Human Resourcing involves the functions of planning and forecasting the personnel needs of the business, as well as putting in place systems for appraising, rewarding and developing staff. Hiring and training good staff are major tasks during the Start-Up Stage.
Business today is becoming more and more about working successfully in a team. Human resource management is integral to developing staff that have the skills to work independently but also as part of a team. A central challenge in the Start-Up Stage is to select talented and experienced staff and to set up successful teams. At this stage the owner often needs to learn to delegate and step away from the more operational day-to-day demands of the business.
Teamwork is the use of many individuals and their unique skills to complete tasks in ways that increase the levels of effectiveness and innovation in the business. Setting up a team is an important contributor to commercial success because:
- There is so much effort involved – you can share the load.
- Business founders do not have all of the expertise required.
- A team helps to build upon the credibility of the business idea by involving others who will be judged by investors as experienced and expert.
- A team allows its members to focus only on roles where they can make the most difference in building the business and not be tied up in “red tape” or roles they don’t like to do.
You can set up two types of teams:
- an informal team of friends, advisers, your accountant, lawyer and similar people
- a formal team that acts as an advisory board, and whose members are paid to give occasional advice, meeting four to five times a year.
In getting the right team together, consider the following suggestions:
- Attach yourself to the right people. Like you, they must be passionate about the idea, product or service – making money is not the primary issue.
- Choose a team that allows you to keep control and ownership. Access their expertise. Be up front about how you want them to help you.
- Avoid hiring “too many of yourself”. Seek people who are different to get balance in your team.
Recruitment and selection processes include activities that assist the business to recruit a pool of job applicants and to select the best applicants for the available jobs.
Companies have at least two major assets that are fundamental to their success:
- a product or service that meets the needs of customers in a way that competitors find it very hard to match
- having highly committed and customer-focused staff
The employment of staff also raises a wide range of issues linked to industrial awards, equal opportunity legislation, training and occupational health and safety. Good human resource practices are about recruiting, selecting and retaining talented staff. There are two options, both of which have their advantages and disadvantages.
Internal recruitment promotes opportunities within, for advancement and promotion. Linked to this is a “trickle-down” effect, where vacancies emerge at lower levels as higher positions are filled. Advantages of internal recruitment include lower costs in locating staff, increased morale, reduced levels of disruption and retaining and growing talented staff by giving them opportunities at higher levels. However, internal promotions have the potential to generate infighting and mistrust, resulting in a negative impact on staff morale.
External recruitment accesses talent from outside the business. You can bring in staff with quite different ideas about meeting customers’ needs. The downside is the higher costs in recruiting and the need to induct and train new staff about procedures and company culture.
Also, there is a wide range of financial incentives available to employers in taking on a trainee or apprentice as a cost effective way of building a talented team. More information can be found from the Department of Employment and Training.
Useful hints in recruiting are to:
Follow a plan – decide well in advance on the type of skills you want your staff to have as you grow and succeed as a business.
Develop a skills inventory – this provides a quick and easy way to evaluate the available skills in the company. The inventory should include personal information, qualifications, job history, special skills and statements of the short and long-term goals set by the individual staff member.
Job Descriptions contain information on position details, including the nature of the job and the necessary skills, knowledge and abilities to do the job well. Accurate job descriptions are an important employee and company resource. These descriptions provide a summary of the current role of employees, the required skills and responsibilities. With the level of change occurring in businesses today, job descriptions have become less rigid and more adaptable.
However, they should never become inaccurate. For the employer, a job description is a wonderful source of information about the jobs, skills, talents and resources located in their business.
Job descriptions should be:
- Updated two to three times a year.
- The basis for regular performance appraisals and discussions about future training, development and promotional opportunities.
- Mostly in dot point form, two to three pages in length, around the headings of job title, purpose of the position, major duties, qualifications and experience required, authorities and accountabilities (dollars, access to resources, sign-offs), date written and approved.
Pay is the amount of money that the business is willing to pay for staff with certain sets of skills or knowledge that are required for the day-to-day operations as well as future growth of the business.
Pay and employment compensation systems are important devices for encouraging high levels of performance and innovation. The compensation policy of the company needs to be well-known and understood. This is especially true in the start-up stages where most staff will be asked to accept moderate levels of pay in the short-term. Organisations that are in the business of innovation often use more innovative approaches towards pay and remuneration.
A company can consider various pay strategies during the Start-Up Stage. In a lot of new ventures staff accept lower pay in the short term for involvement in something quite new and exciting and with the expectation of higher pay in the longer term. Other businesses pay at the industry average or above the average due to a wide range of industrial relations issues. The important issue is to explain to new staff when they join, that the pay and compensation systems aid the philosophy of the company.
Once again, your accountant can provide you with useful advice and can suggest various pay strategies for your business.
Some final comments about pay:
- Australians like to keep the amount they are paid a fairly private matter.
- Many companies are using a mix of remuneration schemes that are strongly linked to trying to achieve higher levels of corporate performance.
- While they take quite a deal of time to set up and update, job descriptions are an important asset for the individual and the company.
- Paying at above the market should be considered as an image and positioning strategy, if it can be afforded. Surprisingly, pay levels even a little above market rates can have a marked effect on employee morale.
Succession Planning involves the transition of the management and leadership of the business to other people. It is important for you to develop a “backup plan” for your business.
Who will do your work if you are unable to, or you decide that you’d prefer to do other things?
A simple succession plan involves consideration of the following steps:
- Identify a successor – from either within the business or quite possibly from outside, especially if the business needs to head in a new direction.
- Groom an heir – begin a coaching relationship where they work with you, attend meetings and “shadow” your activities towards learning about the business.
- Agree on a plan – that sets the time when the owner will step aside, the responsibilities they will pass on, those that they may keep, and to discuss all of this with others in the team so that they understand the plan.
It is important for you to seek professional advice on strategies for succession. Organisational and HR consultants will assist you in defining these strategies and your lawyer or accountant will be able to guide you in the related legal aspects.
Delegation involves the decision to pass the authority for the completion of specific tasks or roles to others in the company. This is often a major problem among entrepreneurs and those who start up businesses.
Business founders should consider the Delegation Exercise.
Draw up three columns on piece of paper.
- Column 1. What are you good at?
- Column 2. What do you dislike doing, but it is important to get done for your business?
- Column 3.Who are the people who can do these important things for the business? Where can you find them now in your business?
Find a mentor who will help you grow into other roles in the business. Think of someone you know or you have heard about who is interested in the idea, product or service you are developing. In particular, seek someone that has successfully grown a small business into a much larger one. Approach them. If the meeting goes well, ask them to be your mentor.
They have three roles:
- to challenge you and your ideas
- to support you emotionally and intellectually
- to accept that mentoring is a two-way relationship. While you are learning from them, they will also learn from you.
After confronting the financial, legal and competitive requirements of the Start-Up Stage, you have reached the final phase.