For Small & Medium Businesses (SMEs/SMBs) (or for that matter, Startups) that have more than 1 founder, professional and personal relationships between the founders, can greatly influence a host of HR operations, as well as a variety of organizational outcomes including business growth, profitability and sustainability. And if the founders have their immediate family members as well as relatives too, taking up various roles in the business, the founders and their families can, at times, make it harder for the organization to grow sustainably and more importantly, attract and retain talented professionals, in the long run.
CAN HR PUNCH ABOVE ITS PAY GRADE?
Interestingly, since SME/SMB founders are least likely to hire HR folks, especially when they set up a business, or even think of having an HR team as they scale up, issues between the founders and their families who play an active role in the business, tend to proliferate. Also, even when HR Professionals are hired, they may not be sufficiently empowered to look at founder-level issues or try and resolve board-room issues.
In one organization, that this author worked with, all 4 Directors were related to each other – while two of them were related by marriage, the other two were a father-son pair. As the business grew several fold, their HR woes multiplied exponentially. Apparently, the day-to-day administration of the organization, including the HR piece, was left to one of the Directors, who worked closely with an HR Head. Given that this Director had a highly technical background and also higher exposure to administration matters in an academic institution, when working as an employee formerly, the founders had collectively decided to put him in charge. However, as employee issues spiraled out of control, it became necessary to bring in an external consultant to address HR and employee issues. Also, other Directors stepped in to challenge and overturn some of the decisions that had been taken.
Oddly, what this situation brings out clearly is that, despite having an experienced HR Head and an HR Team, the Directors did not find it best to rely on their advice and counsel. As a matter of fact, based on similar experience with other SMEs/SMBs, this author is of the opinion that founders may be reluctant to rope in internal HR to take up issues that plague them, because they:
- Don’t trust internal HR enough
- Doubt HR’s competence and experience to address Board-level issues
- Fear other employees may come to know about what goes on at the top
- Feel HR’s role should not be extended to cover founder issues
- Believe HR is also part of the problem
I RECRUIT THEREFORE I AM (HR)
For most SMBs and Start-ups (let’s call them SMBs on Boosters), the sine a qua non for HR’s existence is its ability to recruit. So, it’s all too common for many SMB/SME and even Startup founders to offer deceptive titles like “HR-Head” or “Director-HR” or what have you to HR Professionals and then corral them in the recruitment war room. As an “outsourced” HR Head, this author had a similar experience with one Founder, who spoke eloquently about the “strategic” role that HR plays in his organization but made it a point to narrow the function and the role to a purely recruitment-oriented and employee administration focused one. While HR Professionals may not mind a purely recruitment role, since it’s perhaps a critical business partnering role, this over-focus on ensuring the right people are on board, comes at a cost.
For instance, this Director that the author worked with, had a habit of creating a highly ambiguous Job Description and clarifying a certain set of Compensation & Benefits (C&B) terms, that defied market realities. Based on conversations with Candidates who were shortlisted, the Director would proceed to make changes to the original, at times, all in the course of one day. Apparently, this permanent beta stage version of the Job Description, confused many Candidates.
Eventually, it was pointed out to the Director that the organization should spend some time and effort to create a Role Directory first (in line with Organizational Strategy, of course), that would clarify to folks internally as well as externally, what anyone was expected to do in a particular Role and what would be a decent or fair set of C&B terms for the same. The Recruitment piece could then follow the Directory and when required, amend the Directory, based on market conditions.
Ironically, while this kind of Role Clarification may still work well for employees, Director-level Roles are rarely ever a part of such a Role Directory. One Startup Founder, that this author spoke to said, that he and his Co-Founder had a clear picture (not on paper, of course) of how their 3rd Partner, whom they wanted to bring on board exclusively to focus on Marketing & Sales, would look and sound like. Accordingly, they set out to recruit this 3rd Partner themselves, and found him at a party. It was love at first sight or hind sight and probably, worked out well, for the firm.
ROL(E), CAMERA, ACTION
As is likely to be the case with many SME/SMB and Startup founders who want to grow exponentially, there is hardly any time to clarify their own Roles and required Skills, when there is so much action to be taken care of. Oddly, even when they patch together some Role and Skill requirements, for the employees who join them, the usual complaint from the employees is: my role is to do just about everything, just like the founders!
In one SME that had engaged this author, there were widely different “perceptions” among the 3 founders, with regard to each founder’s competence to handle their current role, the skills required for the role and their expected performance. All of them confessed that they barely got the time to “reflect” on “their” Roles, or Skills or Performance and that most of the time, their focus (almost camera-like) was on finding out how their employees were performing and whether the employees were in the right roles or had the right skills.
GETTING ON BOARD
In most cases, founders assume all HR Roles and Responsibilities, when they launch their ship. It is only when they grow that they may wish to have a dedicated person or function. While this is great, founders may at times, forget that they need to also have an “HR” to handle various issues at their level. These include, apart from several others, their:
- Specific Roles & Responsibilities
- Reporting Relationships
- Role-specific Skills
- Motivation & Engagement
- Entry
- Exit
Now founders can trust each other to take up, any or each of the above areas. But that can be an uphill task, as founders rarely find the time to rise above their business or operations. At the same time, leaving these critical issues unattended can be detrimental for business growth and sustainability, in the long run.
