Human Resource Management 

HR in Start-ups 
Group 2- Tania Mukherjee (18PGDM168), Tushar Das(18PGDM169), 
 
 

What are start-ups? 

A  ​startup  is  a  company  started  by  an  individual  ​founder  or  a  few  entrepreneurs  to  search  for  a 
repeatable  and  scalable  business  model.  ​They  are new businesses that intend to grow beyond the 
solo founder into a large business with many employees. 

On  April  17,  2015,  the  Ministry  of  Commerce  and  Industry  released  a  notification  to  define 
‘startups’: 

1. Till up to five years from the date of incorporation. 

2. If its turnover does not exceed 25 crores in the last five financial years. 

3. It  is  working  towards  innovation,  development,  deployment, and commercialisation 

of new products, processes, or services driven by technology or intellectual property. 

Role of HR in Start-ups 

New  businesses  are  an  important  part  of  any  economy.  However,  the  key  elements  to  achieve 
startup  success  are  often  not  clear  or  up for debate. Attracting, selecting, and training employees 
 

 
 
 
are  critical  activities  for  most  startups.  Research  suggests  that  high  performance  work  systems 
(i.e.,  a  bundle  of  human resource practices) enhance organizational performance. However, most 
startups  lack  these  systems  at  the  onset,  yet  with  minimal  effort  can  establish  a  system  to 
increase  their  likelihood  of  meeting  their  goals,  enhancing  capabilities,  and  ensuring  long-term 
survival.  

High  Performance  Work  Systems  (HPWS)  are  a  bundle  of  HRM practices that typically include 

the  following:  staffing,  self  managed  teams,  decentralized  decision  making,  training,  flexible 
work  assignments,  communication,  and  compensation.  With  regard  to  the  importance  of HPWS 
in start-ups, according to Josh et al.: 
 
(i)  New  ventures  with  high  performance  work  systems  in  place  will  be  more  likely  to 
meet their goals than startups without high performance work systems.  
 
(ii)  New  ventures  with  high  performance  work  systems  in  place  will  grow  capabilities 
better than startups without high-performance work systems.  
 
(iii)  New ventures with high performance work systems in place will have a better chance 
of survival than startups without high performance work systems. 
 
Reasons why HR is essential in Startups 
● 19% of small businesses fail because they are outcompete 

-A strategic HR advisor can create a competitive learning environment. 

● 23% of small businesses fail because they don’t have the right team 

-A  strategic  HR  advisor  ensures  that  the  compatibility  is  maintained  amongst  the  team 
members. 

● 29% of small businesses fail because they run out of cash 

 
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-A strategic HR advisor forecasts decisions relating to employees financial implications. 

● 82%of small businesses fail because they experience cash flow problems. 

-A strategic HR advisor can manage costs keeping an account on budget. 

● 42% of small businesses fail because there is no market need for product and services 

-A strategic HR advisor creates a culture of trust & identifies talented professionals. 

● 82%of small businesses fail because they experience cash flow problems 

-A strategic HR advisor can manage costs keeping an account on budget. 

● 42% of small businesses fail because there is no market need for product and services 

-A strategic HR advisor creates a culture of trust & identifies talented professionals. 

Primary data from 6 startups in India 

 
The  Total  Strategic  Resource  Approach  (TSRA)  measures  an  HPWS.  We  questioned  6 
employees/ex-employees  of  6  start-ups  in  India  using  a  questionnaire  based  on  the  Total 
Strategic  Resource  Approach  with  questions  divided  into  the  three  areas  of:  universal  HR 
practices, differentiated HR practices, and firm specific HR practices. 
 

 
 
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The Total Strategic Resource Approach 
 
Start-u Tra Com Recrui Tea Emplo Perfo Pro Cr Fo Inf Job  Diff Fir Sc
p  ini pens tment  mwo yee  rman mo os rm or De eren m-S or
ng  ation  &  rk  partici ce  tio s-f al  ma sig tiati peci e 
Selecti pation  Man ns  uc Gr tio n  on  fic 
on  agem tio iev n  HR  HR 
ent  na an Sh Prac Pra
l  ce  ari tices  ctic
tea Pr ng  es 
ms  oc
ed
ur
es 

A  5  4  2  5  2  4  5  5  3  5  5  4  5  4.
15 

B  1  1  1  1  2  4  1  1  1  1  1  2  1  1.
38 

C  5  4  2  5  4  5  5  5  5  3  5  5  4  4.
38 

D  4  5  4  5  4  5  4  4  4  5  5  5  5  4.
53 

E  5  5  2  5  4  4  5  4  2  4  5  5  5  4.
23 

F  3  2  1  3  2  3  3  4  2  3  2  3  3  2.
61 

Avera 3.8 3.5  2  4  3  4.16  3.8 3. 2. 3.5  3.8 4  3.8 3.

ge  3  3  83  83  3  3  55 
score 
of  the 
startu
ps 
 

 
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Some Successful Start-ups that used effective HR practices 

Basecamp 

The company handbook: A blueprint to synthesize competing ideas 

For  over  10  years,  the  company  did  not  have  a  handbook.  In  those  10  years,  when  new 
employees joined the company, they were expected to figure things out for themselves. But when 
the  company  grew  from  a  company  of  10,  20,  30  employees  to  a  company  of  over  50,  their 
“introduction  by  immersion”  style  stopped  working.  New  hires  felt  lost  and  isolated,  and  their 
first weeks or even months on the job were stressful because of it. 

Basecamp documented their policies and processes and came up with their handbook: 

(i)  A  key  recurring  theme  in  the  text  is  the  importance  of  employee  happiness.  Employees  are 
encouraged  to live in the places which make them happy – Basecamp’s 50 staff are spread across 
32 different cities.  

(ii)  The  staff  utilize  the  minimum  number  of  tools  possible  to  increase  productivity  and  ease  of 
communication  while  reducing  managerial  needs.  This  makes  all  the  work  visible  within  the 
same organizational platforms and it increases oversight while reducing the need for oversight. 

(iii)  Roughly  every  six  weeks  they  start  a  new  cycle of product work. Each six week work cycle 

contains two type of projects: 

--Big  Batch:  Big  Batch  projects  are  big  features  or  stuff  that’s probably going to take up the full 
six weeks to get done. They typically take on one or two Big Batch projects in a six week cycle. 

--Small  Batch:  Small  Batch  projects  are  smaller  things,  tweaks,  minor  adjustments,  and  easy 
adds  that  should  take  anywhere  from  a  day  to  two  weeks  to  complete.  They  typically  take  on 
between 4 and 8 Small Batch projects in a six week cycle. 

(iv)  Basecamp  employs  “scope  hammering”,  where  they  reduce  the  scope  of  the challenge to fit 
into  their  6  week  blocks.  The  work  is  undertaken  by  small  teams  which  are  assembled  on an ad 
hoc  basis.  Before  a  cycle  begins,  they  ask  each  person  what  kind  of  work  they  would  like to do 
over  the  next  six  weeks.  Teams  either  coalesce  around  areas  of interest, or they assign people to 
a  team  based  on  their  preferences.  Teams  often  change  up  after  the  cycle  so  everyone  gets  a 
chance  to  work  with  different  people,  but  sometimes  they  stick  together  for  a  few cycles. There 
are no hard and fast rules about this. 

Process Street  

At Process Street, a number of best HR practices are followed, for example: 

● Remote working and a dispersed team 

 
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● Collaborative creation of processes and policies 

● An emphasis on self-development and a promotion of good work-life balance 

● Focused development practices 

● The  platform  itself  allows  all  the  company’s  processes  to  be  documented  and  accessible 
to all. This helps staff to jump into new tasks easily and efficiently. 

● Internal  entrepreneurialism  allowed  them  to  launch  related  products  like  Inside  SaaS 
Sales which records and shows the sales and marketing cadences of top SaaS companies.  

Buffer 

.  ​The  Buffer  team  works  from  multiple  countries  and  continents.  In  November  2014, the Buffer 
team  were  looking  at  the  growth  of  the  company  and  trying  to  envision  new  ways  they  could 
move forward. 

.  In  buffer  employees  were  encouraged  to  bring  their  ideas  to  the  table  and  ​be  creative  within 
the workspace​. 

.  With  their  continuous  feedback  to  each  other  ,  it  helped  them  to  identify  things  which  needed 
improvement and also to take actions on any misalignment with their purpose. 

. ​In buffer the team was empowered and was not micromanage. 

.  They  also  expressed  interest  or  concern  for  team  member’s  success  and  personal  well  being 
while ensuring everyone on the team also feels valuable. 

.  ​Employees  were  encouraged  to  work  remotely  and  base  themselves  wherever  they  felt  they 
would feel most fulfilled, meeting up for a company wide retreat every 5 months.  

Zapier 
Zapier  are  a  great  example  of  a  modern  startup.  Their  service  to  provide  a  library  of  third  party 
integrations  has  helped  users  connect  platforms,  and  provided  significant  value.  They  are  a 
remote  team  with  a  high  emphasis  on  creating  a  company  culture  which  is  beneficial  for  both 
employees and customers alike. 

Managing remote workforce- 

Zapier’s  CTO  Bryan  Helmig  gives  these  key  elements  which  guide  Zapier’s  approach  to 
managing a remote team. 
 

 
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● Hire passionate, knowledgeable, and amicable talent with strong communication skills 

● Streamline onboarding with entrenched processes, mentors, and regular feedback 

● Document all processes and communications so information is available when needed 

● Be explicit in communication, provide a variety of tasks, listen to concerns, set up weekly 
updates 

● Focus  meetings  with  a  predetermined  structure,  a  speaker  roster,  prepared  and  shared 
notes. 

 
Preventing organizational silos- 
The  cardinal  warning  sign  of  organizational  silos  is  the  silo  mentality:  a  mindset  wherein 
information  or  other  business  resources that would be beneficial to the organization more widely 
are "owned" or guarded by a given group. 

If  the  marketing  organizational  chart  for  a  company's  group  of  brands  looks  like  the  above 
diagram,  organizational silos are blocking communications between teams and communication is 
only flowing down-channel​. 

How to Build and Maintain Silo-Busting Bridges 

1.  Help  everyone understand the common vision and goals. This will encourage team members to think of 

departments as links in a chain, instead of as separated silos. 

 
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2.  Assign  cross-functional  liaisons-  The  transparency  fostered  in  such  meetings  will  lead  to  closer 
working  relationships,  which will finally encourage resource sharing, as opposed to resource defending or 
hoarding. 
 
3.  Encourage  cross-functional  training-  By  training  employees  on  skills  and  tasks  that  they  officially are 
not  required  to  do,  they  will  get  a  clearer  picture  of  the  jobs  of  their  colleagues.  This  training  will  help 
them know when resources or information might be of help to other departments. 
 
4.  Develop  multi-functional  teams  for  critical  launches-  Team  members  will  be  able  to  see  the 
crucial  role  each  individual  and  group  plays  in  a  successful  launch,  making  it  less  likely  that 
resource- and information-guarding will occur. 

5.  Get  input  from  individuals  across  departments  on  every  major  project.  That  way,  every  team 
will  have  an  emotional  stake  in  the  project,  making  them more likely to share resources to make 
it successful. 

 
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