Who is this guide for?
This is the first part of my HR guide for startups. I wrote this guide for founders and employees trying to build an HR plan. I assume you haven’t taken any HR classes (lucky you) and your company size is 0-25 employees with at least 2 founders.
When you’re done with this guide you should have a baseline understanding of startup HR. Please Note: I will not be getting into the boring legal aspects of HR, while important, I feel that focusing too much time on mitigating risks and building bureaucracy prevents your company from building an HR plan that helps you ship a great product.
What’s an HR plan?
Your HR plan determines if your organization will thrive or die. A great HR plan will create a positive work environment, attract the right talent, improve the productivity of your employees (meaning for each dollar of payroll paid out, you will see an increase in employee output), and it will keep your company focused on its priorities.
I will start with culture followed by:
- How to create a recruiting pitch
- How to find great candidates
- How to interview candidates
- How to build an 80/20 comp & benefits plan
- How to manage and grow employees
So let’s start with the first building block…Culture.
What is culture?
- Culture is the collective hivemind influencing collaboration and decision making within a company.
- Culture is a tie-breaker when a decision can’t be easily made with data.
- Culture determines how a company will be different from the rest.
- Culture defines what are acceptable forms of communication within the company.
- Culture protects employees taking career risks to improve the organization at the risk of upsetting office politics.
- Culture helps attract and hire the right candidates to turbocharge a business.
- Culture is an antibody protecting a company from being infected by unethical decisions.
- Culture holds the company together when it’s rapidly scaling.
- Culture is how decisions are made when the founder is not in the office.
Your culture is the central building block of the company’s future. However, most companies fail to define their culture which leads to terrible products, poor hires, and unethical business decisions.
Creating a culture isn’t a top-down exercise
Cultures aren’t built in a vacuum with zero input from your colleagues. You must include your cofounders, employees, and even customers in this discussion because everyone should have a stake in creating the company’s culture. If you don’t include your employees in this process you risk culture rejection. Culture rejection is hard to identify as a founder because your colleagues will secretly object to your culture by turning it into a joke amongst themselves.
A few years ago I was in a meeting with a group of vendors. One of the vendors was asked by her manager to recite their company’s mission statement. The statement felt like it was created via the mission statement generator website. As the employee was reciting the mission statement I could see the pain in the employee’s eyes because she didn’t believe in it. This is exactly what you don’t want to happen at your company.
Your culture isn’t a means to force your employees to regurgitate a meaningless throwaway mission statement. That ideology is cancer for your organization and a good way to build a dreadful work environment.
Actions speak louder than words
Most companies already have a track record for acting in a certain way. If your desired culture runs counter to your previous actions, you must reconcile the two. Your past actions will likely reflect your future actions, so be realistic in what defines your company’s culture. If your culture diverges from reality, your employees will recognize this incongruence and fail to believe in the company’s culture.
It’s easy to flaunt your culture when simple decisions are being made, but the culturally defining moments are when large sums of money are at stake or you have to make decisions that anger your employees or investors. These culturally defining moments can either strengthen the company’s culture or weaken it. In the short term, it might seem okay to back track on the values of your culture, however, the long-term ramifications can cause a crisis of confidence regarding the company’s culture, which can result in the death of your organization.
Cultures aren’t built they are discovered
As Michel Angelo said, “Every block of stone has a statue inside it and it is the task of the sculptor to discover it.” An organization must study its history to discover the values that are driving its culture.
Your culture was born the second you decided to start a company. Your culture reverberates from interactions with your co-founders, employees, and customers. Like it or not, you have already been hard at work at creating a company culture.
Just like a house needs a sturdy frame to survive, your culture requires key values to thrive. Your values represent key attributes of your company’s culture. The values can be listed in a single sentence, they can be a few bullet points or multiple sentences. It’s all up to you.
Here are some examples:
What are the signs of great values?
Great values are unique to your company and would be meaningless to anyone who tried to copy them because they lack your company’s unique history.
Values can run the gamut from the “We put users first” to “We value uncomfortable conversations.” The more generic value statements like “We love our customers” are meaningless. You would be hard pressed to find a company that doesn’t love their customers.
A good test for the strength of a value is the reversal test. If you took the opposite of the value, would anyone agree with it? If no one agrees, your statement is meaningless because it’s a core tenant of any successful business. For instance let’s try the opposite of “We love our customers,” how about “We hate our customers.” No one would agree with that statement because it’s ludicrous.
Instead of “We value uncomfortable conversations,” how about “We don’t value uncomfortable conversations.” Some people would agree with the former statement because they want harmonious work environments and don’t want to deal with disagreement.
Instead of “Move fast and break things” let’s try “Move slow and don’t break things.” Many people would agree with the former if you work in the medical industry, national defense, or public health because if you break something people die.
Questions to determine your values
The following is a list of questions you can use to determine the values of your culture. These questions should be answered by your entire company (Founders and employees). If everyone isn’t included, the values you create might not be in line with reality your employees are seeing in their day to day interactions with their managers, colleagues, and customers.
Make it clear to everyone that their responses will critically impact the direction of the company and not to hold back on their responses even if they think it might hurt someone’s feelings.
Share a doc with everyone in your company to collaboratively answer these questions.
- What’s your company’s origin story?
- What problem does your company solve?
- (Not to be confused with: what product does your company ship?)
- Who would you like to work with?
- How are decisions made between you and your co-founders?
- What makes your company different from the rest?
- What do your customers think of your company?
By having everyone answer these questions you will see what the company means to your colleagues. More importantly, you can identify communication gaps between your perception of the company compared to everyone else. These perception gaps are blind spots in your organization that needs to be rectified in order for your company to thrive. If you decided to look past these blind spots you’re setting yourself up for problems down the road.
Your company could have been started a few days ago and you lack a company history to begin this process. Don’t expect to have enough information at this point. You need to start working on your product, but remember to return to this list because each action taken by the company lays down the foundation of your culture.
Distilling your culture
Now that you have created a document with your company’s history. It’s time to discover the values that are influencing your company’s history.
Ask everyone to write down the values they are seeing within the document and to stack rank the values they have listed. You should have a list of 3-5 core values. These values will be the building blocks of your culture.
Less is more
“What? But I want to have 20 or 30 values.”
Most employees will be hard pressed to remember the values following the first 3. The longer your list of values become the chances of anyone remembering them are slim to none. You want the values to be easily memorable so other employees can share them with their colleagues. Keep in mind, as your company grows, your employees will be responsible for protecting the company’s culture. If they aren’t able to remember your core values, expect your culture to suffer.
Review your culture on a regular basis
Set a reminder every month to review your values. Ask everyone, what are we doing to live up to these values? If we aren’t, what should we do differently?
Randomly ask your colleagues what your values are. If your colleagues can’t remember the values, what are you doing to make sure your values are widely understood by the organization?
Reward those who practice you culture
Rewarding your colleagues for actively practicing your company’s culture shows everyone the culture truly matters for your organization. Set up a forum so employees can nominate others for practicing the company’s culture. Have the employees submit a nomination with a story demonstrating how the employee exemplified your organization’s culture.
Protecting the company’s culture
Make sure everyone has the ability to directly question decisions made that run counter to the company’s core values, especially the founders. If employees are afraid to speak up, make sure they have the ability to voice their concerns anonymously.
Cultures are never perfect
It’s impossible to build a culture that everyone in the world loves. What defines a culture is what makes it distinct from other cultures. If you try to build a culture that values everything, soon you’ll make a culture that truly values nothing, and in that case, no one will love it.
It’s up to your team to define and protect a culture your company will all love.
That’s a wrap for company culture. Let me know what you think in the comment section!
My next guide will cover how to find great candidates.
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