How can startups avoid these 5 common HR mistakes?

By Oscar Waterworth

Paul Graham defines a startup as a company which is designed to grow fast. This concept mainly applies to tech companies. Most HR mistakes in tech startups originate from the fact that these companies are usually run by engineers without any HR experience.

These mistakes can cause huge losses and lead even the most perspective companies to bankruptcy. Since prevention is always the best medicine in business, in this article I will share some of the most common HR mistakes and ways in which entrepreneurs can avoid them and save their business from financial and organizational consequences.
Ignoring employee development

Ignoring employee development

Fast-growing startups often do not invest money in their employees’ education and development. IT is a very dynamic niche and startup employees do not have enough time for following new trends. In addition to this, most top talents do not exclusively focus on their salary, but also on tools that will help them to build up their career. Therefore companies that do not invest money in their employees’ development are facing higher retention and lower labor efficiency.

This crucial mistake can be avoided by sending employees to niche-specific conferences, seminars, and training on a regular basis. An employer should also equip employees with the right literature and enroll them to on- and offline courses that will help them master their skills and become more competent. Today there are tons of free educational material online, which can be used for employee training and education.

No employer branding

We all know at least a few companies for which everybody would want to work. Perspective tech giants like Facebook or Google are building their employer brand image with high salaries and great career advance opportunities, but they also use other branding tools that make them irresistible for top talents.

Sharing photos from comfortable offices or publicly announcing various non-standard labor benefits are ways that big companies use to popularise their future job offers. Facebook provides longer maternal and paternal leave to its employees, while some other companies offer longer unpaid vacations that enable employees to travel overseas. These tactics can also be used by newly founded startups.

Not hiring an HR professional

I already mentioned that tech entrepreneurs often do not have enough experience in human resources, which causes them to neglect this very important field. They often do both recruitment and HR administration tasks themselves, which results in higher expenses and slower administration process that can lead to labour disputes and lawsuits. This mistake can easily be prevented by hiring experienced HR professional or by outsourcing all HR tasks to third-party agencies.

Not using benefits of automation

HR automation helps companies to free up their HR department workers and enable them to do their job more efficiently. It is especially useful to entrepreneurs, who conduct all HR tasks themselves. Calculating benefits, payroll and work hours or managing health insurance are much easier and faster with the help of customised employee management software.

Most of these apps also come with cloud-based storages that can be used for storing employees’ information. This way, HR data will stay available even after system breakdown. Entrepreneurs should also have in mind that HR automation is a big business and that the solution they choose might define their whole HR strategy. For this reason, they should pick software very carefully and read tons of reviews and testimonials beforehand.

Not knowing local labour laws

The United States has one of the most favourable sets of federal labour laws, at least from entrepreneurs’ point of view. Still, there are many additional state and local laws that are governing relations between employers and their employees.

Startups with subsidiaries in different states need to make sure that their HR policy is compliant with all states’ laws and regulations in order to avoid exorbitant fees and lawsuits. These laws can be found on Department of Labor’s website. Since they are sometimes hard to understand, entrepreneurs should hire a local attorney, immediately after some legal problem occurs.

Startups with developed HR department are able to attract top talents and keep their employees happy. Creation of skilled and knowledgeable HR team is the most important prerequisite for successful business.

Many entrepreneurs who understand this fact, decide to outsource all HR tasks. This is also a good idea because it allows entrepreneurs to invest their time in tasks that will ensure faster development of their business.


This article, entitled “How can startups avoid these 5 common HR mistakes?” originally appeared on e27

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