6 Foundations to build a future-proof HR strategy in start-ups
Updated: Jun 16, 2021
Previously on Scaling Start-Ups...
We flipped everything we thought we knew about HR on its head, and along with it, the mindset and the way we work towards the future to reduce HR debt. In this episode, we will explore the 6 Foundations to build a future-proof HR function...a recipe you can adopt or adapt to your start-up's needs.
Any strategy consultant or strategy professor worth their salt would have some sort of framework they apply to help you plan your strategy. For example, to manage product portfolios, you have the BCG matrix. For marketing strategy, you have the 4Ps. In HR, we also have the famous 9-grid box to evaluate employee performance and potential.
As the aim of this blog is to share with you the strategy to build (or rebuild) an HR function in your start-up, it would be lax of me if I did not start with a framework. So, I hereby present you with the 6 Foundations framework, which I believe has the right ingredients to achieve a well-balanced, well-seasoned HR function. But like all recipes, it is up to you - the chef 👨🍳 - to adapt it to your vision and needs. Feel free to add more ingredients, substitute others or even use a recipe by another chef that is more suited to your tastes.
6 Foundations framework
The recipe to building a future-proof HR function
The strategy is the...well, strategy: it outlines what you’re going to need (ingredients, instructions, equipment) and steps you should take to get to your end result - that delicious cake! It’s your HR function’s strategy on how you will meet the business’ and employees’ needs in a way that gives the business a competitive advantage and keeps the employees delighted (I mean, who isn’t delighted with cake?!).
Like any good recipe, the strategy should include a set of conscious decisions about how the function will deliver on its promise, AKA your value proposition (the cake 🍰!). To go a step further, a strong strategy should also include what you will NOT do; the trade-off you make so you can serve the business and employees better.
For your own HR team, a clear strategy tells them where the function is heading (building a 5-tiered chocolate cake, with pistachio macaroons and chocolate ganache?) and guides them through uncertainty. And most importantly, a clear strategy helps transform a normal HR function into one that inspires people and brings out the best in them.
Structure is the mould for the cake: it’s how you get its shape. It’s how the HR function's organisation structure is designed to deliver against the strategy.
It is also crucial to consider how teams are organised for delivery around the process you put in place as this can massively help or hinder the performance. For example, assuming you are adopting Agile methodology in your function, it would be counterproductive if the team was structured hierarchically with a centralised decision-making structure.
You may only have 2 people in the team now, but that should not stop you from planning what the structure should be like in 2 years’ time (at least). It’s more difficult to change the cake mould halfway through the baking than deciding on what is going to be best for the purpose at the beginning! Click here for how to structure an HR function.
Capabilities are the ingredients for your cake; the relevant beliefs (values), experiences, skills and traits needed to deliver against the strategy you set out.
Any good HR leader will always advise the business: "don’t just hire for today. Hire someone who will grow with the business." But how do you know what is needed? Just as you don’t just wildly guess which ingredients will give you that lovely moist and flavoursome cake, you need a clear strategy and future structure of the HR function to guide you. Click here for how-to map out capabilities B.E.S.T. fit for today but also for future business growth.
Processes & systems 👨🍳
Processes are the instructional steps in your recipe - the sequences of steps taken to get the job done. For example, the steps you take to onboard a new joiner, to answer employee queries, planning for headcount or move employees between teams.
Systems are included here, as technology is required to enable the process and outcomes. Think about systems as the tools you use during your baking. The choice of tool is really up to you - you can either choose to hand-beat your eggs with a fork or to use an electric whisk to achieve the same outcome (just faster and more automated!)
We’ve all come across someone who gives cooking instructions such as “add a handful of flour, maybe some sugar and mix them together. If you like, maybe throw in a few spices.” 😱 Documenting processes provide clarity and remove the guesswork so that we are more likely to achieve a consistent end result every time.
In the long term, this is one of the key factors that can enable the reduction of HR debt through streamlining, optimising and automating any manual activities (get those electric whisks out! 👩🍳)
Data is your cue that the cake is baked - from estimates such as browning at the edges to more specific measurements like taking the internal temperature with a thermometer. It’s the information that can provide you with insights on how well the HR function is doing and enable you to prioritise actions.
Data and people analytics can be a HUGE topic on its own and it is a whole different area to explore in detail. In this article, my suggestion is to start with data that gives you insights into 2 key areas:
HR function: Any data to provide insights into how well the HR function is running. This might include recruitment conversation rate, speed to hire, new hire turnover, employee query response time, employee self-service rate.
Business & employee: Any data to provide insights into how well the business’ and employees’ needs are being met. This might include business KPIs, employees having clarity of expectations, employees receiving impactful feedback.
Principles are the theories behind the baking of the cake: it’s knowing the reaction of the mixture when too much or too little flour is added, or what will happen if you substitute butter for oil in your recipe. It is the philosophy your HR team practices and operates that brings alignment to the delivery of your strategy.
Have you ever, in the middle of working on something, wondered ‘Why the hell do we do things this way?’ Many times, HR functions operate by reason of analogy, which essentially means copying what others do with slight variations. Using this way of thinking, we conclude that because two things are similar in some respects, what is true of one is also true of for the other. For example, “Those unicorn start-ups are using X tool for employee engagement, X tool must be a great tool for us too!” While this is a tempting approach to take, the reality is if we reason by analogy, we tend to make bad decisions.
Principles provide the reasoning to help the team understand why we do things a certain way and the assumptions we may make. But most importantly, it enables the team to use core reasoning as building blocks to solve complex problems, make critical decisions day-to-day or challenge limiting beliefs. If you truly understand the theory behind the recipe you’re making, you’re more likely to be able to make those substitutions or variations to tweak the recipe exactly to your tastes - without ending up with a pile of soggy mess instead of a cake at the end (we’ve all been there)!
The principles you choose must be aligned to your strategy so that both factors reinforce each other to enable the HR function to deliver the right things and deliver them well. Principles will be the glue that holds all the factors together to operate cohesively. Click here for how-to set principles for your HR function.
It’s all well and good to talk about cakes and the 6 Foundations framework, but how do I put all this into action?!
Unfortunately, there’s no step-by-step guide to implementing the 6 Foundations framework, because that would be prescriptive and prescription leads to….clones! 🤖 We don’t want everyone to be using the recipe for a plain old vanilla sponge - we want to see your own flair, whether that be carrot cake, ice cream cake, or gluten-free!
So instead of a step-by-step guide, I have put together a list of questions that you could use to check your thinking as you build (or rebuild) your HR function.
6 Foundations framework: questions to kick-start your thinking
1. Looking at the HR function
☑ What are your HR team’s vision and mission?
☑ How will your function serve the business’s and people’s needs better? How do you avoid employees ‘switching provider?’ What’s your unique selling point (USP)?
2. Looking at the business needs
☑ What are your business’s strategy and growth plan for the next 12 to 24 months?
☑ Which phase on the Greiner’s Curve is your business at and heading towards in the next 24 months?
☑ With that in mind, what are the organisational needs and crisis points you are expecting as part of that growth journey?
3. Looking at the people needs
☑ Looking across the employee journey, do you have all the HR minimal viable products & services in place for a great employee experience?
☑ What HR products and services do you need to build to grow in 6 months, 12 months, 24 months?
☑ How will you organise your HR function to execute the short term and long term strategy? What model will you use?
☑ Is the team structure (reporting line, decision-making autonomy, team composition) enabling or blocking the ways of working and workflow of your delivery methodology of choice?
☑ Does everyone in the team (and outside your team) understand why you are structured in this way, how to operate effectively within it and how it contributes to the ways you want to work together?
☑ What leadership style and management responsibilities are required to lead the team?
☑ What capabilities (beliefs, experiences, skills and traits) are best fitted for the roles in the team?
☑ What are the non-negotiable capabilities you must have?
☑ Are you looking beyond HR professionals for the capabilities you need? (marketing specialists, UX researchers, product managers, etc.)
☑ Start-ups scale quickly, are you looking for people with the ability to grow their skills as quickly?
Processes & systems 👨🍳
☑ Do you know and have visibility of the sequence of steps that are necessary to deliver your HR services or products?
☑ Are these processes documented and continuously evaluated to make them more efficient through streamlining or automation?
☑ Are your systems future-proof?
☑ Are your systems serving the needs of the HR function or the needs of the business and people?
☑ Are your systems user-friendly? (e.g. integratable, available on app, easy to adopt)
☑ What metrics will give you insights on how well (1) your HR function is doing and (2) the business and people are doing?
☑ Is your data accurate? Do you have processes to ensure the data keeps being captured accurately?
☑ Who is responsible for surfacing insights and incorporating them into decisions and actions?
☑ What principles do you have in place to bring alignment to your strategy’s delivery?
☑ Will the principles enable and drive your HR strategy’s achievements?
☑ Will the principles guide everyone in the team to make better decisions?
☑ Do the principles provide clear reasoning for ways of working, and enable the team to challenge assumptions and limiting beliefs?
☑ Will your strategy’s outcomes be derailed if any of the principles are not upheld?
✍ JooBee’s note
The 6 Foundations framework is applied in the context of an HR function in this blog. However, the framework is applicable to build a future-proof strategy for any functions and also at organisational level.
In the next episode...
The 6 Foundations provides a framework to build a future-proof HR function ready to tackle the various phases of start-up growth. In the next episode, we will deep dive into one of the foundations: Structure. Stay tuned to be inspired by the best on how to structure your HR function.