By Hema Ravichandar
The start-up world in India is buzzing. The brightest from the most exclusive campuses want to work for them. They wean away ambitious executives from traditional blue-chip firms. The excitement of the job, the energy of the place and the adrenalin charge it brings are terrific talent motivators in themselves.
And since these organizations seem to fulfil easily, and with zing, the primary purpose of the human resource department (HRD), many a start-up boss sees no need to invest formally in the HR function. In fact, the very word HRD seems to be anathema to these enterprises. As a young friend of mine, a veteran of this world, put it: “Nothing puts their tails up or gets them to yawn as the word human resources.”
And yet the most successful start-ups have demonstrated that in the ultimate analysis, people management is critical and HR mantras, potent. Even if the function is not enshrined formally within departmental boundaries, one or more founders informally take up the key mantle of HR functionaries. Indeed, HR matters and start-ups and their leaders would be well advised to follow certain golden principles of HR management.
Let’s start at the very beginning, as Julie Andrews crooned in The Sound Of Music:
This is critical at every stage, but for a start-up, the complementarities of skills of the founding team give a tremendous head start. This needs to be balanced with the right attitude for a start-up environment, the ability to handle pressure, agility and ambiguity. Check out potential recruits by inviting them to spend a day at the firm. Talent that shares the founders’ dream, and is willing to bootstrap and grow an organization with brand value, is a clear differentiator. Multiple informal interactions with peers, founders and subordinates are a great way of assessing if there is a fit. Great talent hires great talent; mediocrity begets just that.
Be especially careful of dropping hiring standards as the enterprise, flush with institutional funding, suddenly starts to scale. Define clear selection standards. In the absence of a formal HR department, use the VC (venture capital) and PE (private equity) ecosystem to help you identify the right candidates. And encourage every employee to be a recruiter for you. Don’t be in a hurry to hire everyone. Look at different resource models—part-time, secondment, subcontracting, entrepreneurs on time share.
Start-ups hate the word “performance management” because employees relate it to the bell curve from hell that they ran away from in the first place. Yet there is no running away from the need to establish clear job objectives and targets for each employee. When designing compensation packages, holistic is the way to go—fixed, variable and long-term incentive oriented. And it is prudent to make payouts milestone-based. According to a chief executive officer (CEO), keeping the competitive spirit up and running is critical. At the end, a start-up is a commercial entity, not a country club.
When it comes to rewarding or sharing sweat equity, don’t scrimp. There are many bitter tales in the market of how employees who slogged were left out in the cold when the time came to share the spoils. These stories spread fast, growing as they go. And can do much to harm the start-up’s hard-earned goodwill. Fairness is also important in determining salary and roles for newcomers. Be paranoid about ensuring that the new entrant who comes ahead in the salary and designation stakes in comparison to the older employee deserves it. And is not just a trophy to flaunt the start-up’s acquisition ability at a tony campus or an egoistic attempt at besting a competitor. This is best established through a strong mechanism of internal parity in fixing compensation and benefits; else, the organization could end up losing earlier high performers.
Be prudent in designing rewards and policies so that they are sustainable in the long run. Do not go overboard in matching and besting large organizations and flush-with-funds start-ups in the perquisites stakes. Benefits like business-class travel for all and spa vouchers may seem cool now, but they are not sustainable with scale and in hard times. It is always more difficult to withdraw a benefit than not introduce it in the first place. An HR head of a start-up incubated at a large company says that the primary message for employees is, “I want you to be comfortable at work, I care for your safety and travel”, not doling out unnecessary luxuries.
Employees remember promises. Organizational memory may be short. So document, refer and revert. If you can’t adhere to what you had assured, say so honestly, but don’t forget or adopt a cavalier attitude to guarantees.
Provide role clarity
Designations, they are a-raining, but does the role really do what it is supposed to do? Does the chief jolly officer really do only that—ensure jollity in the organization? And can they—really? Also, is everyone clear what they are supposed to achieve vis-à-vis a peer, a subordinate or a superior? In the rush to hire great talent, many start-ups end up with overlapping roles causing confusion and disempowerment. There is nothing more disillusioning than lack of role clarity. Remember, it was the attraction of exciting work that got you the talent in the first place.
They came for growth, to improve their portfolio of experiences. Give them roles, address their competency gaps, provide action learning and development opportunities. Rotating high-potential employees between various roles will give them a great overview and round out experiential learning. Leaders have development needs too. Many founder CEOs, given the number of managers from start-ups venturing out on their own with easy funding, need sound coaching. Leverage the ecosystem, especially the investor world, for good coaches and advisers.
Communicate, connect, celebrate
By far a critical element while growing fast. Explore exciting and innovative ways to communicate—radio channels with collaboratively designed content, awards nights with CEO updates framed around a quiz. Communicate the vision often; share honestly the wins, challenges and rationale for tough decisions. Create a cadre of communicators who can unambiguously communicate the founders’ message. As the funds flow in and the number of employees swells, it is even more important to create this wider circle of organizational communicators, to create a community of employees who understand the journey.
Listen, too! Keep an open-door philosophy. All leaders, especially founders, should be encouraged to address HR issues. Understand employee aspirations and concerns. Just as in the case of communication, it is important to groom first-line managers in people management as the circle widens.
Nurture the right culture
Preserve the entrepreneurial culture of working hard, innovating and taking risks. Work hard at integrating cultures, especially since “aqui-hire” (hiring through acquisition) strategies are very much the flavour of the day to grow start-up businesses. Respect the need for compliance; don’t fall into the underestimation trap. Self-governance is worth promoting as a core organizational principle, given the pressure to embrace in-company fashion shows, go-away trips, very casual dress codes and rather riotous office parties. Don’t compromise on the organization’s ability to discipline when necessary. Good habits are best established at the start.
And finally, be responsible in the tactics you adopt. Does giving employees a 2-hour lead time for accepting offers and attracting them with sign-on benefits for violating notice period contracts augur well for industry? Today you may be the aggressor, tomorrow you could be at the receiving end when such pressure tactics backfire as candidates move to greener pastures.
Structured HRD functions are probably most required as start-ups start scaling, somewhere between series A and B funding. In the run-up, VC and PE firms, well-wishers and mentors, are great wellsprings of knowledge and help. There is no need for you to adopt the HRD word, if you would rather not. While the jolly department with its chief jolly officer, or the culture vultures with the chief culture officer at the helm, may be facetious, suitable alternatives with pizzazz can surely be found, even if, with due apologies to Shakespeare, a rose by any other name is still a rose.
Hema Ravichandar is a strategic human resources consultant. She serves as an independent director and an advisory board member for several organizations. She was formerly the global head of HR for Infosys Ltd.