S4E10 | Startups Need A People Strategy, Even If Not A People Function

In the beginning, startups have nothing but an idea – and a team of true believers who hope to bring it to reality. Everything is riding on the success of that team. And yet ‘HR’ is the last thing that any startup thinks about, perhaps it implies bureaucracy. So here are some reasons to think otherwise and a few steps that startups should undertake early on, to improve individual performance and lengthen the odds of success.

Discussion Topics: Startups Need a People Strategy, Even If Not a People Function

• Why the people function should be a priority
• It becomes a pressing need after about 10 people
• Early employees cannot keep up by themselves
• Even when the future is unclear, it’s important to have some structure
• Startups can start doing the basics first
• Don’t forget to also have career conversations
• Skipping this step makes it 10x harder later
• Wrap up

Transcript: Startups Need a People Strategy, Even If Not a People Function

Subha: Welcome to another episode of Small Talk with Rainkraft! There’s the old but still very popular and relevant quote is the CEO says, what if we invest in training and the people leave? And then there’s a people person saying, but what if we don’t, and they stay?

Hasita: So Subha, why is it that in startups typically, and this is true of also, us being a start-up as well why is the people function or the HR function usually built last? Or why is it not prioritised from the get go?

Subha: Oh, that’s a good one. And, you know, the people function is literally on fire. And it’s strange, because what’s on fire doesn’t exist. And that’s the problem. These are all people’s fires. I mean, not people on fire but.

Hasita: That is actually quite interesting. I mean, firstly, I’m glad to hear that it’s not the actual humans. But how many startup fires have you had to fight?

Subha: No, it’s quite a syndrome across the space. And especially in emerging tech startups, I’m interacting with quite a few of late and over the past few years, I think the founders go in 500%, 1,000%, with that exciting idea with that drive to build some product that doesn’t exist in the market. And so I think at that point, they rush in with a set of people they know typically, so they’ve found a few people who are following them from whatever they were doing earlier, with full excitement to build something. And so I get it, that there is no formal people slash career development slash talent strategy. And we will talk about the many reasons for this, and when does it hits a wall, and what they can do about it.

Hasita: Sure. I know, the story of a group of co-founders got together very excited about making a difference in the world of hiring. And I saw them grow in a two-month period. And I thought, wow, this is growth, this is a thing that everyone wants. And then I recently found out a couple of weeks ago that they had kind of dissolved and the founding team was no longer together. And the reason I wanted to bring this to you is because it seems to me like a people problem. And sometimes I can’t help but wonder, were they trying to solve with conviction what was essentially a problem of values.

Subha: Interesting. And I think maybe they’re lucky that this fire got ignited very early. It’s a lot tougher if you’ve started to build something and brought more people in. And I think it’s the whole mindset with which they jump in that, hey, we’re supposed to be very dynamic, things are supposed to change every day. And we’re going to be scrappy. And we don’t want to get tied down by your processes and your structures. And you know, do this, do that. And they see the HR function as something that belongs only in large corporates.

Hasita: Which actually kind of brings me to the whole idea of what can an HR function do in a smaller system, what would you say would be a benefit?

Subha: See, I think, firstly, the assumption that, hey, we will focus on the core. And as we bring in more people, and as we hire them, the skill level and the people’s effectiveness or their capability will also grow as the company grows. And that’s not going to happen, that’s not going to happen unless there is someone who is owning that growth. And the founder can maybe do it when it’s a small group, when it’s maybe five, maybe even ten people.

But these are typically organisations or these are environments, where you are doubling headcount very quickly. And especially if you break into that funding space, and you’re funded, and now you are responsible to deliver, you know, 5x 10x growth, then you’re also hiring fast, and you have a whole bunch of new people who weren’t there when you jumped into this. And so who’s going to own that people function because as founders, and even that core founder minus one layer, each probably have their set responsibilities by now. So somebody has to help them invest time in the people.

Hasita: Right. But then, I mean, it could potentially be a counter question. And where I’m coming from is to say that hey, I have hired a team of 10 people who are extremely driven to solve the same problems that I’m solving. I’m hiring for passion; I’m hiring for a certain ability to be a self-starter. I’m assuming that these are certain things that a lot of early stage startups especially do look for. But is that not enough? Why is that falling short within a year or so?

Subha: That’s a good question. And I think the answer lies in the fact that you have hired them, for lack of a better word as followers. So they are there to follow your vision, your ideas, your direction, and unless you take the time to keep showing it to them, how are they going to know which way to go? So they may know which way to go from a pure Hey, I’m here to write code for this particular piece of the product. But what else am I expected to do?

Because you brought me in saying, this is what I have to do. And I’m doing it and suddenly, you’re expecting me to do more and more because we’re growing. And so there are many ways in which it hits the founder and founding team, or the top management team very hard, because suddenly, I hear from founders that, hey, these guys were so good and hence, they came with me from my previous company. But now three years into this, and still, the entire burden seems to be on me, I have to wake up every morning and say, where are we on this? And where are we on that? And who’s doing what? And the people just don’t seem to be stepping up, what more do they want? Like I’ve given them such a great start.

Hasita: Which is where I also sometimes kind of wonder, because the startup is inherently a very amorphous atmosphere, and the whole idea behind starting up is to experiment. And to test something and say, is this going to work? Is there enough market uptake for this thing that I’m building? In that context don’t you think having a people or a growth process and essentially then siloing people into a certain vertical or a trajectory, is that not more harmful than helpful?

Subha: See if you don’t do that, then you will find that there are a bunch of folks who are, from their own career, an individual growth perspective, a little lost and meandering. They don’t know what to take ownership for because they don’t know that it’s their function, or it’s their job, or that doing so will get them certain rewards. I mean, at the end of the day, there’s some kind of reward we’re looking for either monetary or recognition. And so you will soon find confusion about growth paths. And hence, another very common symptom that I see is that founders will say my folks are not collaborating, they’re all working in silos.

Because those silos have been created by not defining the various units. You have not defined who owns what, who leads what, and that if you do more, what could tomorrow look like for you. Not everyone wants to be doing the same thing for the next 10 years. We enter startups also to say, Hey, this is going to challenge me, and I’m going to grow and I’m going to learn so much more. So how do I know what else I can grow into? I joined in encoding, and then they gave me some opportunities to run operations. And I enjoyed that. But I really think I want to stint at meetings with clients and hear from them what our product looks and feels like. But what is that path?

Does it exist? Who are the people who are leading that? There’s a lot to be done and in communication, in terms of letting people know what their careers could potentially look like because we are 5 or 10, we are going to become 20, 50, 100, if not more and so what could it potentially look like and how am I going to support you, as the founder of the company, as somebody who’s in charge of the growth trajectory How am I going to support you, because knowing all of that, or seeing that system, getting built in some way will help determine the skills that this group needs to step up. Because otherwise the employees will feel like, Hey, you’re making us hustle.

But I don’t have the skills and everyday seems like I am fighting my own fires, you know, tons of mini fires trying to figure out something because I’m not equipped to do the job. And then the founder is still frustrated because the client is seeing bugs in the software, or they’re not seeing great output, etc. So the people function must start early. And I get that it’s really not a priority on day one. But it can’t be zero priority at three years, five years. And that’s the situation I’m seeing.

Hasita: So the earlier you think about it; it’s like investing today for a better outcome tomorrow. Is that what we are?

Subha: Yeah, because see, if you don’t invest in supporting them on that path then what are you left with?  So if you don’t invest in the people function and create career paths create learning paths, then you have a problem that they’re now still with you.

Hasita: Oh, that sounds really bad. Also, Y Combinator, I think has this famous saying, they say, seven skill companies. So, I think what they’re trying to say is that someone who’s stuck at a certain baseline average, if they are unable to improve, then, ergo, they are damaging the system in not having improved. I think that makes sense now. And therefore say today, I’m a startup who’s six months or a year into operations. And I know I’m growing very quickly. And I know I’ll be hiring several other people over a period of time.

What are two, three things that I should be looking at? And I think more importantly, I want to ask you, is that something I should be accounting for in my funding plans? Is that something that I should be asking for funding for that Yes, I’m going to invest an X amount of money into the people’s practice, and therefore this is how I hope it will compound or I expect it to compound.

Subha: I think that is a big yes. Because when you do sit down with founding teams, and you realise that, hey, we need someone to help us really just speak to our employees, help with skill gaps, even design performance management systems, which are so core to figuring out who is where. And then finally, there is no budget for it. So I think, in whatever growth that you’re planning, you do need to plan for the training aspect of it, the learning aspect of it. And even for let say organisations of our size and scale even if we have few people on our team we do have to budget for online courses that they may need to take or certain conferences, webinars that they need to attend which not everything comes free. Those were the pandemic days.

Hasita: Yeah, no more free webinars for us.

Subha: So we do need to budget for it. And in terms of what you can do, it’s not too difficult. I think, firstly, keep tracking for the skills that your business needs. Like even take Motley Crew and marketing consulting, like you know that you need designers, you know that you need somebody who can be client facing, like, on the customer, right client management, you know, that you need somebody who can write, so you have certain skills, but also looking a little into the future Okay, these are the few things that I’m going to potentially offer, or this is the trend in terms of clients coming my way what are the additional skills that I need to be future ready.

So today, for example, if a lot of your work is B2B tech, then you do need to build a team that understands that. So somebody may come in as a great writer, but he or she needs to be taught what, and how are you going to invest in that it’s, you may not, and especially when you’re small and growing, you can’t afford to say everything will be on the job learning because you want to aspire for clients, and who are at a higher scale, and you’re able to deliver at that quality.

Hasita: So true. So true. That makes a lot of sense. I think sometimes the moment we say people practise, perhaps we make it into this extremely big deal involving policies and SOPs. And probably it’s not that it’s about just making sure that every individual is able to perform to their best potential, to the extent that you are a company and are able to kind of facilitate that.

Subha: That’s a good point that you brought up because HR or the people function itself, there’s the HR operations, which is the policies and the document you have to have in place and a lot of templates, and a lot of that is available off the shelf, payroll systems, all of that is the easy piece to crack. And I think most startups crack that piece. That’s not where the trouble lies.

The one that needs everyone’s time and energy is the career conversations. And again, these are career conversations. And these have a zero element of feedback. They’re very distinct from where you’re giving performance feedback, you’re doing a review, or you’re giving immediate feedback for work that went well or didn’t go well. That is very different from what I mean by a career conversation.

Hasita: Fair enough. I think also making that separation is so important, because we don’t want to overwhelm ourselves with too many things that seem to need to be done.

Subha: Yeah. And I think in a career conversation, you know, if you ask me what really it is, one, it’s simply to have a conversation with your team member to understand from them, where are they today, where do they aspire to be, what are the things that interests them, what are the questions that they have, what are their own concerns about their career, what is their own understanding about skill gaps that they have, where do they need support, what would they like to be doing, you know, in a year from now, two years from now, and also teaching your people managers to have these conversations because it very easily fizzles into performance feedback.

And performance feedback I mean, we’ve talked for hours about it puts the other person in the defensive, and they’re no longer opening up sharing that, Hey, today, I’m doing operations. And here is my manager, telling me five ways in which I’m doing it wrong. And I don’t now have any kind of inclination or energy to tell him or her that I want to be doing client facing work next year.

Hasita: Because I’m already kind of expending so much energy just trying to defend my current position.

Subha: Yeah. So the career conversation, the outcome is to have a good idea of what makes the person take in terms of what kind of work excites them, what are they maybe even shying away from or running away from because they’re worried they won’t be good at it. Like you are grooming somebody to be your maybe sales head equivalent, or to handle all business development, but they are saying no, I’m happy where I am. And is that a comfort zone?

Are they fearing that they don’t have the skill sets for that. So you want to just leave that conversation with a plan with an outline of where they are and what are the gaps. And then comes the job of saying, how can I fill this skill gap. I mean, there could be functional gaps. So you need them to do specific courses, there could be kind of behavioural soft skill gaps, somebody’s communication needs to be a little more on point, somebody needs to be a little better when talking to external partners, vendors, clients, somebody needs to get a little more analytical in their thinking, decision making, etc.

And then there is just using the various kinds of development interventions, somebody who’s extremely important to you, you may want to invest in some one on one coaching time for them. Or like we said, if you’re looking at future ready skills, you may be grooming someone in your team to, let’s say, handle something in the AI space. And that’s something that even you are new to so maybe you need to find some mentors outside of your organisation to work with your team members. It’s not about making things harder for founders, but just to remind them that if you let this slip away, it takes us almost 10x effort to put things in place.

So it’s really not about creating huge structures and processes that you don’t want. You don’t want the bureaucracy, you don’t want the corporatish feel all of that I get, but between yourself and whoever else is responsible for the teams, invest time in career conversations, so that you have a roadmap for skilling, behavioural inputs, coaching, mentoring that your team needs, and you have a roadmap of what are the skills that I need for my organisation and where’s it going to come from. Because that’s also a great way for you to figure out what external hiring you need to do.

So some skills are going to grow internally. And some skills you’re going to acquire from outside. And when you can’t do either, then you’re going to outsource it to somebody. But that roadmap will become clearer and clearer to you only when, you know, the first thing what’s sitting with me already, and where can I take the effort to groom that because these guys know everything else, they know my product, they know my culture, we know each other. And so you want to retain those good guys who are already with you.

Hasita: That makes a lot of sense. I think just simplifying it and making it so clear as to the fact that the individual’s growth is the growth of the system I think that’s the key that I’m taking away from this entire conversation. And that it doesn’t always have to begin with large baskets of different 10 things and culture interventions and engagement and all I think all of these pieces can obviously wait. But the first priority is to just make sure that every individual in the system is best equipped I think to do more than what they probably signed up for on day one. And I definitely think this is going to help fight some fires.

Subha: Yeah, there’s the very old but still very popular and relevant quote that comes in a few shapes and forms. But essentially, the CEO says what if we invest in training and the people leave? And then there’s a people person saying that but what if we don’t and they stay?

Hasita: No, I think this is going to be the start of many, many conversations Subha, because I think hiring, retaining it opens a whole Pandora’s box actually of conversations that can be had around this subject. So I look forward to that.

Subha: Good. Let’s see how you implement it. Thanks a lot for asking me these thought provoking questions about little fires everywhere. That’s it from us, folks. Bye.