Human Resource Functions in the Early-Stage – Weekend Reflections for Leaders

Human Resources:

Over the last several weeks, we have been sharing some concepts for leaders considering making a transition from a large company to building the next chapter of their career in a smaller, early-stage venture.

Leaders who have built an effective set of skills while working for a large company are needed in the early-stage to help bring innovations forward in the market. The risk of all of us being “Amazoned” in the not-too-distant future is real. Being on the forward edge of innovation in the early-stage is one way to stay ahead of the threat of becoming extinct as marketplaces become more efficient in serving customers.

The focus for today’s topic is on establishing a human resource function in the early-stage. In the typical scaling up phase of an early-stage company, a formal human resources function is usually one of the last functions to be brought in house. There are plenty of exceptions but in general, most early-stage companies rely on their leaders and the occasional consultant to help create some degree of process around what would be characterized as a human resources function.

Senior leaders transitioning from a large company to the early-stage world bring a strong foundation in effective human resources. However, the big difference is leaders now have a sense of being all alone in making the decisions and executing the plan. They certainly gain input from advisors, consultants and lawyers, but in the end, all eyes are upon them. It’s the leader who is asked, “What do you want to do?” This is a much different experience than having an internal team of HR professionals and lawyers guiding each step of the way.

There is a misconception that many leaders have when transitioning to the early-stage environment. Leaders often make comments like, “I could never move fast enough in my large company…” to hire or fire someone, or give promotion. There were always so many guardrails, paperwork, and obstacles. “…I can’t wait for a small team where I can move quickly on personnel decisions.”

The reality is that yes, leaders can move quicker on decisions. However, leaders in the early-stage have a different set of guardrails and obstacles to think about in making decisions on personnel.

Given time and money are always in short supply, leaders face the challenge of balancing getting the most out of the team you have versus making some quick firing-hiring decisions. They also face critical vacancies with not enough bodies around the table to get the work done.

Sometimes balancing some positive and negative at the individual level is a bit more complicated. For example, sometimes working as best you can with a non-A player for the near term is a wise choice over having a major gap in a critical-need position.

In addition, when leaders are faced with pending financing of the company like a Series A or B round closing, there are risks to implementing major changes within the team, especially changes in functions that potential investors consider critical to the stability of the leadership team. These are never easy decisions, but in contrasting leadership in a large company to that in an early-stage environment, they both come with their own guardrails and obstacles that may hinder a leader from moving quickly on certain people management decisions.

One additional point to note about moving fast on people management decisions in a small company. Investors do not invest in a company to pay for litigation expenses caused by an employee or former employee issue that arises. Leaders need to be very thoughtful about the discipline with which they implement their own people management processes to ensure people are treated fairly and to minimize the risk of resources being allocated to items that are not creating value for the company.

In most cases, leaders in the early-stage are building these processes from scratch and are fully accountable for them.

Strong leadership is needed in the early-stage marketplace and leaders from large companies have the skills and experience to create great value at the forward edge of innovation. As we look to build and strengthen our leadership over a long-term career journey, the early-stage market provides a wonderful environment for leaders to learn, grow, and bring world-leading innovation to the market.

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Also, for those leaders in healthcare, the opportunity to be at the forefront of creating and scaling life-changing innovation resides in the early stage. This sector needs strong leaders like yourself to drive innovation in the years to come. I wanted to share a link to a program specifically for leaders in healthcare who are looking for insights into building the next chapter of their career in the early-stage. I was asked to contribute to this program based on my experience of leaving a large healthcare company and building my career in the early-stage. Please take a look at the link below.