Article: Creating an agile HR function in start-ups & young companies

Strategic HR

Creating an agile HR function in start-ups & young companies

Why can't the rhythm of the HR function match with the rhythm of the business? Seeking answers to these questions will hold the key for the HR professionals to create a business aligned and employee-centric HR function.
Creating an agile HR function in start-ups & young companies

Indian startup ecosystem has started to show the signs of fatigue with several players fighting for a fair share of customers’ mind space and wallet. In this competitive landscape close to half of the startups in India fail in the very first year of their operations; those which survive are under constant pressure to scale-up and continuously innovate their business models. Extreme uncertainty and ambiguity have become the new normal. Startups which are not agile enough to adapt to this change will fear extinction in near future. Therefore creating a lean and agile organization is no longer a question of competitive advantage, but instead, is a question of survival. 

So what does this mean for HR in a start-up? - Design the organization for agility, right? Only partially right!  Before designing the larger organization for agility, HR first has to put its own house in order. In other words, HR should build a system which can continuously pivot its offerings such as performance management, rewards, talent management, learning etc. against changing employee preferences and business realities. HR needs to become AGILE first! 

While discussing HR agility, it may be interesting to look at HR from two perspectives; first, HR as a product, and second, HR as a service. 

HR as a Product 

Many a times, we have observed HR struggling to find relevance with employees. At best it is looked upon as a function to comply with. What do you think is the primary reason for this? It’s simple – there is a misfit between what HR has to offer and what employees expect from HR. 

Does that mean HR does not know what employees expect from it? The answer is Yes and No. Yes, because often HR creates a hypothesis about employee expectations based on the intelligence gathered through various sources; and No, because HR does not progressively tests its hypothesis with employees over a reasonable duration of time. In the agile world, employee preferences and business realities change so fast that not all HR hypothesis will remain valid forever. Thus there is a need to continuously pivot the HR hypothesis against changing realities. Also investing too much based on the initial set of hypothesis and discovering later that the hypothesis is not valid is a sure shot recipe for disaster. 

Most of the Tech product companies understand this challenge of uncertainty very well. They work in an environment where technology, customer preferences and business models change very fast. In his book ‘The Lean Startup’, Eric Ries explains a methodology which is increasingly adopted by most companies across the globe to address this challenge. According to him, companies should develop their products incrementally and iteratively. The company should minimally invest to create a Minimum Viable Product (MVP) with minimum set of features, just enough for the product to be releasable. Based on the customer feedback the company works to improve on the first version and creates the subsequent version of the next releasable MVP. The process continues till the point there is a product-market fit. Key highlights of this methodology are shorter feedback loops and incremental development of the product. 

This way of working presents a very interesting opportunity for HR to become more agile and lean. Can HR also be developed incrementally, iteratively with shorter feedback loop? The answer is definite ‘Yes’. Imagine a system where we create a very basic version of the HR product, test it with employees (and business leaders), incorporate their feedback, work to create the next version, test it with employees, incorporate their feedback till the point there is HR product – employee fit. This will drastically improve the acceptability of the HR product. Interestingly Google also tests its HR products first with 1% of the employee population before making a company-wide release. This can be done for anything and everything that we CREATE for employees within the HR function, such as training programs, reward philosophies, PMS, talent management, engagement framework etc. Looking at HR from the product development lens can help us ensure that the investment in HR remains relevant at all times. Also this approach to developing HR can help us eliminate the unnecessary complexities which we put into many of our HR products. The products will have only those features which employees believe are relevant. 

While this way of developing HR can be used by organizations in any phase of their lifecycle growth, it is still most relevant for startups and young companies because they are in the process of creating HR from scratch.  

 HR as a Service

Once the HR products are released in the internal market, employees start to interact with them. It is now when the true user experience starts to take shape; and it is not just the function of the HR product but also a function of the way in which the product is delivered to the employees and the support system associated with it. User experience is the sum total of the entire HR product ecosystem. 

Most of the Tech product companies have a separate department called ‘Customer Experience (CX)’. The department ensures that the entire product value proposition is seamlessly delivered to its customers. This also includes post-sales support activities such as query resolution, change requests, cancellation etc. The department uses clearly defined Service Level Agreements (SLAs) and escalation matrix to set the right expectations with customers. Like any other services set-up the effectiveness is evaluated in terms of Net Promoter Score (NPS). It is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company's product to others. 

Effectiveness of each HR value offering can also be evaluated in terms of NPS. HR will need to have clearly defined SLAs and escalation matrix to set the right expectations with employees. Culture of ‘Employees First’ should be engrained in the very fabric of the HR function. Most of the employee queries should get resolved at its first point of contact with HR. This is most relevant for delivery arm of HR in functions such as employee relations and HR support services. Perhaps that is also the most effective way to scale-up the HR value offering for startups and young companies. Thus looking at HR from services lens can help us become more employee friendly and empathetic at scale. 

Both, the product lens and service lens of looking at HR complement each other really well to create an agile HR function. Tech product companies provide such an interesting example for HR professionals to learn the application of agile and lean principles. Why can’t we create an agile HR function the way an agile business is created? Why can’t the rhythm of the HR function match with the rhythm of the business? Seeking answers to these questions will hold the key for the HR professionals to create a business aligned and employee centric HR function. 

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Topics: Strategic HR

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