The role of Human Resources (HR) in a business is multifaceted and essential to the overall success of an organization. HR departments are responsible for managing and developing an organization's most valuable asset: its people. But what do you do as a leader, before you have an HR department or HR personnel? Zach Rosner, Co-Founder, and Chief People Officer of Our Place, shares best practices for building a team during early stages of growth.
Laying The Foundation
- By the book is best. In the early days of hiring, it may seem okay to send a simple email agreement rather than a formal offer letter, or even to fly by a simple verbal agreement. The short answer: it’s not. Doing things that might feel a little corporate in the early days sets you up for long-term success. It may feel overboard for a small brand, or even if you’re only working with freelancers, but buttoning up your agreements and contracts will protect you from headaches down the road.
- Invest in the right resources. One of Zach’s strongest recommendations is to invest in an employment attorney early on – before it feels like you need it. Your employment attorney can provide critical guidance on contracts, wages and compensation, compliance, and more. They can often be more affordable than you might think, and the up-front cost will pale in comparison to trying to fix things later that you did incorrectly – or, worse, illegally – early on..
- Software is at your service. If you are paying salaries, and especially if you’re in a position to offer benefits, Zach’s choice of HR platform is Gusto. For small teams in particular, Gusto has the payroll, benefits, and hiring tools you need, all in one place for a relatively affordable price. If you’re paying people, use a platform like Gusto to do it.
Steps to Effective Hiring, Plus Common Missteps To Avoid
- Obsessive organization. Early-stage recruiting and hiring don’t need to be overcomplicated. Get back to the basics and build out a good old-fashioned spreadsheet, paired with LinkedIn (pay for the premium version). Zach advises the most important thing to do is to stay organized within your spreadsheet and update it constantly. “Maybe you have a tab per role, organize each sheet to include name, contact information, outreach status, whether or not a follow-up is needed,” and update at every touch point of recruitment.”You’re basically building an ATS [applicant tracking system] manually – and the moment your data is out of date, it’s essentially useless. So, stay on top of it and it will serve you well.”
- Clear job descriptions. Clear job descriptions up front not only make it clear to potential hires what the role’s expectations are, but will set your team up for success internally so everybody knows what they’re responsible for – and, sometimes just as importantly, what they’re not.
- Go for the gold. One of the best ways to source great talent is seemingly the simplest: to go after the best. Think about the companies that are doing especially well in one particular function, or companies you admire, and go identify the person or people who oversees or contributes to the function you’re looking to hire for. Get their contact information using a tool like Hunter.io and reach out with their personal email address. Keep it casual, short, honest, and real – if you like their work, say so. And don’t make it all about hiring: you can simply say you’re impressed with their background, and you’d love to chat. Treat them as a peer – the worst they can say is no.
How to Approach Compensation
Before you start hiring, assess if you’re in a financial position to bring humans on. Reality check: Can you pay people fairly? If not, you should not be hiring. People you’re hiring should be able to live comfortably and be paid a fair wage – “experience” doesn’t pay the bills.
- Pay what you can afford. An additional resource to consider during the early stages of growth to inform compensation, is a Finance consultant or fractional CFO. In addition to helping you build your overall financial model, a Finance consultant can help you gut check your pay bands and make sure it works within your organization’s budget. There are companies who specialize in this kind of service for startups – or you can go ahead and reach out to Heads of Finance or CFOs at other companies you look up to and ask if they might be interested in helping..
- Pay fairly to the market. Websites like Glassdoor, Payscale, Indeed, and Salary.com are popular sources for compensation insights. You can also analyze job postings from competitors or companies with similar roles to give you an idea of what salary ranges are being offered for similar positions. And finally, connect with other employers and HR professionals in your industry or region to exchange information about salary benchmarks and trends.
- Incentivize with Equity. Equity makes owners out of employees. It creates a very real sense of shared responsibility - and ensures the team knows they'll share in the upside if things go to plan. It's part of a well-rounded compensation package, and it's also one of the main reasons why many people get excited about joining an early stage startup. It's the reward that balances the risk. Zach cautions to be smart with equity distribution. “It’s easier to give more later than to take things away.” So be conservative when you're starting out. And be honest. "Don't promise you'll make billionaires out of your whole team - be real, and be realistic. It's better to over-deliver anyway, and it will set a tone of trust and transparency from the beginning.
- Have conversations. Taking into consideration what’s reasonable for your model and competitive with the market, have conversations with your prospective talent to understand their expectations for the role. “These are people. Talk to them,” reminds Zach.