Platt Perspective on Business and Technology

Human Resources and adaptation to change 2: building a baseline for comparison for organizational opportunity and challenge 1

Posted in HR and personnel by Timothy Platt on January 19, 2013

This is my second installment to a series on business and marketplace change and on the impact of this on Human Resources as a department. And as a crucial part of that I also seek to delve into how an effective HR department and its functionalities in turn help to shape the business and its operational planning and strategy (see Part 1: the many faces of change.)

I stated at the end of Part 1 of this series that:

• I will explicitly discuss and explore the role that Human Resources plays in all of this, and for individual employees and for the business as a whole, and as HR activity and policy impacts on supply chain partners and other businesses, and on communities of consumers and customers. And I will discuss how goals and priories and needs that would be addressed by Human Resources can differ between groups and levels in this, and how those differences might be identified and reconciled.

So I have carved out a complex topic area for this series. As a starting point, I begin at the beginning and both for a business and for any Human Resources or Personnel-related functionalities and activities that might be needed or in place: with a startup.

• When a business first launches, and here I consider new, independent startups and not franchises affiliated with larger, pre-existing businesses, headcount is limited to its founders. Think of this as a simplest ground state that all change will grow out of.
• In most cases a group of founders is a group of people who have known each other professionally, and who have already worked together at other jobs and for other businesses. There is no formal hiring process per se in their coming together, though an experienced founding team member who has worked on or with other startups might argue the case that founding team members put in writing what they are to do and what they are to contribute, in gaining a place at the table for receiving what in the way of equity, as that becomes a possibility.
• Most startup founders do not do this, relying on handshakes and verbal agreements. And I add, perhaps as a separate and distinct issue, in most cases startup founders have no experience or expertise in Human Resources, unless that is, their new business seeks to offer third party outsourced HR and Personnel management capabilities as their value proposition. And even then, they are not in most cases going to start out building anything like a consistent, organized HR capability into their own still embryonic new business – at least yet and at this stage.

Where can potential personnel conflicts arise here, and at this simple, minimal headcount stage? Can they even develop, and particularly where the founders involved all know each other from prior work history and personally?

Of course problems can arise then and they in fact do, and as a causally explanatory example of a circumstance where they do I cite one of my earliest postings in my Startups and Early Stage Businesses directory: Startups and a Word that Divides Them – Investment. I have even worked with startups where their biggest early stage challenge was in navigating conflicting needs, and perceptions of contributions made and value due. In a larger sense and across business development stages, one of the core functions of a Human Resources department or service is to limit if not prevent this type of disagreement and misunderstanding, and ideally at least through standardized processes that all involved parties would see as at least being equally fair.

So looking at startups as constituting a simple pre-HR baseline as suggested above, can mean buying into an unrealistic cartoon representation of a more complex actual reality. And in this case, and for most startups any efforts in the direction of addressing these potential conflicts and disconnects will probably be ad hoc and one-off, and be best-guess attempts grounded in interpersonal relations in place and a desire to be fair. (Anything else and this startup would simply explode and go away.)

What is an early stage company as opposed to a startup? When I wrote and posted my series: Understanding and Navigating Burn Rate: a Startup Primer (see Startups and Early Stage Businesses, postings 67-78 for Parts 1-12) I posited this distinction primarily in terms of revenue generation and cash flow and wrote of the transition to cash flow break-even and initial profit generation as a startup to early stage transition. That may be a bit arbitrary as an immutable standard but from a fiscal perspective it is valid. Here, I would argue that the startup to early stage transition occurs roughly when personnel issues become complicated enough from early hiring and onboarding so that they rise to the attention of the business founders and owners as explicit issues needing response. And as an initial step, any HR formally carried out will in most every case be as a lean HR service. See When and If it Might Make Sense to Outsource Human Resources 2 for the definition of this term and a discussion of this approach and its robust HR alternative. For clarity here, I repeat these two basic definitions from that posting:

• A lean Human Resources capability is one that holds operational ownership of and responsibility for a minimum number of personnel-related services that do not smoothly fit into the responsibility portfolio of any other department or service and that relate to completing and holding personnel records.
• A robust Human Resources capability is much more usually organized as a full department, or at the very least as a significant level component within a major department such as Operations. And these departments (to settle on a single terminology for simplicity of discussion) carry much wider ranges of responsibility and involvement.

(So in my series When and If it Might Make Sense to Outsource Human Resources (as cited above for its Part 2, when I write of businesses pursuing a lean RH approach when they need a more robust one, I am in a fundamental sense writing of a business stage of development imbalance where HR functionality has not kept up with business growth and development.)

At this point I have built a foundation for installments to come where I will look into a series of business stage and circumstance-specific challenges and opportunities, and at Human Resources as it does and does not support them. And I will begin that in my next series installment by considering a more mature and established business baseline. Meanwhile, you can find this and related postings at HR and Personnel.

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