Startup companies are legitimately focused on the immediate needs of developing their brand and expanding a client base. As revenues increase, company founders and leadership can become time-starved and overwhelmed with managing their new business. That's when they realize they need more help. They have now reached the exciting milestone where they must begin hiring employees, thereby becoming an employer.Hiring employees can bring a company to new levels of growth, but also raises the risk of potential liability. The level of potential liability increases with each new employee. When a company becomes an employer, they become subject to a host of different and quite complex laws and regulations to include: wage and hour laws, sick leave, employment verification requirements, worker's compensation insurance, OSHA regulations, federal, state & local taxes, and many more. And to make things even more complicated, the laws vary based on the number of employees a company has and their location. Oftentimes, cities and towns in the same state will have different HR requirements!
Typically, company founders and leaders may think they don't need to worry about HR functions until they get bigger. They often think that if they can just figure out how to pay someone, then they're good for now. The reality is that businesses need to think about HR from the first employee they hire and thereafter. In fact, many startups spend more time on HR issues than they thought they would and end up wasting precious time struggling to manage employee-related paperwork and compliance issues. That is time that could be better spent growing their companies! Even worse, many startups make costly HR mistakes that subject their companies to needless risk and liability.
In addition, all employers (even small ones!) have a proactive responsibility to create a workplace that is free from harassment and discrimination, and a business interest in fostering good morale. A positive work environment can increase productivity, enhance the company's reputation with current and future employees and customers, and reduce the likelihood of employee lawsuits, which can be very costly. However, it takes management skill, effort, and time to develop a positive workplace. But it is critical to do because the consequences can be the flip-side: decreased productivity, negative reputation and an increase in the risk of lawsuits.
The stark reality is that there are many complexities and an ever-changing landscape when it comes to employment laws and trends. Given the impact employees can have on the company, it is disturbing that startups spend so few resources on developing their HR muscle.Understandably, startups may not be able to afford hiring an experienced HR Director or VP with an associated six-figure price tag; however, costly mistakes can be made when they have employees with no HR experience handling increasingly complex HR functions. It is equally risky for them to resort to using software and/or the internet for information and "canned" forms and materials. While this may seem like a good idea in the short run, in time it may be a costly direction in which to take the company.
As a company grows, it needs to dedicate time to focus on HR functions, which is difficult to do, particularly if key players are focused on developing other areas of the business. There is no question that the following HR functions are all extremely important and time consuming:
Employers have several options they can consider to support their HR needs:
Excelerator Can Help!Established in 2014, Excelerator® provides HR Outsourcing, Training and Payroll administration to companies of all sizes in a diverse set of industries. Our clients range from startups to multibillion dollar global companies.