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
Pang Shu Xin, Executive Director, Mothercare Singapore
‘The first thing I look for is the attitude of the person and just as important as the interview itself is the reference check with their previous employer in terms of their general attitude to work and how fast they are able to pick things up. I don’t just look at people’s job experience, but also at their experiences outside of work.’
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.
Sherwin Siregar, Deputy CEO, Atlas Sound and Vision
“That’s when I realised you really need somebody who knows what they are doing to do the HR role. It is not something you could just do in your spare time. I decided that I really needed to hire an HR person and so I hired an individual who had nine years’ experience and was doing his bachelor’s degree in HR part-time. We needed to formulate clear policies and the various components of HR.”