Human Resource Management – HRM is the management of People Resources to maximize their performance keeping in view the overall strategy of the company.
It is a subject of study world over and given due importance in ALL middle to large companies – with specialists being hired for doing this role. Many companies outsource this function to HRM specialists as consultants.
But Start-Ups in India do not see this function as an essential part of their business. It’s like a Unicorn! Something which is needed only by large corporations.
In my interaction and working with Start Ups over the last 4 years these are the 5 absolute best reasons I have heard for “not catching the HRM Unicorn”:
- We don’t need it. We are just about Starting up. This one is my favourite ‘in your face’ bald statement! It is DIRECT. More than 45% of Start-Ups simply state this! They truly believe that as a Start-UP HRM isn’t a priority
- Its (HRM)way too expensive at this Stage – we shall do it later. We currently need to spend on Business. Now, this one is a part true to the extent that having a full-time HR manager may be adding to your company costs – but there are options of part-time HR managers or HR specialist consultants with a lesser paid HR executive on your roles. Start Ups for some reason do NOT see HRM as a part of the business. Remember what I started with – HRM is a Unicorn…
- HRM is not a need. It’s a frill which we will get done later! This amazingly myopic statement – simply says that “I, the owner, don’t know what HRM is”. Start-Ups do not see HRM as an integral part of their business operations
- I own the company – I do the HRM. I have met so many Start Up owners who claim to be doing their own HRM, people who are otherwise brilliant at their own work and skilled at Technology / Marketing / Strategy – but NOT HRM. They consider HRM to be “just one of those things to be done by us” or “just a fancy name for a normal task”
- I just have 5 people working – why do I need HRM. People believe that small team sizes do not need HRM. They do not see the issues which can crop up with their key employees. (one glaring example I came across was a tech company – where 2 key people were constantly bickering and threatening to leave – and this lead to the other 4 positions constantly seeing attrition. When I start working with them – their Avg employee life cycle was at 4 to 6 months)
India has a very bad Start Up Success rate pegged at barely 1% – and a vast majority of the problem stems from the fact that their people problems and team problems “become their doom”.
Yet for some reason, Start-Ups chose a love “Unicorn” Story to spin around HRM!
I have had many a session with Start Up groups on HRM – and have helped quite a few realise the importance of HRM in their work. It’s been quite stressful in getting them to understand and appreciate the need – I find that it’s only when they struggle with a “people issue” or even have a “failed business” do they realise the importance of HRM.
10 extremely BASIC reasons WHY you need HRM if you are a Start-Up:
- HRM is an integral part of your business functioning. Business is run by people and people are Human Resources! They are the key to the success or failure of any company! HRM thus is a key vertical to your business and needs to be a major part of your strategy to gain “perpetuity and continuity” in business.
- Investors look for robust HRM and do not invest in companies which take people management lightly. People whom you seek to invest in your business would like to know what kind of “People Management” you have in place. The money-bags only open and flow into Start-Ups which know the value of HRM and treat it as a business vertical. In any investment pitch session – HRM is showcased and then subsequently tested or questioned by the investor’s panels. This is also one reason why many an Indian Start-Up fails to raise the funds – and we have conclaves to discuss WHY investments weren’t actually made.
- HRM is a specialist role and actually needs someone specialized to handle it – most Start-Ups take the owner or any one employee and showcase him/her as the HR Manager in pitching sessions. HRM is often an “add-on” quite like the “extra cheese” you put on your favourite pizza. Business owners seemingly ignore the FACT that HRM is a specialist function which cannot “just be done by anyone”. It is only when Start-Ups fail – do they admit the lack of People Management also contributed to their failure. So then my question is – why do you need to fail to see the importance of a specialist function? Why not learn from the mistake of others?
- Employee Satisfaction stems from proper People Management – Employees are what shall run your business for you. Employees are the brand ambassadors for your business. A satisfied and smiling employee says a lot to the potential customer. That itself becomes a “sales and marketing” Ram-Baan. This can ONLY be achieved by defined HRM processes and interventions.
- Ensuring Retention and Engagement of your key resources. Each business has a backbone and that is what needs to be “protected”. These are called “key resources”. Handling, managing and retaining Key Resources is an ART as much as it is a SKILL. And requires the intervention of a specialist HRM person.
- Getting the RIGHT-FIT employee for your Start-Up. Funds are precious and cannot be frittered away by Start-Ups in the trial-and-error method of hiring people. You need to have the RIGHT-FIT employee, at the RIGHT-TIME and at the RIGHT-COST. This is something which is not like a game of chinese checkers where luck matters – it is like a game of chess where a strategy and plan needs to stem out of business needs – and executed with precision. You need HRM to play this game of chess!
- Succession Planning – as a compulsion – an HRM specialized role. Business often forgets that processes are run by people and even though they are standardized, they actually are affected by the people who run them. Each business leader personalizes the processes to their style. To ensure the smooth running and overall business success Succession Planning is an essential wheel.
- Seemingly mundane Administrative tasks – are ESSENTIAL. Handling Performance Appraisals and Salaries which normally look like an “everyday task” are essential elements to prevent attrition. Tasks like security and safety of self and belonging of employees is another task which seemingly looks mundane often becomes a ladder to failure if not handled well. Food and beverages – housekeeping etc – which sound ‘oh so normal’ – are actual NEEDS. Their presence does not cause retention but their absence does cause attrition! HRM is your “force field” protecting you and insulating you from this!
- Knowing people Laws and following them – The Mysterious Labour Laws. Indian laws are clear and well defined. And the lack of knowledge of the law can never be a “protection” in a court of law. When an issue arises, you shall have to consult a lawyer and fight a case. But HRM ensures that legal issues do not arise. All people compliances are adhered to and handled.
- Proper HRM handles Leadership issues and steers co-founders towards success – how often have you heard there were personal differences which cropped up between co-founders thus leading to the demise of the company! People – owners or employees – are people and are bound to have ‘issues’. HRM handles and smoothens these very issues!
Human Resource Management is a NEED for Start-Ups!
And they need to “wake up and smell the roses” – before its too late…
I have just about the list a few reasons WHY HRM is needed by Start-Ups – a more in depth and case-study oriented piece shall follow as a series.
If you are a Start-Up struggling with the old problem statement of HRM persons on your role is an added expense to your payroll – see the other side of the spectrum of failure…
Lack of HRM causes business failures.
Instead of leaving HRM shut in a box and throwing away the key, only to be discovered when the ship has sunk – look for INNOVATIVE HRM people and solutions.
“The HRM Unicorn – will Start-Ups catch it?” Waiting for that Eureka moment…
Disclaimer: the views expressed here are based on my individual interaction and working with Start-Ups in India (specifically in the Eastern and Central India area)