Managing a start-up company: The hard part


MANILA, February 9, 2014 – Ramping up a new start-up company can be daunting for first-time entrepreneurs or even seasoned ones. The operation of the business alone can consume most of the business founders’ time and effort. Managing the day-to-day operations of a start-up company as well can prove overwhelming even for experienced managers.

Clearly, without a reliable team to help with the other aspects of running a business, the sheer magnitude of the challenges can be overwhelming. And that’s where human resources management comes into play.

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One of the areas or departments that start-up business founders tend to overlook is Human resource. Perhaps this is due to the fact that other aspects of a new business rightly seem to have much higher priorities, such as initial capitalization, business operations, marketing, management and of course, that all important element of revenue generation which generally focuses on a company’s products or services.

Human resource, whether managers like it or not, does take a back seat during the initial start-up phase of a new business. On the surface, it seems reasonable enough to put this issue on the back burner given that most start-ups are put together by acquaintances. As a result, human resource policies are frequently reduced to verbal agreements in an early stage business most of the time.

A prime example: Founders and managers of these businesses indulge this mentality when they hire friends and acquaintances at the outset. They feel comfortable working with people they already know. Further, they feel that they owe their friends for helping them start their companies.

But this is often a crucial mistake because they neglect the prudent option of hiring a core team of smart people that share the start-up company’s vision and are willing to take the risk with them. Friends and relative often don’t fit the bill.

A start-up company needs to have a solid, professional core team that shares the vision of the founders in order for the business to grow. This core team should be mature enough to actively be part of the company’s growth by taking it upon themselves to find ways to contribute to the new business and its growth.

This is where a formal and focused human resource system can play an important role in the business. The “right mix” of personnel has great working dynamics that can translate to a great working atmosphere. Company culture then tends to organically evolve from that working atmosphere which the business, more often than not, greatly benefits from. That’s where taking human resources seriously comes into play.

A Human Resources department or specialist is primarily tasked with creating a suitable working atmosphere for everyone in the company from the founders right down to the employees. It will be easier for anyone to sacrifice his time and effort starting a company from scratch if he has the enthusiasm to go to work every day and be part of a team that he gets along with professionally.

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Careful attention by human resources in the hiring of initial and later employees in a startup can help establish a culture that makes the core team excited to come to work every day, while also instilling a sense of accountability to the company. In a small organization, the job of everybody directly affects others and if they should be aware of the role they have in the company. Each employee is not merely accountable himself and to the founders, but also to the person seated in the next office or cube.

Problems can arise when there are real dissensions in the team—not an uncommon occurrence. The work atmosphere can change because of this and ultimately organizations can crumble from within if the situation is not remedied effectively. It is up to the management to address this issue before things get out of hand so as to maintain the dynamics of a team geared to realizing the organization’s goals.

Maintaining and improving the working environment of a small team is crucial and managers should make the hard decision to let go of those elements that negatively affect the company culture. Since most of the start-ups form a team made up of acquaintances, this makes that decision harder due to those personal relationships.

Decisions like this should not be hard to make if the startup team happens to have been carefully chosen and not opportunistically assembled from a cadre of friends and acquaintances. However, there is still a natural tendency to make these kinds of initial hires. This is the reality of most start-ups and there are choices to be made even if these choices are hard.

One final, common, yet often overlooked personnel management/HR issue is capitalization, a common disadvantage borne by a start-up company that can seriously affect its personnel. Revenue may not arrive as projected, and compensation might have to be compromised or cut to help the company survive.

This is the risk one takes when joining any startup. Anyone working for a start-up should understand it, and should be clear the moment the employee agrees to join the company. A solid core team will accept the risk and not grumble if there are early bumps on the road.

Realistically in the real world, however, no matter how aligned a person’s intentions are to a vision, once they feel that they are no longer growing in an organization, chances are they will jump ship. This is normal and managers should not take it against such individuals once they have made a decision to leave the company. Better a gracious exit than a morale-damaging and highly public dissident who continues on staff despite personal dissatisfaction.

A unified vision, an enthusiastic but realistic team, and a sense of drive and accomplishment. While sustained profitability is a new company’s ultimate goal, such a goal cannot be achieved without a solid team driving activities forward. Such a team can only be assembled from the start by founders who are prepared at the outset to take human resources issues as seriously as they do the superb products and services that are the company’s ultimate goal.

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