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When Should a Startup Hire a Head of People?

Jul 11, 2021| Reading time: 10min

BY Alex Hilleary

Principal Content Marketing Manager

In the past — when HR was considered a compliance function — founders waited until the last possible moment to hire someone for the role.

But these days, founders can’t get away with bad people practices. Attracting and retaining top talent matters more than ever. Employees choosing an offer from an early-stage startup over one from big tech have high expectations for the experience they will get at the startup.

Founders must focus on culture-building and employee experience, even in the early days. And it won’t be long before they will need a full-time employee dedicated to the job.

So when is the right time to hire a first Head of People?

We heard from over 1,000 folks on LinkedIn and the results were mixed.

Before we dive into the timing, it’s important to define the role of people operations and make sure we distinguish it from recruiting.

A Head of People is Not Primarily a Recruiter

Recruiters focus on “getting butts in seats” when a startup is ready to scale the team. They post the roles, fill the pipeline with candidates, extend offers, and win over new employees. They are essential for high-growth companies to land the best talent.

From an organizational chart standpoint, a recruiter is likely on the “People” team, but that doesn’t make them the de facto Head of People.

A Head of People is someone who builds people systems, defines policies, creates development paths, and lays the foundational pieces of the employee experience at a company.

Don’t Let Your First Head of People Do Both

Occasionally, you’ll see a startup hire a Head of People that splits this functionality. Half of their job is recruitment and the other half is People Operations. This is a bad idea.

Since recruitment is a more quantifiable metric and feels more urgent in the short-term, the Head of People in the split role will ultimately become a recruiter at the expense of other, longer-term people needs.

It’s fine to have a first Head of People managing internal or external recruiters, but organization-building should be the most important element of their job.

When is it Too Early to Hire Your First Head of People?

A Head of People shouldn’t be a startup’s first hire — or second, or third for that matter. While a team is finding product-market fit, they should be hiring product and go-to-market folks. At the very beginning of a company’s existence, operations should be lean.

People Ops for Startups Under 10 People

Culture, employee experience, and organizational design matter in the early days of a startup, well before it becomes a full-time job. On most teams, one of the founders — often the CEO or COO — takes the lead on championing the company culture and ensuring team-wide well-being.

When the team is small, it’s not a huge task.

That person will have to make some important people decisions including:

But there is not much to do from a day-to-day standpoint. Often people operations takes up around 10% of the founder’s time in the early days.

People Ops for Startups from 10 to 25 People

As teams grow beyond 10 people, the founder may offload some people responsibilities to someone else on the team — who still doesn’t do people ops in a full-time capacity.

In the late pre-market fit stage, startups often hire someone to help leadership with general operations — an Operations Associate or a Chief of Staff. This operational person can take on some of the duties of people operations — whether that’s creating a performance management framework or building out better tooling for HR.

With other operational projects on their plate, people ops likely accounts for 20-50% of this person’s day-to-day role.

What About the Core HR Stuff During This Time?

As the team grows, core HR tasks start to increase. When we talk about core HR, we mean items like:

  • Navigating how to employ someone in a new state
  • Making benefits decisions
  • Complying with labor laws

These jobs are more compliance-focused than the other strategic employee experience projects we’ve talked about so far. It’s not fun stuff, but it’s necessary. In the early stage, HR tasks fall on a COO or Chief of Staff.

Or many startups turn to Professional Employer Organizations (PEO), which are a way to fully outsource your HR needs to a third party until you are big enough to need to do them in-house.

The Perfect Time to Hire Your First Head of People

You should make your first Head of People hire when you exit product-market fit mode and enter into growth mode. At this stage, operational excellence becomes important as you try to scale the business you’ve created.

Alongside other operations aspects of your business, it’s time to invest in people operations.

Headcount isn’t a perfect measure for this, but for most startups, this moment occurs when the team is between 20 and 40 people and planning to double in size the next year.

Some other indications that the timing is right include:

  • You’ve just raised a Series A round or a similar type of new funding
  • Your team has non-founder employees who have been around for 2+ years

A good Head of People hire will know what it takes to lay the foundations for scaling the organization. They’ll help tackle big strategic challenges like:

  • Building compensation structures
  • Crafting professional development paths
  • Creating consistent employee experiences across departments and managers

They’ll also help scale key programs in the employee experience, like onboarding, offboarding, recognition, and day-to-day support.

What Happens if You Wait Too Long to Hire a Head of People?

If you hit growth mode and don’t hire a Head of People, you may not see the negative results right away — after all, it’s a role that focuses on long-term needs, not short-term. But putting off the hire will catch up to you soon enough.

You’ll become so focused on bringing new talent onto the team, that you won’t build the systems that will help you keep the best people on board.

Teams that scale without a Head of People typically hit this moment around one year into scaling mode when all of a sudden, everything starts to feel like it’s falling apart. Veteran employees who have been around for two or more years become disgruntled and start leaving in droves.

This might be because the professional growth they expected working for a high-growth startup isn’t there because you haven’t created a structure for it. Or maybe you haven’t helped them adapt to the rapidly changing business that used to be a small, cohesive unit and is now full of strangers. Situations like these leave these employees feeling like they’re floundering and like they don’t have a vision of what years three, four, and five look like with you. So they decide to take their talent elsewhere.

In turn, you can’t hire fast enough to replace them and your growth stalls as you look to fix the expanding hole in the bottom of your boat.

Takeaways

A strong Head of People hire will help position your organization for long-term success in talent retention. As your company hits growth mode, this role should be at the top of your job board.

Hiring a Head of People is an important decision. And since those first 90 days as a startup people leader are critical, we’ve made a checklist to help you determine the best areas to focus your energy for maximum impact.

Read the checklist here

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