HR For Startups: What to Expect and Tips for Success

So you joined a startup to either lead or help run its HR team. Congrats! But also, my condolences.

While the thought of a “no rules” environment without the red tape and hierarchies of a big company may sound attractive (not to mention the potential to ride an IPO), it’s not a walk down easy street.

I’ve worked with startups for over a decade, and I love it. But even I’ll admit that startups are incredibly chaotic and not for everyone. The same relaxed environment, without bureaucracy, means you won’t have a process to follow, and people may not take you seriously.

Think of this guide as a starting point to building a blueprint for success in a startup environment. I’ll share the challenges you’ll face, strategies to follow, and a few stories you can learn from.

 

Why HR is Essential for Startups

HR is essential, but I guarantee that 99% of executives won’t be able to correctly answer why. Ask most executives what value HR brings, and they’ll probably respond with one of the following:

• Compliance
• Protecting the company
• Recruiting and hiring
• Payroll

Yes, HR plays a role in those. But HR brings so much more value than simple administrative work. For example, as an HR leader, you get to have a say in:

• Shaping the company culture, which dictates how work gets done
• Workforce planning and headcount forecasting
• Organization design and how teams are structured in your company
• Employee benefits and incentives
• Your employer brand, which will be used to attract like-minded talent

I’ve seen companies with $120M in the bank blow it all in a few years, and I’ve seen small upstarts in highly regulated industries crush their competitors. It wasn’t good products or luck that made the difference between these companies; it was a strategic approach to HR.

Case in point: my time at Glorious Gaming.

Glorious is a PC gaming peripherals e-commerce company that manufactures keyboards, mice, headsets, and accessories for competitive e-sports gaming. During the pandemic, the company had recently transitioned from an in-office presence in the Dallas area to a nationwide remote presence in the United States.

At the time I joined, the company was doing $25M-$30M in annual revenue, and my goal was to help it scale sustainably. To do that, I:

• Set up employment infrastructure across the entire United States and internationally, hiring employees and contractors in more than 25 countries within 6 months.
• Conducted a full-scale compliance audit of US and international HR operations, resolved multiple non-compliance issues, and revamped the entire HR policies and procedures.
• Designed and implemented a new organizational structure to better align with the corporate strategy and improve operational efficiencies.
• Led the company’s global recruitment efforts, growing the headcount from 30 to 100+ within 8 months by implementing a redesigned recruitment process that reduced the time to hire from 45 days to 25 days.
• Revamped the company’s performance management system and correlated results with employee engagement data to identify departments with the highest risk of turnover from top performers.
• Eliminated inconsistencies in compensation by aligning pay-to-market data and implemented a compensation strategy to attract and retain target talent.
• Implemented heavy automation to make sure that almost all admin work was fully automated and streamlined, allowing the HR operation to rely on only two full-time employees and keeping it very nimble.

And that’s just what I have room to squeeze into this article. After 18 months, Glorious’s revenues rose to $80M and were ranked by SMU 100 as the 4th-fastest-growing company in Dallas. While having a good product helped, this type of growth does not happen by accident; it is a product of doing HR in a way that enables the company to scale quickly and sustainably.

 

The Role You Can Expect to Play

While you may not be entirely responsible for everything below, you can expect to play a role or contribute to the following:

• Culture: With top talent in demand and large companies able to offer massive salaries, signing bonuses, and benefits, culture will be what retains your best employees. In the early stages, the founding team will set the pace, but HR plays a role in shaping and evolving a company’s culture.
• Compliance: This is where I see founders assume HR’s primary value lies, but compliance is only one facet of HR. Still, you will play a significant role in ensuring your company hires, pays, and handles conflicts correctly.
• Hiring: The people you bring into your company will significantly impact its trajectory in the early stages. Expect to play a role in developing hiring standards and a consistent interview process across teams.
• Employee engagement: It’s easy for employees in large companies to hide and coast, but in a small startup, everyone needs to bring their best and contribute. Expect to play a role in ensuring that your employees are engaged, motivated, and rewarded for their effort.
• Onboarding: First impressions matter, and a chaotic first week can sour even the most excited new hire. You’ll need to build a structured onboarding process that gets people productive quickly while making them feel welcomed and set up for success from day one.
• Benefits: Early-stage companies can’t compete dollar-for-dollar with tech giants, but benefits can make a difference. Your role is to identify which benefits will actually move the needle for your team without blowing your budget on perks nobody uses.

Now, just because you and I agree that HR is important doesn’t mean everyone else will. Because of that, you can expect to face the following challenges in the next section.

 

Common Challenges HR Leaders Can Expect to Face

Beyond the obvious challenges startups face, like “running out of money,” here are some of the unique hurdles HR will be expected to leap over without breaking a sweat:

• Lack of support from leadership
• Handling blame from the company
• Lack of direction
• Limited budget

 

Lack of support from leadership

Chances are good that leadership will not understand your value, ignore some or all of your opinions, and leave your initiatives toothless. Because you and I agree that you play a much larger role than managing payroll, this can threaten the most important work you do in your company.

The first step is to earn your CEO’s trust and respect. To do that, I recommend the following:

• Learn your CEO’s language
• Be data-driven
• Communicate regularly
• Think strategically, not just tactically
• Take ownership

Check out my guide to partnering with your CEO to get buy-in for your initiatives.

Handling Blame From the Company

Leadership will blame you for a lack of engagement across the team, and employees will blame you for any and all unpopular news you have to share. For better or worse, HR is often the messenger for company initiatives. When the message is bad, you will shoulder the load even if the decision isn’t yours (and even if you don’t agree with it) because employees will not know.

You will never escape the blame game, but you can prepare for it. To do that, I recommend the following:

• Set boundaries. When an employee comes to you with a personal problem that isn’t work-related, be compassionate and direct. When they come to you with a work issue, be clear that you will listen, but your role is to document and act.
• When you’re delivering bad news or discussing a difficult situation, be direct and empathetic. Be human, but within reason, and stand firm so you can do your job.
• You can’t be an effective HR professional if you’re not in lockstep with senior management. Make it clear to the organization that you are an essential part of the leadership team and not just an administrative function.

Check out my guide to managing blame in HR for a full breakdown of the above tactics.

 

Lack of Direction

One month, you need to increase headcount by 10%; the next, it’s time for a RIF.

I don’t care if you’ve successfully bootstrapped to $1M ARR or you’ve raised $100M in funding; no one is immune. The past decade alone is littered with last-minute decisions and near-failures. Just look at Substack. Fresh off a $65M raise in 2021, Substack laid off 14% of its company in 2022. CEO Chris Best Tweeted “Today’s the saddest day we’ve had at Substack.”

If a company as flush with cash and users as Substack can overhire and quickly backtrack, imagine how fast a startup will need to make decisions. And how many of those decisions are likely to contradict each other?

Check out my guide to upskilling as a solo HR leader for more tips.

 

Limited Budget

You know all those cool benefits that Google offers to its employees? Things like catered lunches, on-site drycleaning, child care, fitness classes, and dozens of other perks. Or how about Propellernet, which runs a dream ball lottery where they fund any employee’s dream, from African safaris to staging rock operas?

You can’t afford that. Even HubSpot, a billion-dollar company, had to cut costs when employees took advantage of freshly stocked produce in the fridge (for the full saga, here’s Katie Burke’s write-up).

Rather than seeing your budget as an excuse, see it as a creative limitation. Consider your ideal candidate and think through ways to make your company stand out, attract top talent, and fit within a scalable benefits strategy. DoorDash credits and gym memberships are great… but over-extending benefits only to cut them later will crush morale.

 

How to Build an HR Strategy in Your Company: Key Principles

You’ve got an understanding of your role and the headaches you can expect. Let’s get to the good stuff: how to build an effective HR strategy in your company that drives growth.

Over the years, I’ve developed a system for deploying HR as a strategic function inside a company. The following are the key principles I follow:

• Start with the business
• Treat HR strategy as a living thing
• Build feedback loops with leadership
• Lean on partners in the company
• Make culture and innovation deliberate
• Anticipate scale pains

 

Start With the Business and Position HR as a Strategic Partner

Strategic HR in a startup is built backwards from the company’s business strategy, not forwards from HR best practices. Thinking this way is probably one of the fastest ways to earn your CEO’s trust and respect.

Remember that everything you do needs to support the company:

• Anchor HR decisions on what matters most to the company and where it is going.
• Know your business numbers cold. You should be able to wake up from a dead sleep and recite them.
• Translate business strategy into people strategy.

Start with the business, and you are off to a great start.

 

Treat HR Strategy as a Living Process

There is no such thing as “set it and forget it” in a startup. Remember that the HR strategy you build will need to adapt and evolve as your company grows. New hires will join, new challenges will emerge, and your HR strategy needs to roll with the punches to support them.

I like to use a simple HR strategy canvas as a one-page view that connects the business, its goals, people priorities, key initiatives, and core metrics. By the way, you can get access to this canvas and dozens of other templates in my HR Startup Operating System course!

 

Build Feedback Loops With Leadership

Strategic HR isn’t aligned just once. HR needs to stay aligned with the CEO and leadership team through deliberate, recurring feedback loops. Making the effort to align with your executive team is one of the best ways to get buy-in and support for your initiatives.

In practice, this looks like:

• Standing check-ins with the CEO and functional leaders, focused on: What’s changing in the business? What’s blocking progress? What signals are we seeing from teams?
• Shared metrics and KPIs tied to the same scoreboard leadership cares about: hiring velocity for critical roles, ramp time, regrettable attrition in key teams, manager capacity, engagement in pivotal orgs, etc.
• Two-way visibility. HR provides qualitative signals from the organization (morale, capacity, early signs of burnout, culture drift), while leaders provide strategy; both are required to guide HR in your organization.

Build and maintain these feedback loops, and you will earn the trust and confidence you need from leadership to do your job effectively.

 

Lean on Partners in the Company

Your leverage in a company comes from working through other business functions, rather than driving everything yourself. By leaning on partners in the company, you can play a role in:

• Capacity planning
• Defining and articulating your brand story
• Processes for compensation, promotion, and firing
• Culture

It’s not up to you to do all of the above yourself, but it is up to you to guide your company’s teams and departments to align with the strategy. I find that HR leaders who try to do everything on their own burn out quickly. A startup is a marathon, not a sprint, so find partners in your company.

 

Make Culture and Innovation Deliberate

Your company culture will form whether or not you play a role; the question is what kind of culture you want and whether you want to shape it.

Culture isn’t a slogan painted on the wall or something you define in a slide deck. Company culture is a shared understanding of the type of person you hire, the mindset employees adopt, and how work gets done. Culture is just as much a strategic function as hiring and technology, so treat it as such.

 

Anticipate Scale Pains

Being strategic means paying attention to what’s around the corner: growing pains that will pop up as your company scales. One of the best ways to earn your CEO’s trust is to anticipate them and address them before they become a full-blown crisis.

The best way to do that is to:

• Recognize common inflection points like culture drift, founder bottlenecks, or overloaded managers. Pay attention to the signs of strain as you scale.
• Introduce structure when (and only when) it is needed.
• Balance speed with sustainability. Be the voice of reason that asks whether you can sustain your current growth without leading to burnout or other downstream effects.

The most strategic HR leaders I’ve ever worked with act like risk managers. They see scaling as a matter of anticipating predictable growing pains and quietly building the systems that prevent them from blowing up.

 

Tips for Measuring Success in Business Terms

Strategic HR proves its value by showing how people decisions move real business outcomes, not just HR activity metrics.

Of all my tips, this is one of the best ways to earn your leadership team’s trust and respect.

Rather than fall back on weak reasoning like “should” or “ought to,” point to the data you are trying to influence through your work. These should be clear and actionable metrics that measure the effectiveness, efficiency, and impact of your HR processes.

By tracking your metrics, you can identify what’s working, spot problems early, and make data-driven decisions about hiring, retention, and employee development. Some metrics you might want to consider tracking are things like:

• Time to hire
• Cost per hire
• Regrettable/non-regrettable turnover
• Employee satisfaction/engagement

Work with leadership on the metrics that matter to the business and show how HR influences them.

 

Ready to Tame Startup Chaos? Download the HR Survival Guide

HR plays a pivotal role in startups, but your path to success is far from guaranteed.

You can expect to face a lack of understanding of your role, limited support for your initiatives, and a lack of budget. But if you get it right, well, that can mean being a key part of an eight-figure exit. Don’t worry, I have something to help you handle the pressure.

Successful startups scale because they build the systems needed to attract and retain top performers, and equip them to do their best work. 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 hyper-growth.