HR challenges of scale-ups and start-ups

HR challenges of scale-ups and start-ups

We talked to 50 scale-up and start-up founders about their people challenges and we asked what keeps them up at night.

We captured some important recurring HR issues (and high needs for caffeine). And we decided to summarize 5 key HR challenges many founders are facing in their growth journey.

The need for faster onboarding of new hires

New hires need to be up & running and need to contribute to the company growth as soon as possible.

The period of time during which the new employee is merely a cost, should be as short as possible, in the interest of the company and the new hire.

On one hand, start-ups and scale-ups need to see quick ROI to continue their growth.

On the other hand, employees feel best at work when they bring added value and feel connected to their colleagues.

So a smooth onboarding is equally important for both parties.

Many times, new hires get a good administrative onboarding and a pretty good skills training, but miss a solid introduction into the company culture, mission and vision.

This makes it harder for the new hire to connect with the people, the way of working and the company purpose.

And this, in turn, may have a negative effect on the engagement and performance level of the new hire.

The risk of losing the startup-culture

“I don’t want hierarchy and rules to creep in and destroy our entrepreneurial vibes”

“I’m afraid to lose the dynamic and informal culture as we grow further”

“I don’t want to wake up one day and find that I don’t like working in my own company anymore”

We were positively surprised to see that building a strong company culture is high on the agenda of many founders. They understand how company values drive the behaviors (and thus results) of the team.

So many founders define a set of company values at an early stage and they put them on the website and wall.

However, there are 2 things they still struggle with:

  • How to hire people with a good culture fit?
  • How to ensure the employees live by the company values?

The uncomfortable requests for salary increases

If you hire ambitious people, they knock ‘ll on your door. They ‘ll ask for a salary increase, a promotion, a buzzing title, a bonus,… Some will come knocking only 6 months after their onboarding.

Pretty uncomfortable situation for a scale-up without a Reward Strategy... 

So what do you do?

  • Say 'no' and risk losing your employee to a competitor?
  • Say 'yes' and risk having the rest of the team knocking on your door too?

Many founders have tried both tactics. Without satisfactory results. Because without a solid Reward Strategy, you have no credible story to tell. 

The fear of losing employees

The last thing founders want - as they are scaling their company and team - is losing valuable employees along the way.

The obvious reason is that hiring and onboarding are expensive and very time consuming.

But there is something that hurts even more than losing those investments…

As a founder you’ve built your company from scratch, with every bit of energy you have. When employees decide to leave your company, it feels like they also turn their back on you personally...

The cost of bad hiring decisions

Hire slow, fire fast”, they say. It’s good advice, because a bad hire is a sunk cost. As soon as you know, you need to act. Fast.

Unfortunately there are many bad hiring decisions in start-ups and scale-ups, because the necessary recruitment capabilities are not yet built in house.

Many founders hire based on gut feel and find out – a little later – that this is not the best strategy. They come to realize that applicants with whom they click during the interview, don’t necessarily perform well.

And that bad hires are very expensive.

Conclusion

Recurring (and predictable) people issues are keeping start-up and scale-up founders awake at night.

They tend to professionalize product development, sales, marketing, finance,… at an early stage, and postpone investment in HR.

For HR topics, founders tend to rely on their gut feeling for tool long. They struggle and lose precious time and money.

Building solid HR practices at an early stage, creates more transparency and builds confidence. It gives employees a clear framework (and - if you want - a lot of freedom within that framework). On top of that, it brings founders more peace of mind.

If you’re looking for HR best practices to build a solid HR foundation at an early stage of your start-up or scale-up, please check our webshop with HR tools.

We created these HR guides to make your life as a founder easier (and your nights more peaceful ;-)).