When You Need an HR Team and How to Build One Effectively
It’s 4:55 on a sunny Friday afternoon. You have a whole weekend of relaxing in the backyard planned. Maybe you’ll have friends over for a barbecue, or finally finish that crime thriller you started last year and forgot about. There’s always that super-extended director’s cut of a film from four years ago that just came … Continued
It’s 4:55 on a sunny Friday afternoon. You have a whole weekend of relaxing in the backyard planned. Maybe you’ll have friends over for a barbecue, or finally finish that crime thriller you started last year and forgot about. There’s always that super-extended director’s cut of a film from four years ago that just came out.
You’re blissfully contemplating all your stress-free options when your line manager pops their head in and cheerily says, “HR wants to see you first thing Monday morning. Have a great weekend!”
The truth is, the role of HR teams – and even the name – has evolved quite a bit over the years, though its reputation hasn’t been quite so quick to keep up. People Teams, as all the start-ups are calling it these days, still have a vital role to play in the structure and organization of a company, though.
So, when is it time to create a super team-up for your start-up? More importantly, how do you do it?
I sat down with Process Street’s own VP of People, Jay Hanlon, to talk:
What are some of HR’s primary roles within a company?
The two biggest buckets I’d call out are recruiting talent and operationalizing culture.
For Talent Acquisition, you’re asking things like, how do you make your company a place that people want to work? How do you find the people who want to work there? How do you identify which of those folks are the best fit, get them hired, and onboard them well so they’ll succeed??
How should each of those processes be built? For example, at Process Street, when we’re screening to find the right candidate, we want people to interview not only with their hiring manager but also their peers, and key partners in the other departments they’ll need to collaborate with. We also want almost all roles to have a test project.
Test projects are a great example of how challenging it can be to structure each part of the process the best way. On one hand, we never don’t want to add things to the process that might make certain types of candidates less likely to apply.
But we also know that interviews may reflect more about how good someone is at interviewing, than how effective they’ll be in a given role. So in our case, we try to create a project for every role, but work hard to not make the projects take too much time.
“Part of my job is negotiating six-figure contracts. But then part of my job is driving to the UPS store to send a onesie to someone who just had a kid.”
So let’s talk about that second big bucket – operationalizing culture. What is the experience for the actual humans who work at your company? What things do we emphasize? How do we expect people to interact and treat each other?
It’s also about the structures we put in place to help teammates feel fulfilled at work. Some of that is making sure everyone understands that the work they do matters.
It’s making sure that we’re doing our job as a leadership team to communicate the team’s big picture goals, and how each individual’s role and efforts fit into those goals.
What are the challenges involved in developing culture at a remote start-up?
I love this topic!
There are a bunch of levels to what makes a culture, but I think one of the most important ones is a company’s values. What do we actually value?
And what employees learn that you actually value isn’t what you put on a list (or a plaque, if you still go into a physical office, like a cave-person.) What they’ll learn that you actually value is all about what you do as a leadership team, and what kinds of behaviors are rewarded.
Sure, it’s great to say: “We believe in treating each other well.” But if you then have a team where everyone says, well, so-and-so is an asshole, but they’re a top developer so we’ve all got to put up with it. You’re not really living that value in that situation, and people notice.
And the answer doesn’t have to be to push that developer out. They may just need coaching! Or clarity.
Sometimes people just need to hear that, while they may bring enormous value to the team on the coding side, there’s a cost we’re not willing to accept in how their interaction style impacts the team.
The other key thing about values is that they have to be specific enough that the ones you chose (and the ones you didn’t) actually convey something.
Before my start-up life, I worked in finance for about 14 years.
And my first day, I walked into this giant investment bank, and they had these values etched on the wall. They were things like respect for the individual, teamwork, being customer-focused, and so on. I thought, This is so amazing. I agree with all of these! These values were etched in stone in every building. That’s how much they cared, right?
Then, one day, I had to go to a client meeting at a different bank – a competitor. And their values were on the wall…and it was just a slightly reworded version. You could go into any bank and four of the five were all the same.
The point here isn’t that those are wrong answers. No one would disagree with any of them. But they’re so broad and generic that once they’re lumped together like that, they don’t mean anything.
“The values aren’t always just the things that are written down, either. It’s good to have those, but they should match actual behaviors.”
When you pick your values, you’re not saying, “These are the things that we believe in, but no one else does.” Most values are things other people would agree with. The key is to be specific about them.
It’s really important to start out by asking: What do we believe in more than other company’s do? What do we want to make sure we’re teaching each other?
And you have to think about what happens to values as you grow. When you get to a certain size, the founders can’t be the only ones defining the culture. You get to a place where not everyone is interacting with those people, or has the opportunity to be face-to-face.
So you need to train all your leaders to model the values. This is your managers, but also senior employees that others look up to. They, along with the founders, need to set an example. And you need to listen to the natural culture as it evolves. There will always be the parts that the founders have decided, but cultures will – and should – evolve.
What’s the value that people feel is critical but isn’t on our current list? Oftentimes, the answer to that isn’t going to be picked by leadership. It’s often the employees who are teaching leadership what we most need to focus on.
HR teams: The problem of bad branding
What contributes to negative impressions of HR teams?
I think there are two challenges.
One is simply the way HR can function – or used to function. Especially at larger corporations, the gap between the people in HR and an average employee is enormous. There’s no personal relationship there. They’re 72 layers apart.
And in the bad old days, HR was highly focused on protecting the company from its employees, rather than working with those employees to resolve issues.
There is also a selection bias.
In the case of the People Team, disciplinary problems or conflicts might only be like 10% of their job. The rest might be spent finding awesome talent, and making the company a better place to work – benefits, perks, getting better feedback. But that positive 90% mostly happens behind the scenes.
Ultimately, the People Team’s job is to make sure the company is an amazing place to work for everyone. I think of it as mutual advocacy; the job is to basically be an advocate for all of the employees.
“You want to be able to say: Hey, just so you know, if this ever happens, bring it to us. Here’s how we’re going to handle it. We’re going to figure it out.”
Sometimes that won’t be the individual employee’s personal needs because it’s at odds with too many other employees. You have to remember the “everyone” part.
How do you handle a situation where employees don’t trust HR?
If you’re in a place where most of the people feel like the HR team is dangerous and bad for them, it’s probably a broader culture problem. It almost always happens in a context where the people fundamentally don’t trust leadership, and HR is just a proxy for that distrust.
If you have a scenario where there’s distrust of the People Team specifically, the first thing I’d ask is: How are you interacting with people in a way that’s positive?
Are you checking in to see how they’re doing, how engaged they are, and how we can make this a better place to work? Are we having the interactions that make it clear that our job is to try to advocate for all employees?
It’s really important in a job like this to make sure the way you allocate your time is focused on working toward making people’s day-to-day lives better, not just handling the rare problem situations.
“The People Team’s role is to make sure we know what it takes to make someone feel fulfilled at work. It’s our job to have those structures in place to encourage all the right people to provide that.”
Historically, the single biggest predictor of people wanting to stay in their jobs is feeling that their direct leadership cares about them.
It’s not salary, it’s not benefits – that stuff matters; I don’t want to minimize it – but the biggest reason people leave is they have a boss that doesn’t seem to care about them. That’s not shocking, right? It’s basic human nature.
Are people getting the right feedback? Do they have the structures and resources that deliver what they need? Are their efforts being recognized?
Why did Process Street opt for a People & Operations team as opposed to the traditional HR department?
Particularly with younger start-up companies, you almost always see CPO (Chief People Officer) now, instead of CHRO (Chief Human Resources Officer).
I won’t speak for all start-ups, but I think a lot of it is that HR, over time, has been associated with being in trouble.
If that’s your brand, that’s a bad brand.
Imagine if you’re trying to name a group of people, and let’s say you start from the right place. I want people to understand that there’s this team dedicated to communicating, living, showing, and building the structure that shows people they are the most valuable thing we have.
What are we calling it? The Human Resources Department.
Seriously? Human Resources? That’s like what a malevolent AI would come up with if they were trying to sound like they value the people and don’t simply consider them food to be consumed at the end of the machine. It has the least humanity of any name I could come up with.
I’m not saying that “People Team” evokes magic and rainbows, but at least it’s communicating that we are about the humans who work at the company.
“Branding matters. It creates first impressions, and that’s going to have a big impact on your likelihood to start interacting with them.”
Has the rebranding worked?
Well, it sure isn’t hurting. If I have a problem and am looking for advice on things I can’t raise with my manager, how likely would I be to go to something called the “Human Components of Our Value of Our Money Generating System”? But what if it was the “Clouds and Rainbows and Unicorns Department”?
Okay, so the latter is perhaps not going to be taken very seriously, but it’s a little more likely to make me at least entertain reaching out.
But, my fundamental answer is that it’s really about how you have built up a relationship with people. How much they trust you. The way people think about the People Team – or any team – is going to be less about how it’s named or structured, and more about their actual own experiences of those individuals.
Key factors in building a healthy HR team
At what point should a company start thinking about building an HR team?
I wish I had an answer like, “As soon as you have X in monthly recurring revenue (MRR) or as soon as you have Y in people, you probably need this.”
But it really depends a lot on what your company looks like and how it grows.
In the early days, you definitely don’t need a dedicated People Team. The founders should be doing most of that in conjunction with other leaders.
There are two really big needs you’ll eventually have that might trigger a need for a People Team.
One is the nuts and bolts of employing people: compliance, payroll, and operational processes.
Let’s take a company like us. We work with contractors all over the globe, and we have full-time employees in many, many states in the US. But we’re still a pretty small shop, considering the size of our business.
The challenge there is that a founder can’t easily be registering with the Department of Labor (DOL) and the Secretary of State in Iowa and New York and California – which each have different employment laws, by the way.
“A PEO [professional employer organization] can even mediate disputes for you, but if you have someone outside your company handling an employee complaint, something is deeply broken. I’m not a big believer in that side of it.”
So especially as a remote company – but also brick-and-mortar ones – you have this question of how do I actually employ people? Like, officially and stuff?
There’s a lot of work involved in delivering payroll correctly, registering employees correctly with the DOL, withholding the right things with all these different rules. Often, start-ups will outsource to what’s called a PEO. They serve as your whole HR and payroll solution when you’re smaller. The best option for a start-up is often to use a PEO.
For example, you may not know all the rules around interviewing. In New York state, it’s illegal to ask a candidate what they currently make. Most managers wouldn’t know that. If you’re too small to have a dedicated person who knows all of those rules, it’s great to have that resource.
The second big moment is usually around recruiting. For many young start-ups, the first dedicated People Team hire is going to be the first in-house recruiter. The nature of most startups is that if they’re succeeding, they’re growing in headcount faster than almost anything else.
What does a company need to consider when creating an HR team?
I really do think it depends on the company. It depends on what’s already been done by the founders. At some companies, the founders start with a philosophy on what is a perfectly functioning company.
They’ve written out pages and pages of documents on culture. So for that company, the first step for someone dedicated is not to try to capture our culture and how we interact. They might desperately need to create better ways to capture information or track things like – as silly as it sounds – how do we make sure we know where everybody lives when they move? Who their dependents are?
What happens when someone just doesn’t show up for work one day and we’re worried about them. We need to be able to figure out when they haven’t responded to three emails, how do you call their spouse and just say: Hey, work’s fine. Are they fine?
It’s really going to depend on what sort of infrastructure there is because that’s going to happen at different times for different companies, and these companies will prioritize different things first.
“The way we handle recruiting is not about only being good and efficient at it; it’s making sure we reinforce the same values we want people to understand that we represent.”
I would say that the most critical things are: How well defined is the culture and how we interact with each other? If it’s well-defined, that may not be the top thing.
But also, what are the ways we’re bringing in talent and getting them to understand who we are? How are we making them want to work here?
The way you recruit has a big impact on the future of your company. For example, if your take is, “Oh, we get lots of applicants, but only a few are great, so we’re going to ignore a lot of people and take a long time doing it. But it’s going to work out because we have enough applicants and we’re still going to get those hires.”
You’re creating a real problem. Even though you’re getting all the hires you need, two things have happened.
All the people you didn’t hire – who might have been talented – not only didn’t you hire them, but they walk away thinking you’re rude. Over time, that matters. They’re potential hires later on. They’re also potential customers. Start-ups want to get big and have lots of people. People have long memories when they’re personally mistreated.
But you also have the people you did hire, who waited it out, what have they learned about what’s right? Don’t get me wrong – we do this, too, sometimes. Everybody does. It’s hard. You get overwhelmed.
It’s really important when you’re recruiting to think about things like what is the culture we’re training people on even before they join the company?
How will People Teams – and HR departments – have to evolve to meet future needs?
I think one of the biggest, most fundamental changes in the issues People Teams have to handle is the portability of jobs. If you go back to the 1980s, people stayed in jobs much, much longer.
Two things have happened since then.
One is there’s a shift to a larger percent of the population in knowledge-worker jobs. There are more people sitting at a computer with a skill that will work on any other computer, and fewer people on an assembly line where you have to know how to use this specific type of machine. It’s easier to move. It’s easier to get around. Fewer things require you to be anywhere specific.
“It’s wildly irrational to believe the number of people working remotely will be the same after this as it was before [the pandemic].”
That increase in job portability also really drove companies to become better places to work. Which is great! When there are very few barriers to moving somewhere else, companies need to earn employee loyalty. By actually, you know, treating them well.
As we look past the pandemic, the key question is obviously how much remote working expands.
Will most places stay all remote? No, I don’t believe so. But will the vast majority of younger companies, or companies in tech, allow people to work remotely whenever it’s convenient for them? I think most will.
Remote work isn’t perfect, but a ton of companies have learned that remote can work almost as well, and that’s huge.
Plus, momentum has a lot of power. They used to think it would never work. How could we possibly change all this and not have people in the office? It’ll all go wrong.
But now they’ve seen it, and you get: How can we pay those rents again? That seems like a mistake. I don’t want to deal with that.
And as more people go remote, there are going to be huge challenges for People Teams.
The way you manage people as a remote manager is very different. There are different skills you need to learn, but it’s also just a lot harder.
Even with all the right skills and training, you almost need to hire one level more experienced for a remote manager than an in-person one. If you need someone at director level to be a manager in a normal company, a remote company may need someone closer to VP level.
Part of that goes back to the fact that one of the most critical skills for a manager is the ability to care about your people and make sure they know it. You have to mean it because people can smell it if you’re full of it. You need to be able to communicate to your team that you care about them and that they’re valuable to you, both as employees and as human beings.
In-person, you can cover that super easily in like six minutes a day by strolling by and asking, “How are you doing, Sarah? Everything good? Still working on that? How’s it coming along? Great progress.”
It’s a little thing, but if you care about Sarah, she’ll feel it. You can hit a team of 12 like that on the way back from lunch. But you go remote and you try to type that? It’s weird. It’s a totally different feel than casually dropping by someone’s office to check-in.
“You get 10 times the potential employees. That means you get better people, and happier people in many ways. But no one meets 100% effectiveness. If you get it to 85%, that’s an amazing trade.”
There are ways to do it. We put a lot of effort into making Zoom work, always using video and things like that. It’s important and it helps. But there are a lot of trade-offs and costs.
In a group call, when someone’s super, super escalated in some way, you notice. But there’s that zone where someone is about to cry, but won’t. If you manage people a long time, you’re going to run into this. There’s a deep, emotional thing, but they’re acting professional, and they don’t want to let that out.
In person, you’ll catch it. It’s much more challenging to pick up in a remote setting – especially on that group call when one person’s gone quiet but everyone else is still talking.
Remote managers need to be able to pick up on that. A good manager will ask the question that elicits the thing that isn’t being said.
The final word on HR teams
For those who did come here looking for a specific formula on the “when to HR” question, I offer this from my boss, Marketing VP, Bryan Sise:
“Not until you’re at least past Series A, maybe later. Until then, an Office Manager (who does triple duty with accounting work, HR work, and facilities work) is the usual way HR is handled, and/or it is outsourced to a PEO.
While there may be no definitive guide to building your HR team, or hard-and-fast criteria for when you need one, HR teams – or rather, People Teams – are not obsolete yet. While line managers may take over several of the recruiting, training, and coaching, the People Team still has an important role to play.
Whether it’s ensuring compliance, enabling employee support, or simply driving to the UPS store to mail a onesie, the People Team is a bit like the iceberg of the company.
Only the end results may be visible, but it’s important to remember there’s a lot more that remains unseen beneath the surface.”
Join the debate: HR or People team? Let’s duke it out in the comments!