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Dilemma of the Month: Why Startups Need HR Help Before They Launch

Back Article Jul 2, 2020 By Suzanne Lucas

I’m launching my own company this year, with about 12 employees, and I’m thinking about the importance of human resources services. Should I hire someone for that position, or can I use an outside service or an online site? And what are the most important things I should do before I launch?

You’re brilliant. How do I know this? Because you’re thinking about human resources before you launch your company instead of waiting until you have a big problem. It’s always easier to start with a good, solid HR plan than to throw one together the first time you have an issue.

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You probably don’t need to hire a full-time HR person if you’re planning on 12 employees. You might want to hire someone part time, but most likely you can hire a consultant or an HR outsourcing company. If your business will require people working on-site — rather than 12 telecommuters — then hire a local person. That way, if you need an HR person for difficult conversations, the consultant can come in. Plus, a lot of HR policies and procedures depend on local laws, so you will want a California HR specialist. California has lots of different rules.

Here are the things you’ll want to do before you launch.

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1. Think About Benefits

You’ll want to offer excellent health benefits, so talk with brokers about what is and is not reasonable. You may feel a bit woozy when you first see the numbers, so be prepared. Check out what your competitors do and what you can reasonably afford.

Then think about sick and vacation time. Federal law doesn’t require vacation or holiday time, so you’re free to do what you want. But California considers vacation time earned income, so you have to pay any accrued vacation when someone quits. You can have a maximum accrual level, but you can’t have a use-it-or-lose-it policy. Vacation time is critical for most job candidates, so check out what your competitors do — and match or beat it. Make sure you set a maximum accrual; otherwise, if you have an employee who never takes time off and then quits, you have to pay out a vast amount of money. That’s not good for your business or their mental health.

Sick leave is another benefit important to potential employees. In California, employers must provide and allow employees to use at least 24 hours or three days of paid leave per year, and some local jurisdictions such as San Francisco require more. (You can see why you want a local HR consultant and an employment attorney advising you.)

Other benefits and perks can wait until you have a staff to see what they think is important. Want to offer free lunches to lure people from the Googles of the world? People you hire might have food allergies or dietary requirements. Want to have a dry cleaner come by once a week to pick up clothes? That wouldn’t make sense if everyone is wearing jeans and T-shirts. So assess your staff first before deciding on these kinds of perks.

2. Determine Your Culture

It’s a new business, and you’re the boss, so you get to choose. But you can’t say, “We have a free-thinking, open-door policy” and then yell at anyone the second they ask questions. But is on-site attendance mandatory, or can people work at home at will? Are hours strict or flexible? 

Think through what you’re comfortable with. Employees love flexibility, but if it will drive you crazy to not have everyone at their desks by 8:05 a.m., be upfront about it. There are plenty of people who also enjoy this type of workplace. Don’t pretend to be something you are not.

3. Get All Your Legal Policies in Order 

Your consultant should have a template for you. It will include things like at-will and nondiscrimination policies, employee conduct guidelines, expense reimbursement, and other things you haven’t considered. You don’t want to accidentally violate a law because you’ve never heard of it.

4. Put It All Into a Handbook

Your handbook is an important tool in explaining the culture and the rules. Your handbook legally binds you, so make sure it says what you want it to and is compliant with federal, state and local laws. 

5. Get an HR Information System

Sure, you can do everything in a spreadsheet, but  please don’t. There are a lot of options for small businesses that are relatively inexpensive and will make your life more comfortable in the long run. There are rules regarding employee data, and a professionally run HR information system can help you follow them.

I realize everything discussed here has dollar signs attached, and you may be panicking about how much it costs just to develop policies. Still, a good, legally vetted handbook at the start of your business will save you thousands of dollars later on.

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