A few weeks back, I read an article by a VC that outlined org charts for companies from the Series A through Series C (400 employees).
Before I criticize this post, I should say that offering the type of advice the author outlined is always perilous as the answer is invariably "it depends" for different types of companies in different markets.
However, what stood out to me in this article was how HR and Recruiting was very much thought of as a cost center from the get go.
HR was clearly under resourced, and a bit of an afterthought in these sample org charts. Advice like this will lead to more companies at scale that simply do not care about HR!
How HR should scale with venture backed companies
Currently, HR is thought of as a cost center across most organizations. It's a legacy mindset that's tough to break out of!
It hurts companies as the strategic value from People teams isn't realized due to fixed budgets, lack of headcount, and lack of internal power.
This is an easy fix at the beginning of a company, and very hard at scale.
Here's how I'd recommend "HR" be treated by venture backed companies:
- First off, call it PeopleOps and not HR. HR has bad branding for many employees and management teams. It's tied so closely with paper pushing, and stereotypes from shows like The Office. Calling it People sends a message to employees, as well as the right candidates who may want to head up your PeopleOps.
- Companies hire sales/marketing/engineering leadership at the Series A stage. Companies should hire a senior People person at the Series A as well. The right person will shape culture, comp plans, strategic hiring, etc. Don't wait until you are 300 people.
- Think of People strategically, not as a cost center. They may run payroll, but they are also designing performance plans/management, training, headcounts, collaboration, and so much more. This is the engine that allows your engineering team to build faster, and your sales team to sell more.
- The head of People should report to the CEO, not VP of Ops/Finance. Their work is as important as any other functional leader, they need access to the board, budget, and internal juice necessary to build a high performing organization.
Unfortunately, too many companies start off with the wrong mentality on HR. They view it as a commodity to run payroll, and then the burden to do strategic People leadership falls on the shoulders of functional leaders and the CEO of venture backed companies.
Treat People like every other function at the early stage. Hire a smart utility player who can do the blocking/tackling needed, but who also has the vision and business acumen to grow with the company.
Companies also need to reward these employees just like they would other senior execs, and think about their value to the organization in the same robust way (what's the ROI from faster hires, better onboarding, etc).
Many early stage companies hire "athletes" who are defined as hustlers who can learn fast to cover the responsibilities for leading sales/product/customer success/etc. Toast is going public today. Many of their early stage employees from head of product to CFO had no training or experience in that role. You can take the athlete mentality to People hiring too.
The bottom line is that the early stage companies who take on the same ethos as companies who get People (Google/McKinsey/Goldman/etc) will reap the benefits for their entire lifecycle, as opposed to trying to right the ship when they get to 500 employees.