1. Jumping on Bandwagon

Overview

In this first start-up, entrepreneurial stage, the organisation is characterised by informality and contingency, with an emergent strategy, fluid structures, flexible job roles and tacit knowledge exchange. There is usually no formal human resources role in this stage; instead, people management issues are dealt with by the owner/entrepreneur.

Learning is mainly experiential and on the job. There is an emphasis on the salary side of reward, with rates decided by the owner, perhaps supplemented with share options or equivalent, but benefits at this stage are unlikely apart from legal requirements. The owner’s vision and values drive practice.

At this stage, people’s engagement tends to be largely intrinsic, coming from the excitement of working for an entrepreneurial company, the opportunity to be involved in different aspects of the business, and both personal and organisational achievements. Recruitment is ad hoc, based on immediate skills requirements. However, applicants’ attitude also plays a large part in recruitment decisions, in particular if they are willing to be flexible to meet the changing needs of a start-up business

Tipping Point

Consistent with existing theories of organisation growth, an inflection point is reached as the organisation gets to a size where a level of formalisation is required, with the owner/founder no longer able to manage effectively in an informal way. This inflection point marks a critical stage for people management: are people management activities retained by the owner/founder, or a senior leader, more formally, or delegated to an existing staff member, such as the office manager? Is an HR professional hired at this stage and, if so, in what capacity? What does the owner/ leader, or a senior leader, expect from HR? Do they know the potential that HR could add to the business?

Wherever responsibility for people management lies, it becomes clear that some degree of policies and processes are required to avoid duplication of effort and to ensure alignment of people’s work to organisation goals and direction. These issues need to be effectively managed to sustain organisational performance.

Insight for Practice

This stage of organisation transition is typically characterised by formalisation of the organisation’s structure (including team structures and more formalised job roles) and introduction of processes. In addition, with people and performance issues becoming salient, the fundamental HR policies and processes are introduced.

However, HR tends to be transactional in nature at this point and reactive to immediate issues, such as the need to recruit quickly, or to ensure a consistent people management approach across the business.

The introduction of formality at this stage also tends to include a more consistent approach to training for operational staff. However, as the organisation is still emerging, flexibility remains important and needs to be considered when introducing people management policies and processes.

One of the first tasks Atlas’s first HR executive undertook was to design a robust recruitment and selection approach.