ATD Blog

Talent Challenges for Start-Up Companies

Wednesday, October 7, 2015

ATD’s Senior Leaders and Executives Community of Practice recently talked to Robert Siegel, a lecturer in organizational behavior at Stanford’s Graduate School of Business, about ways to build good HR practices in start-up businesses. 

Q: Why is it important to establish the best talent development and HR practices in the earliest days of a start-up business?

A: Often the tyranny of the urgent in a start-up prevents early founders and entrepreneurs from thinking about the long-term growth of their team and a staff. As a company grows and scales, the skill sets required to run a business are obviously different when a company has 5 or 25 or 250 people. 

If an entrepreneur believes that developing one’s team and people are a company’s strongest assets, it is important to establish that hygiene in the organization from the earliest days. (I use hygiene to mean talking about the proper way of doing things). You need to think about the hygiene of feedback, of growth, of how to help people extend their runways, and how to deal with performance issues. It’s easier to begin that in a firm’s earliest days, than to clean up the accumulated challenges when the company is larger.

Q: Why do you think the importance of a talent strategy is often overlooked and neglected?

A: During the earliest days of a start-up there are two big issues that a company is dealing with: developing its product or service, and finding its first customers. Those two things can be all encompassing, and often the issues around developing a team take a back seat. Often, the people skills fall below the line and are not addressed. 

Most start-ups don’t have an HR person from day one. The CEO or vice president of marketing or engineering—the person managing HR—has all of his other responsibilities and doesn’t have the time to think about people skills and development. Even if we assume natural proclivities for such HR issues, these leaders are dealing with other issues, and often haven’t been trained in the HR function. 

Q: Many people think that HR is solely about benefits, but you say that the real focus of an HR department ought to be staff development. Please expand on that thought.

A: Let’s start with the broader economic changes happening in society. We are continually automating a variety of functions in the labor force that computing power does substantively, effectively, and efficiently better and faster than humans. The people you do have in an organization need to be continually groomed and grown. They need to be able to learn new skills as the business changes. If you’ve got good talent, you have to make sure they stay trained in the technology du jour. It’s critical. 

If you’re going to be a learning organization, the mindset has to be one where you are thinking about taking an existing talent and training him. It’s much more expensive to replace someone than take an existing talent and grow him. For the survival of the organization, and the speed with which we’re dealing with these issues, companies have to think through their long-term growth of their people. Executives need to ask if employees not only can do their first job, but also can they do the next two positions as the company grows and scales? 

The question is where is that competency going to reside in an organization? HR is the logical and proper place for that.


Q: Do you find that start-up businesses often lack clear, transparent, and direct communications? If so, why is that important and what can they do to improve that situation?

A: I believe that for the reasons we’ve already discussed, when the tyranny of the urgent gets in the way, start-ups don’t embed the DNA of open and direct communication into the company. Improving the situation starts from the top. The CEO of the business has to think about it when he starts the organization. Even if he doesn’t have a head or HR when the business starts, management has to be thinking that having that person on board within the time frame of relevance needs to be done sooner rather than later. 

Until an HR person is in place, the CEO needs to own this. Leaders need to inculcate how to give feedback and grow more people until a full-time function staff member on board. In the early days of a start-up, it’s fine to hire an HR consultant 10 to 20 hours per week. The most important thing is to have the culture embracing and modeling that from day one. 

Q: You also write, “Employers must ask themselves certain questions: Are you giving your employees the tools to be effective in their jobs? Are you providing them with tools to grow their careers? Are you enabling opportunities for them to accomplish all the things they want to do?” Please talk a bit more about those questions and the answers employers need to gather to answer those questions.

A: One of the things that happens in start-ups and large companies alike is this notion that people will come back to interact with you many times, sometimes over decades and in different contexts. If you’re a manager of an organization, understanding the hopes and goals and professional aspirations of your team enables you to put your team into roles and positions where they’ll be highly motivated to work hard. If people believe you’re looking out for them, it’s amazing what they can accomplish. 

The question a strong leader needs to ask is does he really know the goals of the team and can he help his teammates get there? It’s a mindset that takes a long-term view rather than a transactional view of people development. 

Providing employees tools to grow their careers has a wide range:

  • teaching how to be good leaders themselves
  • teaching people how to model good behavior
  • teaching how to be good managers (especially if it’s the first time they’re managing people)
  • teaching how to give feedback
  • teaching what’s required to motivate people
  • helping your team think through not only what they want in this job, but also in the next two
  • challenging them to exercise muscles they haven’t exercised before. 

Some of my best mentors consistently pushed me into my zone of discomfort. When I was doing well, they’d say that’s enough, let me raise the bar on you. Leaders can give people specific tools such as workshops for particular skill sets, but also they need to push and challenge people. 
Q: How do employers in start-up companies, deal with bad behavior quickly and professionally? 

A: If someone is causing trouble, highlight the behavior, talk about the problems, set expectations of how the company deals with hard issues or stress, as well as the expectations of how the team will perform together. 

We talk about this at Stanford in our course called Interpersonal Dynamics. The first thing is to make sure you give the feedback in a positive and constructive manner. If someone is given the feedback, “You’re doing A we need you to do B,” and if the situation is not getting better, then the person needs to be told a second time, “This isn’t improving and it’s not fair to everyone else on the team.” 

In addition, giving frequent feedback is essential. If you see someone is doing well, tell him. Feedback should be given weekly and if you can’t do that, then it’s important to give it at least once a month over lunch in an informal setting. The contents of a review should never be a surprise. The recipient should know what’s going to be in the review ahead of time. It’s incumbent upon the manager to be giving feedback on a consistent basis.

Some people are afraid to coach someone out (fire them) because they’re afraid it will reflect poorly on him. They’re afraid it will hurt the team because everyone’s so busy and all of a sudden the team will be down a person. That’s short-term thinking. As CEO, your job is to put the best team on the field. If you don’t make a change, you might lose the rest of the team. 

Q: How can employers in start-up companies find and use the best practices for how to motivate, how to grow people, how to manage people, and how to help people succeed who are struggling?

A: The great news is you don’t need to reinvent the wheel. There are a lot of talented people out there who have been in organizations and have figured out how to do things right. Many experienced HR and talent development leaders fit well in start-ups and understand what companies need. Go look for them. 

I’m intrigued with the work that some companies are trying, which turns employee feedback on its head. A lot of companies are doing away with the “dreaded annual performance review.” Performance reviews are dreaded when they’re not done well. There are best practices on how to do them well. 

I encourage companies to try new things if they can’t find something that works for them. As a leader, what you’re trying to accomplish is to make your people successful. If your people are successful, the company has a better chance of being successful. Stay focused on enabling your people to perform. Empower people to accomplish great things. 

About the Author

Ruth Palombo Weiss is a business writer. 

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