Human Resource Policies for Startups

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Ashutosh Garg November 22, 2019

It is a huge challenge to get excellent professionals managers to leave large companies and join startups. Good people are needed by a startup but they won’t join easily. Such managers are generally poor risk takers and only when they see stability in a company and they see other professional managers making this leap of faith do they agree to make a change. 


While it must always be the objective of every entrepreneur who is working towards building a big business on a national level to bring in strong professionals and gradually hand over the operations of the company to such professionals, the timing of bringing in these professionals has to be right. The entrepreneur must outline his philosophy for the Human Resources function not just in words but also in deeds because this is what will set the management culture of the company. 


The human resource function of any company can make or break a company since the employees are ambassadors of the company and your “face” in front of your customers. Therefore this function must have a strong leader and must have the complete support of the entrepreneur. 


Some guiding human resources principles that the entrepreneur should consider establishing very early in the company’s journey are: 


  • The company should rapidly move towards professional management and that not build a family run organisation. 


  • Professional growth must be based on meritocracy and not based on relationships with the entrepreneur or some senior member of management or patronage


  • Any relationships between managers would need to be disclosed at the time of hiring and approved by the management committee of the company. It should also be specified that two managers who are related would not be allowed to work in the same department.


  • Performance management must be done based on agreed and quantifiable key result areas for each manager


  • Salary increases would be based on the achievement of results and not based on seniority and definitely not based on relationships.


In large established companies, HR policies are followed by everyone because “everyone else” follows them and no one asks for any exceptions to be made. However, in a new company, most new employees try and implement policies they have either seen in use elsewhere or want to get implemented for their own personal needs. 


The entrepreneur must make it clear to everyone that the company will implement policies for employees that the entrepreneur is willing to accept himself. He must take a decision to abide with the policies articulated by the Human Resources department of the company, and approved by the board, in their entirety so that there would no exceptions. 


  1. He must start marking his attendance on the biometric fingerprint reader every morning and evening like he would expect all employees to do.


  1. Leave should be applied for in the standard company approved application form. This must apply to the entrepreneur as well.


  1. Ensure that no special discounts are offered to the entrepreneur that the other employees are not entitled to. Obviously, these can be graded based on seniority but the principle must be transparent for all to understand.


  1. If the entrepreneur calls for any samples to be given out as gifts, these should be duly authorised as is done for all other managers.


  1. All the expense claims of the entrepreneur must be approved by another board member as is the practice followed in the company.


  1. For gifts received by employees, some companies fix a limit beyond which all gifts need to be handed over to the Human Resources Manager. These gifts are then given away to all staff members through a raffle either on an annual day or in a town hall meeting.


Only when people start to see the entrepreneur following the companies’ policies will they start accepting these and started adhering to them. If the entrepreneur does not follow these policies then it will take a very short time before all management levels will start to build exceptions for themselves.


Establishing the key result areas, quantifying these and getting the “buy-in” from the respective managers is a big challenge the human resources function is confronted with in every new company. Getting people to sit down and make a commitment to accountable and measurable parameters was tough since most people did not want to be pinned down to a set of numbers they would be held accountable for. 


It can take several years and constant cajoling to get managers to start making this commitment for themselves based on which they would set similar KRAs for their teams. This cannot be done through a directive because the entrepreneur is always worried about losing key managers and therefore he needs to constantly live on the edge of the razor!


While it is important to professionalise a startup company quickly, handing over the reins of the company and stepping back should only be done by an entrepreneur when the organisation has built sufficient resilience to handle changes that a professional manager is bound to bring in for the long term good of the company.


Good policies coupled with firm implementation could mean that your young company will need to keep hiring better and better people to keep upgrading your skill sets. This will also result in a higher than normal turnover in your management ranks but this is to be expected and must not be a reason for any concern. It is better to lose those employees who find it difficult to accept the company’s policies rather than allow them to develop arbitrary policies and norms for employees. Over a period of time, the management team will stabilise.


In summary, the motivation of human beings in a startup must be a fire from within. If someone else tries to light that fire under the employee, chances are that this fire of motivation will burn very briefly.



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The author is the founder Chairman of Guardian Pharmacies and the author of 5 best-selling books, Reboot. Reinvent. Rewire: Managing Retirement in the 21st Century; The Corner Office; An Eye for an Eye; The Buck Stops Here - Learnings of a #Startup Entrepreneur and The Buck Stops Here – My Journey from a Manager to an Entrepreneur.


Twitter: @gargashutosh

Instagram: ashutoshgarg56

Blog: ashutoshgargin.wordpress.com | ashutoshgarg56.blogspot.com

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