Is your HR team a high-performing one?

In 2024, despite the economic contraction and difficult fundraising environment the battle for the best talent remains as fierce as ever. On the front lines of these challenges are People teams. Let's take a closer look at the different roles within the HR function.

How big or small should a People team be? This is a common question for business leaders, and with good reason. As a support function, the HR team forms the baseline for the rest of the company to scale, accelerate, handle growth and manage change. The size of a HR function is generally correlated to the size of the company, its stage, the company culture, its growth strategy and all the specificities of the company itself. And of course, the total budget allocated for the HR function (including headcount and associated tools) will have a direct impact on the size and effectiveness of the People team.

CEOs should take pains to avoid having a purely transactional HR leader whose time is 100% dedicated to day-to-day operational topics. Instead, the most effective HR leaders must have the bandwidth to help the CEO on strategic People topics like organisational design, corporate governance, ownership of key topics and anticipation of key hires. HR leaders help to structure companies, by starting at home: structuring their own department well. 

The core functions of a HR department

Generally we talk about 4 core areas in People teams

People operations

There’s no way around it, no matter which country you operate in, having employees means having paperwork, payroll and legal subjects to manage.

Startups have a tendency to underestimate the sheer volume of legal topics to be across, which differ greatly in their specifics from one region to the next, but may include: industrial relations, employee unions, obligatory documents for the state etc.

People Ops teams also manage key HR information systems and tools like a HRIS or payroll software and often lend a hand to other parts of the People team on digitalisation and tooling topics.

Talent acquisition

Talent acquisition teams are responsible for building employer brand, implementing candidate sourcing strategies and are responsible for delivering an incredible candidate experience from first impressions of the company through to day 1 as an employee.

Building a strong employer brand involves a lot of external communication designed to share the company values, highlight employees and their achievements, as well as give a window into what it’s really like to work at the company. Often, a company’s best ambassadors are their existing employees, provided they are happy! Their perspective shared via their own personal social media accounts (on LinkedIn, Glassdoor, or even Instagram), can help make your company shine.

Well-known companies with recognisable employer brands have to focus more on selection of candidates amongst the vast number of inbound applications they receive. Startups or lesser known brands will have to do more of the work to attract and educate candidates.

Depending on the company and their target candidates, various brand messages and channels may be used including specialised media, social media, referral platforms etc.

From the very first interaction and throughout the entire recruitment process until an offer is accepted, talent acquisition specialists are the face of the company to candidates in process, and play a huge role in the success of a new hire.

Occasionally, the talent acquisition team is also involved in the early days of onboarding, where the HR team works in tandem with the new hire’s direct manager to ensure the new hire is set up for success. That involves everything from ensuring basic logistics like email access and laptops delivered on time, along with introductions to all members of the team, social invitations, like lunches during the first week, and any necessary training. 

It’s crucial that a new hire feels welcome and like one of the team from day 1 or perhaps even earlier, thanks to their interactions with the talent acquisition team.

Talent management

The talent management team is in charge of all learning and development in the company, including career paths, training, talent review and succession planning. They also generally cover topics like compensation and benefits, including establishing salary grids, compensation and benefits policy, and equity allocations. Dedicated employee experience roles often also sit under talent management.

Learning and development specialists define progression pathways for each job type and also create learning and development plans to enable employees to progress to the next level and acquire new skills. They are heavily involved in annual review processes and develop training plans and programs for various departments. In larger organisations, this involves a considerable piece of work around data collection and analysis in order to make the most pertinent recommendations for learning and development programs. 

Compensation and benefits specialists work to classify each job type and role within the organisation to establish the level of responsibility and the corresponding level of remuneration. They establish policies for remuneration with regards to market practices, fixed and variable compensation as well as performance bonuses and equity grants.

They’re also generally involved in conversations with People Operations teams around benefits such as private health insurance, life and disability insurance, paid parental leave etc.

Dedicated employee experience team members follow the journey of an employee from day 1 of onboarding through to offboarding. The goal is to ensure a seamless experience, as high quality when welcoming a new team member as when we bid them farewell. Indeed, more and more employees return to work for a former employer (known as the “boomerang effect”), so ensuring a great experience even at the end of an employment period is primordial.

Business partner

This core part of the People function sits closest to the rest of the business, and acts as a veritable partner to the various business units of the company, to ensure all the projects and programs designed by the rest of the HR function actually serve the businesses needs. This is a two-way street, and business partners also request programs, policies and specific support from their HR colleagues for their business units. Business partners can also provide additional support in manager-employee relations as a somewhat neutral third party to help unblock situations. 

Generally, business partners specialise in 1 or 2 areas of the business (such as engineering, or marketing) and work directly with the leaders of these business units to better understand their specific needs and challenges, and to build meaningful, trust-filled relationships with managers and employees. 

For example, they may work with managers to identify high potential employees or to establish performance management plans. They also often intervene in individual employee disciplinary conversations.

The functions of a HR department according to company size

In a multinational corporation, around 2% of the total employee headcount is dedicated to Human Resources. However, in the world of startups, the ratio is closer to 4% particularly for a startup in a phase of hyper-scale.

More precisely:

• From day 1 up to 30 employees, 1 HR generalist on the team usually focusing on people operations topics like employment contracts, on and offboarding, payroll and legal as well as recruitment + 1 Strategic HR partner between 10 and 20%
• From 30-75 employees, generally an additional 1-2 roles to support recruitment needs and have broader coverage across legal obligations. At this stage, the HR leader must focus more on mid-term priorities and start to structure and anticipate the next phase of development linked to fundraising etc. It’s the perfect time to call on or extend the partnership with more senior, external HR leaders (like a fractional HR Director) to help with these more strategic HR topics, given the early People hires in a startup are generally (necessarily) more operational profiles
• Between 75-150 employees, companies start to hire experts in-house across compensation & benefits, learning & development as well as HR Business Partners
• Above 150 employees, each core HR function should add expertise and seniority to their respective teams to support the development (local or international) of the company at its next stages

Structuring your HR department: should you use an external contractor? 

For companies who are starting to scale and accelerate their growth, hiring the right senior internal HR Director takes a lot of time, and it’s easy to de-prioritise this hire while you have so many operational topics to handle, right now. This is exactly where a fractional or part-time HR Director can help not only save time but better prepare your company for the next stages from a strategic and operational point of view.

A fractional (or part-time) HR Director can help in 3 core stages, depending on the company’s needs: 

1 - an initial audit to understand the core People priorities and understand the company context and culture

2 - a recommendation phase to help define priorities and a HR roadmap for the next 1-2 years

3 - hands on, putting in place the strategy defined in 1 & 2. As opposed to a consultant who generally remains at the audit/ recommendation stage, a fractional HR Director can concretely contribute and start putting in place all of the actions defined in the roadmap. They join the executive committee and can mentor the internal People team on strategic and day-to-day topics.

When it comes to recruitment, if the hiring plan is ambitious, it makes sense to internalise a talent acquisition manager along with a second talent acquisition specialist focused on core job types like engineering or sales, or even a campus recruiter to focus on intern and graduate hiring. The rule of thumb is that a recruiter can handle around 40 generalist open roles per year, reduced to 30 per year if the roles are technical. 

Using external help like recruitment agencies or RPO (Recruitment Process Outsourcing) consultants can be a great solution to ramping up recruitment quickly and efficiently. 

Agencies are usually helpful for strategic one-off roles whereas RPO is great for handling additional recruitment volume quickly.

As we’ve seen here, the People department is a core function in any successful startup, scale-up or established business. Investing in this function early and well, ensures your company is well-prepared to handle every step of their growth and acceleration journey.