Here’s why founders should make sure they have an HR in place before hiring their 50th employee
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When it comes to building a business from scratch, it is normal for the founders to make mistakes along the way. But one of the main traps in which this group comes up against is to cause HR too late.
Most founders make hiring decisions according to what is most necessary at the time and often favors roles in engineering, marketing or sales, on other parts of the company. But as soon as a company reaches this mark of 50 employees, it is subject to multiple federal labor laws which offer benefits and additional protections to workers, such as the law on family and medical holidays, the Fair Labor Standards Act and the Act respecting affordable care.
It is at this inflection point that Meredith Meyer Grelli, assistant professor at the Tapper Business of Business of Carnegie Mellon University and Deputy Doyenne of Entrepreneurship Initiatives at the IT school, says that “informal practices are starting to kiss.”
“When there is a sufficiently small team, culture is organic and the processes do not have to be so defined,” she said. “But once the company is starting to hire, managers must start to bring people specially designed for the organizational structure and manage humans well.”
This is why she and other experts say that the founders must hire an HR person before hitting this landmark. It is not necessary that it is a chro or a person having a role of level C, but it says that there must be a point of point designated to manage problems such as the advantages, the PDO and the work arrangements from a distance / hybrid.
The Sweet Spot for HR hiring is somewhere around the 20 to 30 employees brand, explains Massimo Mazza, main partner of Strategy and Corporate Finance at the McKinsey consulting firm. He adds that it is at this moment that a company begins to develop a real culture, because the teams are built and that more intermediate management is brought.
“Consider it as a family transition to a city, from a place where everyone knows each other where you have to have a kind of infrastructure, a kind of governance so that it is effective,” explains Mazza.
The need for a human resources professional also increases in cases where a startup takes all types of major financing cycles, in particular venture capital, notes Meyer Grelli. Indeed, once the money arrives, investors will probably put additional pressure on the company to develop rapidly. This kind of rapid hiring requires a person who can implement firm practices to ensure that labor laws are not raped in the process.
“When you assume funding, you could even bring HR earlier, because these jumps in a company supported by a company can occur so quickly, from 10 people to 50 during the night after a tour,” she said. “It is therefore preferable to have this person on board in anticipation.”
Find out more about the common job errors that the founders of startups make and how to avoid them here.
Brit Morse
Brit.morse@fortune.com
This story was initially presented on Fortune.com
