When Does a Startup Need to Hire an HR Manager?
At Bookatable, we hired an HR Manager when we were 50 people
At HouseTrip, we hired an HR manager when we were 30 people
At IOVOX, we were a team of 25 and growing and yet we didn't hire an HR Manager
When do you hire an HR Manager?
Before answering that, 2 important points.
HR means a lot of things to different people. For the purposes of this post it means any activity that aims to attract and retain the best people for the team, any administrative or regulatory work required related to people (contracts, policies etc), resolving any employee issues and maximising performance.
Just because you don't have an HR Manager, it doesn't mean you don't think about HR. It starts on the first hire. The founder(s) make the first hire and HR activity exists in an embryonic form. (The R is HR is "resources" and with the exception of a laptop and an internet connection, the H (Humans) are the only resource a startup has).
Back to the point..
The CEO must take accountability for
- organisation structure
- compliance with regulatory requirements
- recruiting the best talent
(Accountability by the way = "the buck stops here!")
Some of the above may be delegated to the COO or to a CFO - to a responsible person (Responsible = the do-er)
The CEO (or COO) may choose to then delegate some tasks to an HR Manager to help with some or all of the above. When?
There are 3 variables that need to be considered to make this decision;
1. How many people are there in the organisation?
The larger the organisation, the more likely you need a dedicated person for HR. A good rule of thumb is that at a 100 people it's more effective to have an HR Manager than not.
2. What is the rate of hiring?
If you've only got 1 hire on at any one time you probably don't need an HR Manager - senior managers can handle hiring, onboarding, issue resolution etc.
If you have 10 hires a month closing you probably need an HR Manager as well as a Recruiter reporting to them.
That's why at HouseTrip we hired an HR role when we were only 30 people; we were hiring at least 5 people a month.
3. What is the cost of hiring?
Early stage companies often need to use recruiters to find candidates simply because they are so time constrained that it's the simplest way to get good people. It comes at a cost, often more than £5k per role. Hire 10 people like that in a year and you might as well have someone in-house who can do it for you.
A high growth startup CEO or COO will spend at least 1/3 of their time hiring. With or without an HR Manager, this will probably be the case and is a good use of their time. If it get to be more than 50%, there should definitely be an HR role in place - as long as that's a cheaper option than using agencies.
Aside from hiring which is a large time effort, it makes sense to invest in culture and performance as early as possible (HR Manager or no HR Manager).
At Forward Partners, when we invest in a company early, we also offer office space and access to our team. One of our team members is Matt, our Head of Talent. He can help entrepreneurs build a world class team, starting with a cofounder if needed.