In our continued conversation around professionalizing your defense startup as you grow, we talk about some of the things to consider as you grow your Human Resources (HR) function.
Even though in almost every business people are the most important asset, most startups will begin with a pretty ad-hoc approach to HR. That’s ok. What attracts people to join a startup is typically much more nuanced than how you run your HR group. So, focus on those things early. Gain traction in the marketplace. Prove that the company has some staying power. During this early timeframe, someone in your organization, maybe one of the founders, will be responsible for this function as one of their many hats. That’s normal.
Once you’ve established the company and have started to have more success you do need to revisit that HR maturation roadmap though. Employees, especially newer employees, won’t give you the pass that the ground floor ones might have. They will expect and even require the basic block and tackling that your bigger competitors have, so it’s essential to make sure your small defense contracting business HR is organized correctly.
There are a bunch of things to consider during this inflection point. Not all need to be done at once and each company has its own personality and workforce. The following considerations are really just a framework to be thinking about. Not a true cookbook recipe.
Management professionalization – at some point you will need to consider shedding the HR manager hat and bring in someone to focus on it. It can be very useful to bring in someone from the outside who has seen the mechanics of a larger organization before, to improve your defense contracting business’ HR Department Structure. Find someone flexible who will collaborate with you as a partner to implement your vision of the company. You’re probably not looking to adopt some other companies’ culture and HR ethos, so make sure the person you choose knows that and wants to build on what you’ve started. Adding this person will be a new expense for you so do it when you can. In your earlier stages, you may need to have this person wear a couple of hats to make it affordable. Recognize though, that with some of these new changes coming, that your status quo HR solution may not be able to handle all the steps that need to be taken to accomodate your growth level. So, despite the cost, better early than late.
Some of the individual systems and processes that will likely need to expand are:
- Talent Management ( Career progression and customer category mapping )
- Benefits Management ( benefits are very complex and likely your biggest expense )
- Onboarding/Offboarding ( early practices don’t scale )
- Recruiting ( workflows for the applicant review and interview scheduling )
- Retention
- Training ( do you need an LMS? )
- Hiring practices
- HRIS framework. ( There are special information systems designed to help with all workflows )
- Culture ( all functions touch culture. Often HR owns company events and several things that impact culture )
Let’s take a look at some of these:
Talent Management – In the early days, you may not even have a robust set of job categories and defined career paths. There is nothing wrong with that. As mentioned above those aren’t usually the things potential employees are attracted to in a startup. When you start having dozens of employees though and are no longer able to play that startup card as easily, many people will expect to know where they are from a role, job description, and career path perspective. They will want some guidance on how you judge performance and what they need to do to continue to better themselves and progress in their careers. Ad hoc treatment will start to frustrate some of these people, leading to feelings of possible favoritism and frustration that they don’t know how to blend the company goals with their personal objectives. In the worst case, this can cause people to look elsewhere for that career progression and satisfaction. Talent management is another essential piece that a small business HR program should address.
Consider developing a written job category roadmap with possible career paths mapped out. Document the performance expectations of each of these categories but don’t make them too black and white. If you are a service and labor-based company, you likely already have job descriptions for your customers, used in your proposals and contracts. Using these “as is” can be a mistake. These categories have different audiences. You can have a document that maps the two together but the purpose is so different they should be customized separately. They often are also not a 1-1 mapping. You may have 5 job categories that map to one customer category or vice versa.
Onboarding and offboarding – In the early days, this is pretty ad-hoc. When you hire your 8th person, that’s a big deal and you treat it as a special event. Maybe one of the founders meets with that person and gives them some personal guidance on what they’ve just joined, etc. The problem with that is it doesn’t scale, especially in the defense contracting industry. While I am a huge fan of that personal attention and getting new people engaged very early, you need to underlying block and tackling processes under the hood. This may be a checklist that gets initiated the day the offer is accepted. Make sure that new people coming in have a place to work, computer resources, welcome packages, etc all in hour 1. Too often during this growth inflection point that gets dropped in the everyday hubbub of the growing company. It’s embarrassing for the company to be unprepared. It’s worse for the new person, though. To come in excited on that first day and not feel you were expected and planned for, gets you off on a terrible first foot. Make that first impression great by creating an operational HR Department structure, as you did with employee number 5 or 6. It’s also a good idea to have a process that assigns guides/mentors to each new person to help them get over that new kid set of jitters. The goal isn’t necessarily having someone who will mentor them on their job. It’s more about someone who will guide them on how the company works. Sometimes a peer is best.
Unfortunately, with growth comes attrition. People leave. Hopefully not many but you need a plan for when they do. Making sure you collect their equipment in a timely fashion. Security closeouts and exit interviews can be useful. You need a checklist with individual people assigned responsibility and urgency for each of these matters, all alternative pieces to the HR professionalism puzzle.
HRIS system – Human Resource Information System. You likely don’t start out using one of these when you startup. They are overkill and add cost. Employees are logged in the accounting and payroll systems. Everything else is managed using spreadsheets or other basic tools. If you keep growing there will come a time when you need more. More for yourself and more for your employees. A good HRIS can provide an integrated workflow around employee data, career paths and status changes, compensation, benefits administration and selections, performance appraisals, recruiting, training and so many other things. While these systems can help you and your HR leadership manage a larger set of data and information flow, it can also be an invaluable tool for your employees to accomplish some self-servicing.
There are many different HRIS offerings in the defense contracting market. They range from very expensive to almost free. It’s important to get one that’s suited for where you and are and where you’re planning on going. Put together a prioritized list of near and medium-term objectives and develop an RFP process to choose a vendor. You can research and choose who will get the RFP but let them respond to your specific goals. It’s usually better to evaluate a collection of 2-5 responses from the providers than to try to choose one yourself by doing internet research alone. Allow them to tell you why your specific story is best met by them.
Another consideration as you grow will be Affirmative Action and EEO regulatory requirements levied on your company. Once you pass size thresholds you will be required to report on your efforts to adhere to these guidelines. Among other things, you will be required to show that your recruiting process does not discriminate. Your applicant tracking data will need to be accessible. Again, small startups don’t usually track this. You hire or you don’t. Often the options are referrals alone. You don’t track the pool or the rejections are much as you will need to later. Consider an HRSI that integrates your recruiting process and applicant tracking to make this EEO reporting easier for you.
An HRIS will be a material recurring expense but it’s likely going to be necessary someday. So put it, and the process to acquire it on your future roadmap.
As with each of the professionalization tasks, it’s best to have a plan early with an idea of what gates will cause you to make a change. You don’t want to do these things too early or all at once. Conversely, getting caught off guard with an unexpected new set of expenses and a realization you have to rush to get something in place is also not optimal. Your growth should allow you to invest in your infrastructure. It’s not a luxury. At some point, it will be critical to mature past a startup HR mentality. The best strategy is to be aware of what is coming as you continue to understand your future growth trajectory. Have that rough plan on a shelf. Dust it off every once in a while, and refresh it. But I suggest putting heavy weight on a small defense contracting business HR structure before you get in over your head. You’ll thank me later.
I deliberately stayed away from specifics on HRIS and recruiting tools from when I professionalized my own small business start HR department. Do what’s best for your company. As always, I’m happy to share more of those in a one-on-one conversation.
Contact us with any thoughts or questions!