Importance of Human Resource Management in Start-ups

By: Ankit Bhusal

There is a common misconception that only big companies need Human Resource Management (HRM). Most of the start ups fail to live up to the mark because they underestimate its impact on growth and sustainability. It is to be noted that even the biggest companies initially started with few employees and the fact that they expanded to the level they are today can be credited to proper Human Resource Management.

When you start your own business from the ground, you will have to play multiple roles to keep your business going. At the initial days of operation you will have to involve in all functional areas or at least make sure that you have the right people to get the work done. The later is more convenient in this fast paced business environment as it enables you to make quick decisions. While hiring the right person is a head start, managing them is a challenge, especially for start ups. A combination of both these activities can be called HRM. Start-ups tend to demand more dedication, pro activity and commitment from their employees than larger and more established companies. Because of these demands there is difficulty in retaining employees unless there is something about the company that inspires commitment and facilitates engagement.

Here are five reasons why you should incorporate HRM in your start-ups:

1. Strategic management

HR enhances the organization’s main concern with its information of how human capital influences organization achievements. Having knowledge regarding HRM ensures that founders can make decisions that underline current staffing appraisals and projections for future workforce needs based on business demands.

2. Recruitment and selection

In initial stages of your business where you are aiming to grow, there is a little room for mistakes. Avoiding mistakes will largely depend on the type of people you hire. Depending on the employee needed, a company may use different recruitment techniques but it needs to get to the source that ensures the best pool of candidate. Start-ups need to explore the sources from which to get candidates, the cost associated with it and the benefits of choosing a particular alternative.

3. Employee satisfaction and retention

Since start-ups experience huge employee turnover, the best it can do to avoid it is ensure that employee morale is high and that they find it exciting to work in the business. While providing a good compensation is key, it is not enough in today’s workplace. Including employee benefit programs, stress free working environment, handling grievances will help strengthen a strong employee-employer relationship and also boost satisfaction levels. Satisfied employees are less likely to leave your business.

4. Training and Development

Many start-ups look for the ‘perfect candidate’ who knows everything in advance. This is rather an unrealistic assumption and having this mind set can cause companies to miss out on candidates with potential. This potential is unlocked through Training and Development. There will be things that candidates will learn after joining the company. Performance appraisals are a good tool to trace the things that you want your employees to learn. Therefore, it is really necessary that you invest in training and development programs.

5. Performance appraisals

Employees seek career growth once they join your business. A proper way to reward employees can be through performance appraisals. It can be promotions, increase in pay or benefits. Not only is it used for rewarding purpose be it positive or negative, it is also essential in determining has which employee needed training and development.

Since, employees are the assets that help the business achieve their goals; HRM should be taken under serious consideration. People often underestimate its role in business and when they realize its importance, but it is a powerful functional area of an organization that when used properly will help your business elevate.

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