Build a fit-for-purpose HR structure for the reality of start-ups

JooBee
May 30, 2021
8 min read

Updated: Oct 14, 2023

Previously on Scaling Start-Ups...

We explored the 6 Foundations to build a future-proof HR function ready to tackle the various phases of start-up growth. In this episode, we are diving into one of the foundations: Structure, where we explore how to structure an HR function inspired by best practices beyond HR.

Building an HR team for future-focused start-ups

For the past 20 years, businesses and HR folks have been using Ulrich’s model to structure HR roles (for better or worse), but when it comes to start-ups, this model goes straight out the window. In fact, most models do!

👀 Here’s the reality of what happens in a start-ups:

When they receive funding to grow their product, they need to hire a team, fast! The first HR hire seems to be a no-brainer: a recruiter. When the HR administration becomes too much to handle for the recruiter, an HR generalist will be hired, whose role will be everything ‘people’ related.

With more new hires, employees' needs become more apparent. You’ll start to hear questions: “What is the next step of my career here? When will my salary be reviewed? When will I be promoted? How are you developing me?”

The next thing you know, your people are starting to leave because they ‘lack career progression.’

Not having the right HR structure before you grow your employee base means you’re on the back foot when it comes to meeting your employees' needs. You may experience the loss of talent, the high cost to replace them but most importantly, the very real possibility of a delay to your business growth, #bewareofhrdebt!

Only very few founders recognise that HR is a lead function, not a lag function

I have been fortunate to work for a couple of organisations that have such a mindset. I joined at a fairly early stage and gave myself 2 years to get ahead of the curve on HR debt. To do so, I made sure the structure of the HR function (as well as the other 5 factors in the 6 Foundations framework) was built to scale with as little upheaval as possible while the business grew at rocket speed.

Beg, Borrow & Steal

Ulrich’s model has inspired HR transformation for decades, but like all knowledge - once bright, attractive and fitting - it falls like dominoes to be replaced by ways better suited to our reality... which will eventually fall too. This is the way knowledge evolves and advances.

With this in mind, I decided to beg, borrow and steal to build a fit-for-purpose HR function for the reality of start-ups 😁.

BEG the business to avoid the trap

I begged the business to avoid the repeated mistakes and well-known challenges that other HR functions have faced using the Ulrich model. As Einstein said, the definition of insanity is “doing the same thing over and over again and expecting different results.” My business leaders had a progressive mindset and I was given full autonomy to build the HR structure I envisioned could serve our business and employees’ needs better.

BORROW from other areas to build 3 key HR pillars

Although Ulrich’s model is the holy grail for HR structure, it doesn’t come without limitations. So, I borrowed from other disciplines to build the 3 pillars of my HR function.

3 pillars of HR function

1. BORROW from Product Development and User Experience (UX): People Product Development pillar

In Ulrich’s model, the HR Centre of Excellence (CoE) develops and introduces strategic HR initiatives, where a group of specialists (for example, talent management, L&D, reward) are organised in their respective team and typically operate in a waterfall fashion. Imagine HR as a production line making a car: each specialism designs its own parts independently. Through the assembly line, each finishes their part and hands it over to the next specialist to attach theirs, and by the end of the production line, you have the sum of all the parts: your car.

Waterfall flow of responsibilities

The drawbacks associated with this way of working are solutions and planning are decided by senior leaders, usually lacking the involvement of consumers (your employees!), usually siloed and there’s little flexibility in responding to change.

If business and employee needs are to be at the heart of what an HR function would focus on, why reinvent the wheel (can’t help the car pun!) when product development and UX have already got this down to a tee? And that is the foundation upon which the People Product Development (PPD) team was built upon.

The PPD team is made up of multidisciplinary specialists with shared responsibilities to develop ‘people products.’ This team needs to be obsessed with our employees.

They take problem statements and test these with the business and employees to determine whether the problem is relevant and impactful. Using external research (as far and wide as possible!) and specialist knowledge, the team then design, develop, test and launch the product. But of course, the testing and learning don’t stop there! Products will continually be reviewed and iterated to make sure they’re still fit for purpose as the business evolves.