The birth of a Human Resources department isn’t a dramatic moment. It’s a gradual process that happens as a business grows out of its startup stage into a more mature, stable company.
At a certain point, responsibilities that had once been covered by line managers become untenable and have to be shifted off into a new role, commonly known as Human Resources (HR), Talent Management or new-age People Operations.
This normally takes place when a company crosses the 40 employee mark, or around four or five managers. At this point, one manager will need to dedicate their full day to taking care of the people-related needs of the organization, including recruitment, employee onboarding, training, and engagement. However, it is often at this critical stage when companies face their greatest HR challenges.
For mid-sized businesses, defined as having 51-100 employees, Wasp Barcode’s State of Small Business Report found that over half of the owners (54%) reported that hiring, above growing revenue (42%), was the biggest challenge for their organizations.
Unfortunately, when graduating from a start-up to a mid-sized organization, HR is often not fully equipped or staffed; as a result, employee engagement can suffer.
Employees at mid-sized companies are more likely to be dissatisfied, which overtime can lead to a major ROI killer — employee turnover.
Thankfully, you’re not alone. The same challenges are often faced by human resources teams in all mid-sized businesses, and simple measures can be taken to improve and mitigate their impacts, and get back on the path of employee success.
In a small business, owners can meet everyone and develop personal relationships.
With the flexibility that this personal touch adds, everyone working on the team is more likely to feel included, and employee engagement is likely to be high.
There is less need for well-established standards or rules, because every challenge is a new one, and everyone knows that the playbook is being written on the fly.
As the business grows, however, this same lack of standards becomes unwieldy. It’s no longer possible for the owner to develop a strong relationship with everyone on the team.
Instead, the employees’ interactions with the company leadership will start to go through intermediaries that are made up of representatives pulled from the management team (in most cases).
Soon enough, decisions are being made by multiple individuals in the organization, cross department relationships become weaker, and lack of true accountability, results and ownership arise.
To counteract this natural tendency, mid-sized businesses must be proactive and not let their growing size prevent them from maintaining and developing all-star teams, and incubating great talent around the company vision.
At this stage, it’s important to get employees focused on a core set of company values - whether it’s trust, transparency, customer service or just plain fun.
This value-based framework will provide a “true north” for the team and guide how decisions are approached going into the future.
Along this road, there will be mistakes and setbacks. But it’s almost mission-critical that HR teams create an environment that encourages people to take ownership and make mistakes in search of the ultimate goal — improvement.
Mid-sized businesses can often be caught in a catch-22 when it comes to people investment.
While they no longer have the flexibility of smaller companies to engage with their employees on a personal level, they also don’t have the same pool of resources to invest in their development as they would if their businesses were larger.
When a company crosses 40 to 50 people and becomes a mid-sized business, budget and resource allocations need to be reassessed in all parts of the company, and a budget can be hard to come by in the newly formed HR team.
Furthermore, due to growth, the competitor landscape is likely to have changed, and the budget will likely reflect shifting priorities and challenges.
When a company reaches this size, hiring and employee training become more challenging issues to deal with. An increase in the training and people resources can go a long way to brightening the outlook and improving results.
When a business graduates from the term “small business,” it gives rise to a host of new systems that will need to be set in motion. HR and people departments play a critical role coordinating this movement.
With the team’s addition of new, specialized roles, not only will employee training become even more difficult, but fostering an atmosphere where employees understand what’s happening on the other side of the office becomes a challenge.
At this point, today’s companies are increasingly leveraging technology to integrate the right systems and solutions.
HR leaders will need to develop a technology roadmap leveraging software applications that can integrate into the various company systems.
Furthermore, employee training programs should be adapted using these tools, which will better serve a 21st century learning style and increase employee engagement, especially among Millennial generation workers.
To make sure the company’s systems are integrated, the HR department needs to open up a direct line of communication with management and the executive decision makers. The entire company needs to recognize the critical role technology will play moving forward and build that into their central strategy.
Instead of panicking, mid-sized businesses approaching the HR creation/ inflection point should plan and develop a solid people operations framework that is built for growth.
The infrastructure shouldn’t be built for today, but rather for a year out when the company has grown at its expected rate.
Foresight and preparedness become critical to building robust HR machinery that will efficiently bring on new hires and maximize employee engagement into the future. Employee Onboarding is the foundation of employee success, and creating the right experience for new employees that will scale the company’s culture is mission-critical.
Not only will HR be developing new employee training programs for the skill-based positions that a mid-sized company will suddenly find itself needing, but you will be building a framework for developing new and scalable training programs in the future.
HR and people teams should use the opportunity at this stage to build an innovative people management model that the company will rely on throughout the rest of its growth.
Measures taken at this stage will set the precedent for employee success tomorrow.
Needless to say, the Human Resources department doesn’t exist in a vacuum. The decisions that are made can only go so far without the buy-in from the company’s top decision makers — likely the CEO and CFO.
That means that probably the most critical battle an HR Manager will play will be convincing these decision makers to allocate the proper resources and attention to the people of the company.
The CEO, who has moved past having a personal connection with the majority of the workforce, is generally focused on ROI-based metrics. As a result, subjective terms like employee “happiness” and “well-being” are more likely to fall on deaf ears.
Developing a clear plan of attack that speaks the decision makers’ language is critical to effectively promote the growth of the people in the organization.
The CEO must be convinced that without a proper investment in HR, the company won’t be able to successfully hire the top talent it needs, onboard them efficiently and effectively, maintain high employee engagement, or grow confidently as a business.
The main problem that Human Resource Managers encounter is that their department is non-technical, making it more difficult to prove its direct contribution to the bottom line.
People management is easily the most important aspect of the organization. The HR Manager’s job is to ensure that the CEO never forgets this, and to continually display how the HR department is contributing to that bottom line.
Are you an HR or People Manager at a mid-sized business? Employee onboarding can go a long way in building the foundations for scalable employee success.
Download the Sapling Guide to Employee Onboarding Success or sign up for a free product demo today.