Getting HR Processes Right from the Start

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Setting Your Business Up for Growth

Getting HR Processes Right from the Start

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03. Introduction

04. Part one: Understanding business growth

– The small business lifecycle

– Common business challenges

07. Part two: Incorporating HR

– Getting HR right

– HR problems – and solutions – for every stage of

growth

– The tech talk

14. Part three: Case study

17. How ELMO can help

Table of contents

02Copyright © 2021 ELMO Software - All Rights Reserved.

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With economic uncertainty now a fact of life, many business leaders are cautious about rapid growth – some would prefer a ‘steady as she goes’ approach until conditions improve and COVID-19 recedes into the background. However, there are still many sectors and organisations in growth mode and trying to deal with the natural ‘growing pains’ that come with that.

Handling growth can be one of the biggest challenges for a business, even more so than obtaining funding or establishing a unique selling point.

You may scoff when you hear the words ‘we grew too fast’ – as if rapid growth is not something desired by every business – but too many businesses come undone by their own ambition.

In these cases, organisations misjudge their ability to maintain their pace and it often proves too much for them to handle.

Often, employee and client relationships are damaged before the bottom line is affected.

Human resources is such an integral part of business that those who ignore it do so at their peril.

Gary Vaynerchuk is a multi-millionaire investor in high profile companies such as Facebook and Tumblr, and undoubtedly has the resources to lure top recruiters into his business. However, despite having over 1000 employees in his company, Vaynerchuck doesn’t trust anyone but himself to manage his HR department. That’s how much he values the role.

Mishandling HR isn’t just a company issue; it can play out in the public arena and shine a negative light on the business. The danger has been played out in recent media: harassment lawsuits, underpayment cases, damage to brand and reputation.

So, at what point is a dedicated HR function necessary, and how should HR departments grow with a company? From startups to massive success stories, we’ve assembled research and experts to advise us on how to navigate company growth from an HR perspective, no matter the size of your business.

This guide will equip you with practical, step-by-step tools for integrating HR into your business, so your organisation can move to the next stage seamlessly.

And believe us, the earlier you implement these tips, the better.

Introduction




Part One: Understanding business growth

Nothing is certain in life – and business – except change. That’s especially the case in growing organisations. This chapter outlines the four typical stages of company growth and the types of business challenges that can be expected at each stage.




The business lifecycleDue in part to its portrayal in the media and by politicians, it’s tempting to define business sizes in a very binary way: they can either be a ‘small’ or ‘big’ business.

However, the truth is business growth is rarely so linear, and more often they cycle through stages.

The challenge for HR professionals is being able to identify which stage a business is in, and what needs and opportunities businesses have at each stage.

We’re going to look at four broad categories that should cover the periods of growth where change is most acute.

1) The seeding stage At this point, your business has yet to become operational, and is likely more like a concept. For many entrepreneurs, this stage occurs when they identify an intersection between a market opportunity and a particular passion or skill they have. In fact, much of the work at this stage lies in determining whether the business concept is viable at all. This process typically involves:

Coming up with a solid business plan Understanding the costs involved

Comprehending the possible market and profitability of the business

At this point, many business ideas are placed aside. Only business ideas able to combine passion and profitability should move to the next stage.

2) Startup stage At this point you realise that the business has potential and you start setting up the administrative side of things: bank accounts, company numbers, marketing materials, etc. Most importantly, you begin approaching potential clients or customers. If you’re developing a product on your own, you might prepare that product for sale by building a prototype.

To support this, businesses onboard the first employees at this point and the culture of the organisation starts presenting itself.

3) Growth and expansion Sales are happening, you’re beginning to hire more people – it’s at this point the business matures from a scrappy startup where everyone’s roles are broad and vague, into a professional outfit with distinct workflows, job descriptions, and where the chief executive can step back from the day-to-day operations. This is also the stage where companies are in danger of losing their focus.

Tied up in the red tape of inbound revenue and payrolls, being opportunistic and pivoting isn’t as easy as it used to be. However, as money rolls in, so does the chance to explore ideas you previously had to put on the backburner.

4) Maturity A mature business has reached a point where it has a dedicated customer following, is a well-known brand in its industry, and where growth has slowed to a steady pace. It might not sound as exciting as an early-stage startup, but it’s likely to be more profitable.

The seeding stage

Growth and expansion Maturity1 Startup stage2 3 4




Common business challengesEach of these stages has its own distinct set of challenges, which often require different personalities and skill sets to tackle them.

Founders need to distinguish which of these require grunt work and which would benefit from a fresh take. To do this, here are some questions you should ask yourself.

Each stage of growth clearly requires a new mindset. However, the underlying theme across these stages is constant: you need people to grow. People need support and an atmosphere that lets them thrive. That’s what HR is all about.

So, how do you incorporate HR into your growth journey?

CHALLENGES AT THE SEEDING STAGE:

CHALLENGES AT THE EXPANSION AND GROWTH STAGE:

CHALLENGES AT THE STARTUP STAGE:

CHALLENGES AT THE MATURITY STAGE:

Is this business idea viable? How big is the total assessable market of

my business idea? Is this idea possible given my geography,

legal constraints, funding source, and skill set?

What competitors am I going up against? How much money will this business take to

get started? Will I be able to run this business myself, or

will I need to find other people? Understanding the costs involved

How am I going to make sure we maintain our level of performance as we hire more people?

How are we going to maintain a consistent cashflow?

How will we balance our revenue to grow new areas while fulfilling day-to-day operations?

We are growing into new areas – are these the right areas to focus on?

Which areas of the business are less profitable than others? Why? Do we want to abandon those?

Do we want to expand into new geographies? How do we plan and prepare for that?

Am I or the other co-founders the right leaders for this business, or does it need a fresh perspective to progress to the next stage?

How am I going to obtain funding for this business idea?

Should I approach a bank, or will investors such as private equity help me get it off the ground?

How can we develop our products or services quickly and bring them to market?

How do we market ourselves to stand out from competitors?

Who are the first people I should hire to make this business a reality?

How will we pivot to a new idea if too much legal red tape stalls our progress?

As we grow, how will we be able to respond to market forces and remain competitive?

Are we becoming too slow and sluggish? How do we streamline our processes? How

frequently do we assess it? Are we attracting the right talent for our

key areas to become leaders in our field? How do we explore new areas for business

growth while staying true to our core values?




Part Two: Incorporating HR

A growing company brings with it new opportunities but also challenges – especially when it comes to people management. How can you ensure HR continues to add value as your organisation expands?




Getting HR rightDespite being one of the most important aspects of any business, Deborah Peppard, founder of HR consulting firm HR Staff n’ Stuff, says it often falls between the cracks as founders’ schedules fill to capacity.

Wurth HR founder David Wurth has similar experiences working with founders who only considered the practicalities of implementing HR policies when something goes wrong.

However, failing to prepare for challenges will only expose businesses to several risks, according to both Peppard and Wurth.

Compliance: The sheer volume of laws regarding wages, entitlements and industrial relations can be a minefield for new founders. Recent underpayment cases making their way into the media clearly shows how important it is to understand HR obligations from day one.

Lawsuits: Proper policies or procedures about harassment or bullying ensure people feel safe at work. While that might not matter for businesses run only by its founders, staff numbers grow and as it does, different personalities can collide. Policies and procedures relating to workplace health and safety (WHS) is another core area that cannot be ignored.

Inability to retain good people: People like to work in areas they feel safe. HR procedures and processes create comfortable, safe environments, which are necessary for employees to thrive. Just as critically, employees need professional development and clear career paths, otherwise they will jump ship. It should be noted that all these factors influence how attractive an employer is to candidates, so it’s not just about retaining great people; it’s also about recruiting them.

“Some people are more proactive about it, but first timers have so much other stuff going on. They try to find fantastic people, but they don’t think about the structures in place to keep them.” - David Wurth

“It costs a business two-and-a-half times one person’s salary to replace them. Retaining staff is hugely important, and the number one reason why people leave is because of their manager.” - David Wurth




HR problems – and solutions – for every stage of growthTo negate most of these issues, experts agree it’s best to formalise HR policies from the get-go.

“We’re big on advocating for policies as early as possible,” says Peppard. “When you don’t, people just rely on word of mouth.”

As a starting point, businesses can easily start this by distributing starter guides from the Australian Fair Work Ombudsman or Employment New Zealand websites. These guides provide a baseline for processes and procedures in the workplace.

1) The beginning: HR at the early stages

Both Wurth and Peppard say common issues can be traced to this point, where founders are often lulled into a false sense of security and time because of the small number of employees.

For example, entitlements and wages are a huge problem: startups and small businesses shouldn’t assume they don’t have to pay those, just because they’re small and don’t have the cash.

“There are obligations around minimum entitlements for employees,” Peppard says.

“[In Australia] business owners hear the words ‘Fair Work’, but many businesses don’t understand which awards govern which contract. It’s more than just minimum pay rates; there are entitlements to breaks, use of a phone, car, and so on. Startups mistakenly say they can’t afford that so they ignore it – but they can’t.”

According to Peppard, many businesses also mistakenly believe they can just hire an ‘intern’ to avoid payment; instead, companies incorrectly claim they were providing “an opportunity for that intern to learn”.

Even in these cases, however, Peppard says “they still have to pay”.

Another struggle for early-stage businesses is understanding the difference between an employee and a contractor. In Australia, the two are very clearly defined by the Fair Work Ombudsman, and businesses need to abide by them – which means paying correct entitlements. Employment New Zealand also outlines the differences in rights and responsibilities for employees vs. contractors.

Because early-stage startups often have a few versatile employees wearing several hats, Peppard encourages leaders to nail good job descriptions at the beginning to help establish clarity.

You don’t want to constrain people, she says, so attrition often happens because people don’t have clarity over their roles.

“You need to work out the legal documentation, and identify that employment status from the very beginning.” - David Wurth



https://www.fairwork.gov.au/

https://www.fairwork.gov.au/

https://www.employment.govt.nz/

https://www.fairwork.gov.au/find-help-for/independent-contractors

https://www.employment.govt.nz/starting-employment/who-is-an-employee/difference-between-a-self-employed-contractor-and-an-employee


2) Expansion and growth: HR challenges for mid-size businesses

When businesses begin to grow, these experts say new HR challenges come in two forms: processes and policies that deal with how people interact, and management practices.

Both experts say the first can be solved very simply by creating thorough policies for bullying, harassment, whistle-

“The best cabinet maker becomes the foreman, or the best salesperson becomes the sales manager. But even though they are technically good at their jobs, they’re not necessarily good managers.” - Deborah Peppard

blowing, and so on.

“You want to stop people operating by word of mouth,” Peppard says. “What happens is they say that ‘oh Kenny told me I’m not supposed to do it this way, but Colin told me another way’, and so on.”

By creating a source of truth for how things should be done, HR issues won’t get in the way of business growth, she adds. “The sooner you do that, the better.”

The second problem – management – is a hangover from the earliest stage. When searching for talent, businesses usually employ people who are good at specific tasks. As the business grows, those employees are promoted to management.

To complicate the matter, retaining people is critical to ensuring the business stays on track. Therefore, establishing good management practices means once again creating solid position descriptions, with an emphasis on the technical skills of management.

“Recruit the right managers to start with and make sure they’re trained in how to be managers,” Wurth says.

Overall, processes at this stage need to start promoting healthy workplace interactions – particularly when personalities and views differ. Good managers encourage those critical discussions to occur without forcing people to leave.

Without these skills, businesses also put themselves at risk of facing bullying and harassment claims, Peppard says.

3) Solid and steady: Ensuring healthy long-term HR

The next challenge is knowing when to bring on a full-time HR professional.

While a chief executive or founder becomes the default HR representative, the natural influence founders have on the workplace culture will overflow onto the processes and procedures as well.

At this point, hiring a full-time employee then becomes critical to ensuring the culture is maintained during expansion, Wurth says.

“I say 50-80 people is when you need a full-time HR manager in your business,” Wurth adds. “Prior to that you can use a person like me, a consultant, but after that you need a dedicated resource. I like to say you need one HR person for every 60-70 employees.”




The tech talkLike with all business processes, technology plays a significant role at every stage of the business lifecycle. For HR and payroll in particular, our experts suggest that each stage requires a different set of tools as you grow.

However, Peppard points out that business owners shouldn’t confuse technology for having robust HR processes.

At the end of the day, she says, having policies is the best line of defence for HR. Technology simply helps you enforce and maintain those policies.

THE STARTUP STAGE At this point, businesses won’t have many payroll requirements, so any HR technology will be to manage teams or simplify processes, such as rostering.

There are several different types of online rostering and scheduling tools available, and many of them are attached to different accounting software packages.

However, Wurth points out that many businesses will want to investigate their own payroll solution. Many digital payroll systems scale easily with new team members and preparing for future growth from the start can save a lot of headaches later on.

To find out how Breathe HR, an ELMO company, can help your business from its earliest stages, click here.

EXPANSION AND GROWTH Businesses need to integrate more features and end-to-end HR solutions to cover the entire employee lifecycle before it reaches maturity, so adding hundreds or potentially thousands of employees doesn’t become a burden later on.

As businesses start hiring more people and payroll starts expanding, a robust system needs to be implemented, capable of managing information across payroll such as rostering, employee profile data, leave and attendance, performance management, remuneration, and training.

As Wurth points out, you’ll also need a dedicated HR employee to manage the system and ensure the robust processes put in place are reflected in the technology itself.

To find out how ELMO Software can support your business as it grows, click here.

MATURITY As businesses reach maturity, all HR and payroll systems will need to have self-service built in, so employees and managers can look up critical information and policies and update their own personal records as required. Placing this responsibility on employees ensures they’re aware of all the processes and policies.



https://www.breathehr.com/en-au/

https://elmosoftware.com.au/


While navigating the HR responsibilities can be a minefield, businesses stay on top by implementing policies as soon as possible and, when appropriate, integrate their policies with technology. That way, the HR department will scale alongside the business and be a key contributor to your success, instead of holding you back.

To choose the right tech for every stage of your business life successfully, businesses need to understand common needs.

HR during expansion

Who’s in charge? A dedicated HR

director

Tech solutions: A system that

integrates HR, payroll, rostering, time and attendance able to cover every employee touchpoint, from ‘hiring to retiring’

Business challenges: Maintain level of

performance during growth

Growing and maintaining cashflow

Moving and growing into new areas while staying profitable

Understanding if founders are best suited to lead the business

HR challenges: Does the business

have the right managers?

Does the business have a scalable payroll solution?

Are staff given access to important information such as payroll?

Are policies clearly documented and distributed?

Are there procedures to follow up on HR complaints?

Who’s in charge? Founder or chief

executive

Tech solutions: Rostering solutions Scheduling, time and

attendance software Payroll software

Business challenges: Finding funding to

continue to grow Developing products

to go to market Creating a marketing

strategy Finding dedicated

early staff members

HR challenges: Creating policies for

early employees Making sure new

personalities can get along

Creating solid job descriptions

Ensuring staff are paid accurately and legally

HR at the startup stage

HR technology at every business stage




Who’s in charge? Dedicated HR

manager or director, plus multiple HR officers depending on the number of staff

Tech solutions: A system that

integrates HR, payroll, rostering, time and attendance able to cover every employee touchpoint, from ‘hiring to retiring’

Scalable systems with 24/7 mobile and app access

Self-service portals for employees and managers

Learning and development portals

Business challenges: How can we respond

to market forces and remain competitive?

Are we becoming too slow and sluggish?

Are processes as efficient as they could be? Can we still work quickly?

How do we explore new areas for business while staying true to our core values?

HR challenges: Are we attracting the

right talent for our key areas? Are we a leader in our field?

Do staff feel supported to resolve conflicts?

Are we able to support people of different personalities?

Is our HR system robust enough to allow people self-service?

Is our system scalable enough, and reliable?

HR at maturity

Questions to ask your tech vendor about scalability and customisationYour HR technology solution should be able to scale up as your business grows and the demands on your HR team escalate. Payroll is often the starting point for many smaller businesses, but as employee numbers increase, you may require recruitment and onboarding, succession, learning and performance management solutions. The system should also be configurable and customisable to your internal HR processes, workflows and specific needs. Here are some questions to ask your vendor:

Can the vendor adapt to your changing needs and scale up as your organisation grows? Is it an out-of-the-box solution that is ready to go and fully set up once installed? Alternatively, is it a configurable software-as-a-service (SaaS) solution which can be tweaked or configured to handle

additional fields (widgets) and screens? Does the solution offer different workflow processes and procedures in addition to what comes with the default

settings? As a customer will you have insight to product roadmaps for future enhancements and developments?




Part 3: Case studyIt’s always useful to learn from others. In this chapter, we provide a case study of ELMO Software, a company that has undergone rapid expansion, with HR evolving through each stage of growth.




Monica Watt, Chief HR Officer of ELMO Software, has witnessed first-hand some of the challenges that come from a rapidly growing organisation. ELMO has moved well beyond being a startup and is now a mid-market sized organisation employing over 600 people across multiple locations in Australia, New Zealand and the United Kingdom. HR operations have had to grow and evolve during this constant change. Whatever stage of growth an organisation is at, Watt says HR is all about supporting business outcomes and objectives.

“It’s about working our way through existing challenges for the world we’re working in today,” Watt says.

To do this well, Watt considers all aspects of business support and risk management, rather than making traditional HR related tasks the end result. Wearing multiple hats is a defining feature of HR practitioners in growing organisations.

“Whilst I am the Chief HR Officer, I also manage all the operations of the business – I manage admin, agile coaching, upskilling,” she says. “I have a broader remit than just HR.”

As part of this, Watt keeps an eye out for several pitfalls:

BRAND MANAGEMENT As consumers and employees’ voices gain prominence in public arenas, businesses need to protect their brands in both physical spaces and online.

“We have to be mindful that employees and customers are looking for reciprocation,” Watt says. “Trust is a big thing – it’s at the apex of most conversations.”

It can also affect the way businesses recruit suitable talent, who can not only grow with the business as it scales, but also fit with the workplace culture.

“If you have a blemished reputation it can be a challenge to bring in skills and experience,” Watt says.

DATA PROTECTION Although policies and management strategies update infrequently, data protection frameworks need to be adjusted regularly to protect sensitive information.

Failing to monitor the health of your business’ online security measures can result in legal and branding challenges down the track.

“It’s not something you can be complacent with,” Watt says. “Whether it’s social media, digital marketing or online content, it really needs to be front and centre.”

COMPETITION IN THE MARKET Another common pitfall is underestimating potential competitors in the same market.

“You can’t be certain as to what and who is a player in your market,” Watt says, suggesting businesses question any peripheral player edging into your business’ stomping ground.

“That’s a challenge for any business, from small-to-medium businesses through to enterprise.”

The HR challenges – and opportunities – in a fast-growth tech company




ARCHAIC VS. AGILE WAYS OF WORKING Complacency in HR also cripples the leadership of businesses to adjust to workplace trends.

“Internationally, hierarchies are being benched for flatter structures, which helps to decentralise decision making,” Watt says.

“I still think many businesses have the old structures and really struggle to move faster and work with customers closer, and really empower employees to make decisions. That’s easier when your values and mission are really indoctrinated throughout the business.”

ONGOING UNCERTAINTY Watt says businesses need to prepare for ongoing economic uncertainty amidst the COVID-19 pandemic.

“The stronger businesses are, the safer they’re likely to be,” she says. “You have to give assurance to your employees and customers and you have to have momentum. Ultimately we need to come back to who we are, why we exist and who our customers are.”

In her department, disaster planning includes hypothesising likely outcomes, making business continuity plans and controlling what they can.

“My availability to skill people, deliver to customers and keep them top of mind and top of behaviours is critical,” Watt says.

ADVICE FOR BUSINESSES FACING THESE CHALLENGES Watt encourages businesses to work on communication, which will offer some level of protection to the brand’s reputation.

“Be honest,” she says. “Communicating with customers and employees, and championing them can go a long way to keeping them on side.”

Regardless of competition, market climates and the industry landscape, ELMO is also always looking to improve, which Watt considers the best way to negate any predictable or unseen challenges.

“You don’t need to be everything for everyone at every point in time,” Watt says. “Identify what sets you apart and craft that first. The key to survival is to evolve.”




How ELMO can helpRegardless of your organisation’s stage of growth, ELMO Software (ASX:ELO) is on the journey with you. We understand the challenges you face and the opportunities you will encounter. As a cloud-based, modular software solution, ELMO is designed to grow with your business. From start-ups to SMBs, right through to enterprise-sized organisations, the ELMO group helps organisations manage their people, process and pay throughout the employee lifecycle, from ‘hire to retire’. They can be used together or stand-alone, and are configurable according to an organisation’s unique processes and workflows. Automate and streamline your operations to reduce costs, increase efficiency and bolster productivity.

For further information:

Contact us

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Getting HR Processes Right from the Start