7 Minute Read

Why HR is Important – Even for Startups

HR is relevant and necessary even for startups. It’s difficult to manage the paperwork, the compliance forms, even something as (seemingly) simple as recruiting and hiring becomes another burden. So, HR is important even for startups. While Red Branch Media has never surpassed the 20-employee mark, we HAVE implemented some great processes around HR, because, well…we have to! Let’s examine exactly why you need HR processes, platforms and personnel.


HR is relevant and necessary even for startups. Learn more here: Click To Tweet


Higher Retention Rates

You want to keep the people you’ve hired, right? With an HR team in place, you don’t need to concentrate on tracking engagement anymore. Although many startups default to hiring friends and family – those in their personal networks – an HR department will help draw boundaries while in the office. In fact, leaders typically will tap into their personal networks until they reach 50-70 employees. Lauren Weber (@laurenweberWSJ), workplace Reporter for the Wall Street Journal, said:


“Startups can be especially fraught HR terrain because founders often hire friends and acquaintances in a company’s early stages, turning personal issues into professional ones, and vice versa.”


So when it comes to hiring, having an HR team in place will help reduce turnover due to personal conflicts. An HR team would be able to source, attract, and hire individuals who have the credentials, not just the relationship, necessary for the job.


Compliance? No Worries

There’s a lot of federal and state regulations employers have to remain compliant with. Between the I-9s and EEOC laws, there are numerous paper trails to keep track of. When you have more than a handful of employees, that trail becomes increasingly complex. That’s why you need HR. It’s recommended that employers with more than 25 on their regular staff bring on a specialized individual.


When you have more than a handful of employees, HR can help with the various compliance complexities. Click To Tweet


Compliance, like HR, is important even for startups. But because many tasks, like payroll, can be completed automatically through software, many startups default to self-maintenance. Michal Lev-Ram (@mlevram), Senior Writer at Fortune Magazine, said:


“Still, it’s understandably hard for some early-stage companies to see the need to invest in HR when the more apparent demand is for technical skills, and when software and outside firms can do most of the menial tasks performed by human resources departments, like payroll and benefits.”


There are Other HR Functions…

Whether it’s payroll, complaints, performance management, or the variety of other internal functions, an HR individual would be able to take care of them. What some startups forget, is that HR is more than just the people who send paychecks every week. Grace Ferguson, Demand Media, groups the functions of HR as:

  • Recruitment and selection – This is where tools like free to low-cost applicant tracking systems come in. The applicant tracking system, among many other applications, helps HR departments at startups find elusive, highly-skilled candidates. We use Recruiterbox.
  • Employee benefits – Whether or not you offer benefits, an HR professional would be able to help you outline what you would like to offer employees as part of their benefits or fringe benefits packages. We use KinHR to administer benefits.
  • Compensation and evaluation – Do you conduct regular performance reviews? HR helps you regulate, standardize, and track this information so you can help improve employee performance. We use a system called Gusto to manage compensation and iRevu to create a feedback loop.
  • Training and development – Considering 63% of employees believe developing new skills is important to career development, bringing on an HR professional to manage this could help increase retention rates. Our training program is housed within Bitrix24 in client and process wikis.
  • Employee incentives – An HR team would be able to effectively uncover and manage what keeps employees motivated in your office. We don’t have a specific tool to measure incentives with the exception of a 10% referral bonus for new business or employees.
  • Compliance – Clearly there are a plethora of regulations to follow when you hire someone or multiple people; consider an HR professional to take care of this so you can focus on business strategy. Currently, our compliance is simple but we did invest in having an HR professional create an employee handbook for us.
  • Termination – No one likes firing an employee, especially the employee. Create an HR team to make sure you follow all of the proper guidelines so you reduce your risk of litigation. One of the reasons we implemented a more formal review process was so we could (if needed) document a performance plan.


Making the decision to create an HR department (even if it is one professional that manages a series of platforms) to your small team is difficult. While you need someone to maintain employee records, compensation, development and the like, it’s understandable that you’d want to maintain control of your business brainchild. However, for the sake of business development, compliance, and retention, HR is important even for startups.