll face competition for talented people leaders. Timing, values alignment, candidate experience, reporting structure, resources and budget, team, and total compensation are all critical components to increase your likelihood of closing in on people-leader candidates.
Understanding their motivations will also help you. These are some of the things today’s heads of people seek when considering new roles:
Business Impact: Modern heads of people see themselves as business leaders impacting the business through people. Don’t limit them to a siloed HR role only. Involve them in all areas of your business.
Autonomy: To optimize the impact of your head of people, you have to let them lead. Micromanaging, and/or publicly overruling, diminishes their ability to influence and drive your business forward.
Values Alignment: The relationship between the founder(s) and head of people is among the most important on your leadership team. Values misalignment, on either side, will derail success. Ensure you create ample space in your interview process to assess values alignment.
Trust: Your head of people is also your coach, advisor, and truth teller. Great ones will tell you things you don’t always want to hear. This feedback and partnership will make you a better leader.
“Your head of people should be among the first 10 hires you make,” says Angela Cheng-Cimini, SVP talent and CHRO at Harvard Business Publishing. “Not only will your HR leader help you acquire talent, they will help you unleash it—and ensure your culture is the one you want, not the one you get.”
4. Avoid Over-Hiring.
According to Layoffs.fyi, the technology sector has seen 225,000-plus layoffs YTD in 2023, exceeding the 164,511 tech layoffs in 2022.
Some companies made layoffs headlines for all the wrong reasons. Others used clarity and compassion to make these difficult decisions slightly better for employees.
Growth for growth’s sake is not a sustainable model. As a founder, you must balance market opportunities against the risk of over-hiring and the likely layoffs that will follow.
Once your core leadership team is in place (i.e., experienced hires), hire candidates with a growth mindset: smart, curious, utility players who can grow and evolve with your business.
Startups are career-growth engines. It’s not uncommon to cycle through two to three different jobs in one year. Lean into that culture of growth and mobility and block “me” managers who hoard talent and obstruct mobility. They will slow your growth and chip away at your retention from the inside.
“Invest early in the things that matter to you longer-term and that you want to be differentiated on,” says Jevan Soo Lenox, chief people officer at biotech company Insitro. Focus on bringing in the right leaders with both the mindsets and capabilities to set the culture and drive the organizational outcomes you seek.”
5. Avoid Diversity Debt.
Most founders understand the pain of technical debt. Many don’t consider the risks of diversity debt and find excuses not to prioritize inclusive practices early on.
Diversity debt describes the compounding effect of a lack of diversity on your organization as it scales.
The more diverse your company is early on, the more attractive it will be to underrepresented talent as you grow. The inverse is also true.
Representation alone won’t eliminate diversity debt. Having more representative perspectives in your leadership team when making decisions about hiring, promotions, development, and compensation will help.
Don’t let the current political environment steer you away from these commitments. The value of more diverse teams on business performance is clear.
Here are a few other factors to consider to avoid diversity debt:
Avoid leveling inequity: Resist the urge to create one-offs (titles, comp packages, org structures). They’ll create inequity that can quickly become toxic and derail your culture. “Don’t overinflate titles, don’t make up titles, and don’t use titles as a bargaining chip,” says Natalie Ledbetter, a three-time startup chief people officer and advisor. “It’s unbelievable how messy and expensive it can be to clean up, once you get around to properly leveling the org and determining accurate pay bands.”
Representation matters: Your leadership team, your advisors, your career site, your interview process, your brand ambassadors, your vendors and partners—all of it. These are opportunities to show candidates who you are. Or who you’re not.
Ensure pay equity: Legislation continues to steer organizations toward more open compensation practices. Embrace compensation transparency (or at least translucency) early, and you’ll build trust and avoid painful leveling efforts in the future.
Building a startup is incredibly difficult. That’s why 90% fail. Prioritizing these people programs can help your business avoid being a statistic and build a company designed to thrive in today’s new world of work.
This piece originally ran in Fast Company