Ep. 10 - Hiring the First HR Leader for Your Startup

It’s the most common question that Katie Burke, Chief People Officer at HubSpot, gets: When should you hire your first HR leader?

Hiring the first HR leader in a startup is a pivotal decision. In this episode, I outline three key indicators that will indicate when it’s time to make this hire. I’ll also talk about the ideal characteristics of a startup HR leader as well as some of the pitfalls that founders make during the hiring process.

Hiring your first HR leader is an important step for structuring your startup’s path to growth and long-term success.

As your business evolves from achieving product-market fit to entering a rapid growth phase, the challenges of managing an expanding team and sustaining your unique company culture necessitate a dedicated and strategic HR presence.

This crucial hire alleviates founders from the growing HR responsibilities, allowing them to redirect their energy towards higher-level strategic initiatives while aligning HR functions with business goals.

Here are the main learning points from Episode 10 - Hiring the First HR Leader for Your Startup.

When is the Right Time for Your First HR Hire?

I hate to say it, but it depends. That said, having worked with 150+ startups over the years, some making tens of millions in ARR, I’ve found that there are three indicators you should look for while making this decision.

If any of these elements exist in your company, then it’s time to make the hire:

1. You’ve exited the product-market fit stage
2. HR tasks are taking up too much time
3. You’ve reached certain employee headcount milestones

Let’s dig a bit deeper into each one.

You’ve Exited the Product-Market Fit Stage

Product-market fit is the do-or-die stage for any startup. It’s when you figure out if your product/service has the market and traction needed to get to the next level.

A startup generally exits this stage and goes into the growth stage once its revenues reach seven figures and team size reaches 20 to 40 employees. Getting here is no small accomplishment, but continued success is not guaranteed.

At this growth stage, the focus shifts from validating your product to scaling your operations. An HR leader becomes essential to manage increasing complexities in recruitment, onboarding, and culture-building efforts, among other things.

An HR leader frees up the existing leadership team, enabling them to focus more intently on strategic planning and growth rather than being consumed by HR tasks that they are not equipped to deal with.

HR Tasks Take up Too Much Time

In the early going, the founder or founding team can take on a variety of tasks. Startup founders often wear many hats when trying to get their companies off the ground.

This is a blessing and a curse, though. While it may be good enough to gain traction, it can lead to founders and leaders finding themselves dedicating excessive time and energy to HR-related activities. This serves as a clear indicator that the time has come to hire a proficient HR leader.

An HR leader takes charge of handling interpersonal issues, administrative tasks, and the overall HR operational framework, thereby freeing founders to devote their talents to core business objectives.

An HR leader plays a critical role in enhancing employee relations, implementing robust performance management programs, and fostering comprehensive talent development initiatives.

Employee Headcount Milestone

Regardless of the two indicators above, your startup needs an HR leader once your headcount hits 50 employees.

A 2023 study by Zelt revealed that, on average, first-time HR hires happen when a company’s headcount is between 40 and 50 employees. Stats aside, I can confirm this number from my experience working with 150+ companies for more than a decade. Every time your company hires an employee, it creates an administrative, compliance, and general HR burden on your team. What ends up happening is that you and your managers will start drowning in HR work over time, work that you won’t be equipped to handle because you don’t have the expertise for it.

As the workforce continues to scale, a dedicated HR leader ensures smooth and efficient operations, laying the groundwork for sustained growth and future expansion. By instilling systematic processes and fostering an employee-centric culture, the HR leader becomes an invaluable asset in navigating the organization through the intricacies of expanding human capital.

What to Look For in an Ideal HR Leader Profile: 3 Key Qualities

Every founder knows that the startup life is not for everyone.

You need a special type of individual who can thrive in the startup world, and that is no different for the HR leader’s role. Here are the three traits to look for:

• Visionary self-starter
• Aligns with company values
• Versatile and takes a hands-on approach

Visionary Self-Starter

The ideal HR leader for your startup is a visionary and strategic self-starter who can anticipate and proactively address challenges before they escalate.

They should be skilled at crafting innovative HR strategies that align seamlessly with your startup’s long-term vision and goals.

Aligns with Company Values

Ensuring a strong cultural alignment with your company’s foundational values is crucial for a startup HR leader.

This leader should not only embody these values but also work to maintain a respectful and synergistic relationship with the founders. Open communication and mutual respect are critical to a transparent and strong relationship with the executive team members.

Versatile and Hands-On Approach

A successful startup HR leader must exhibit the versatility to shift between strategic initiatives and hands-on operations seamlessly. In many cases, the HR leader will be the first HR hire the startup makes. Therefore, they will shoulder the load of all the day-to-day HR work.

They are responsible for managing comprehensive recruitment efforts, optimizing onboarding processes, and enhancing employee engagement.

A bonus is if they adopt an Agile mindset, because they are well-equipped to quickly address emerging needs and support the scalability demands inherent in a rapidly growing startup environment.

Check out my guide to defining an ideal hire for your startup for more info on this.

Avoid These HR Hiring Pitfalls

There are four pitfalls I see founders make when hiring their first HR leader. Make sure you avoid these to maximize your chances of landing a rockstar HR leader:

• Focusing too much on compliance
• Lack of startup experience
• Leading HR for the first time
• Failing to match your growth stage

Compliance Overemphasis

While compliance is an essential aspect of HR, it should not overshadow the strategic elements crucial for business growth throughout the hiring process.

Many compliance-related tasks can be effectively outsourced, allowing your HR leader to concentrate on nurturing the company culture, defining strategic directions, and ensuring scalability.

By maintaining a balanced focus, the HR leader can drive significant organizational growth while ensuring all compliance requirements are consistently met.

Lack of Startup Experience

Hiring an HR leader with experience in the startup world should be a core requirement. The fast-paced and dynamic nature of startups demands a leader who thrives in such environments, someone who displays an exceptional adaptability to manage constant change and complexity.

Without this experience, there’s a pronounced risk of encountering missteps and inefficiencies that can hinder the startup’s progress and innovation.

First-Time HR Leader Risks

Choosing a candidate with extensive experience as an HR leader can bring essential knowledge and strategic skills that are often crucial for a growing startup.

In contrast, hiring a first-time HR leader might introduce risks related to their limited experience and understanding of the unique demands and nuances present in a startup setting since they’ve never held the decision-making authority in these situations.

This could potentially lead to strategic misalignments and operational setbacks, which eventually slow down your company’s scaling efforts.

Failing to Match Your HR Leader to Your Growth Stage

Selecting an HR leader whose skills align with your company’s growth stage is crucial for success.

Early-stage startups typically need leaders strong in recruitment and building basic HR processes, while scaling companies require expertise in operations and change management.

Before hiring, assess both current and future needs to ensure your HR leader can handle immediate challenges while supporting long-term growth objectives.

Check out my guide to the top startup hiring red flags for other warning signs to watch out for.

Fractional vs Full-Time: Which is Best for Your First HR Leader?

Here’s another question I get all the time: Should your first HR leader be a full-time hire or a fractional hire?

Your first HR leader doesn’t have to be a full-time hire. You can opt for a fractional HR leader who fits the profile and slowly scale up the work from there. For more information on what to outsource in HR and how, check out episode 8.

I’ve led high-growth startups to use HR as rocket fuel for their growth. Learn more about my fractional HR services to see how I can help you scale.

Hiring is Just One Part of HR: Download the Startup HR Survival Guide For the Rest

Hiring is a key piece of your startup’s success, but it’s only one element of HR.

The most successful startups know that their path to scaling from 7 to 9 figures will be made possible by the practices they follow to attract and retain top performers in their company.

I mapped out this and more in my Startup HR Survival Guide. In this free guide, you will learn:

• How HR can drive growth
• How to hire
• How HR evolves as your company grows
• And more!

Fill out the form below to download the free guide and put your company on the path to hypergrowth.