Attracting Funding For Early-Stage Startups By Streamlining HR Functions

Streamlining HR functions is not the only objective of having a dedicated in-house HR team. As an entrepreneur looking to attract investor attention for their early-stage company, you’ll also focus on other benefits. Investors view a strong HR team as a prerequisite for long-term success.

A robust HR department is essential for scouting, hiring, and retaining the top talent and skill sets your company needs. You’ll also ensure a progressive and collaborative company culture, low turnover, and higher employee satisfaction. These factors are sure to spur rapid growth.

Rapid growth translates into profitability and long-term sustainability, making your startup a viable investment opportunity. A typical early-stage company has less than 50 employees. However, a dedicated HR department is advisable even if your team comprises around 20 to 30 people.

Of course, you can also consider bringing expert HR personnel on board if the company is poised for accelerated growth. Or if you have non-exempt employees in the workforce. Read ahead for detailed information about why streamlining HR functions places you on priority for investor backing.

Getting Started with Building Your HR Team

The optimum number of professionals in your HR team depends on the size of your workforce. As an early-stage startup, you could go with one HR personnel managing around 50 people. You’ll hire another member as the organization grows and brings more people on board.

Alternatively, you can delegate some of their tasks to an external agency or a part-time consultant. You’ll also integrate online HR tools and resources to help with management. This strategy helps save on costs. Also, consider moving an existing employee to the role of managing human resources.

Other factors that influence your HR team include your company’s location and the specific vertical in which you work. For instance, you may work in multiple locations or have remote employees on your payroll. In that case, you’ll need more HR personnel to manage them.

Then again, some industries require highly specialized people working in diverse positions. You’ll need the right HR team to recruit talent while ensuring compliance with relevant labor laws. You may also need expertise to ensure low turnover and higher employee engagement.

Investors Are Keenly Interested in the Team Slide

The team slide is one of the most crucial features of your pitch deck. Having the right people working for the company makes a huge difference in the quality of your products. Quality impacts the volume of sales your company generates and ultimately influences revenues and profits.

Investors pay keen attention to this slide since they want to know the driving force behind your brand. Regardless of how great your business idea or concept is, it’s the team that converts those ideas into marketable products. Investors will want to see if the team has the caliber to make that happen.

Your team slide should demonstrate a well-rounded skill set that can handle both–the technical and business aspects. Include information like their LinkedIn profiles, academic qualifications, and track records with successful product launches.

Highlight people in top managerial roles and their achievements in the past. A quick personal story also delivers impact. The team information is typically added to a single slide in the pitch deck. However, depending on the information that may interest investors, you’ll add a second slide.

You’ll need to know how to position the team slide in the pitch deck for maximum impact. Not sure how to do that? Check out this video I have created outlining exactly how that’s done.

Streamlining HR Functions – Key Responsibilities

Considering how crucial the team is, you’ll need to hire professionals to recruit top-notch talent and execute the onboarding process. You’ll also need their assistance to retain that talent and ensure engagement. Remember that the right skills can provide an edge over the competition.

Acquiring Talent

Rely on your HR team to identify the skills needed to fill a particular position. They’ll post the job on the right platforms, vet applications, and target candidates for suitability. Conducting interviews, negotiating compensation packages, and finalizing hires are part of streamlining HR functions.

Regardless of your company’s size, these processes are time-consuming but require careful planning and execution. The next step involves drafting the necessary paperwork, which is another meticulous exercise. HR must draft the offer letter and outline the job description and other expectations.

HR also compiles all employee information for the company’s records and payroll. If needed, they file references and employee verification documents. If the compensation package includes option pools, they’ll add their vesting periods and other terms and conditions to the contract.

Many companies hiring highly specialized people require them to create Intellectual Property. In that case, their employment contracts must include the legalities about their signing over rights on the IP. Streamlining HR functions will ensure the paperwork is in order.

New hires may also have to sign NDAs if they will be handling sensitive company data and other privileged information. Managing these nuances at the onset is crucial to avoid the possibility of disputes and costly lawsuits. Investors want assurance that you’re on top of these details.

Keep in mind that IP ownership issues can create hurdles down the line if you wish to liquidate the assets. You’ll also want to prepare for the possibility of an M&A transaction or exit. At the time, clear IP rights are crucial for the deal to progress without legal snags.

Investors will likely examine the relevant documents during due diligence, so keep that in mind.

Onboarding Talent

The right onboarding processes ensure that the new hire integrates into the company quickly. By providing all the relevant information, you can allow them to hit the ground running. HR teams introduce them to the company’s culture, objectives, vision, and mission statement.

The new people must also understand the company’s expectations and job deliverables. Establishing open lines of communication at this point is crucial. Employees should know that questions are welcome, and the company makes efforts to create a positive work environment.

HR outlines the employee’s deliverables and objectives for short intervals as part of the onboarding process. Revisiting the objectives every three to six months and checking on the worker’s progress is also part of streamlining HR functions.

Ensuring the company’s goals align well with the workers sets them up for success. HR will also ascertain if the employee is proving to be a good fit for the position. Moving them to other roles or firing them becomes essential to keep costs low.

Compliance with Employment Laws

Your HR team performs one of the most crucial roles for a company–ensuring compliance with employment laws. Non-compliance can lead to expensive lawsuits, fines, and legal risks that impede a company’s growth. Investors need assurance that you’ve accounted for these risks.

Employment laws require that your workplace complies with the Occupational Safety and Health Act (OSHA) rules. The HR team will develop policies and behavioral guidelines to ensure workplace safety per federal and state laws.

Setting up the right company culture will also enforce ethical behavior, particularly regarding sexual harassment and inclusion. Further, the company should communicate to employees that it can change policies as needed. This strategy allows you to update the policies to keep pace with changing regulations.

If your employees work remotely, the HR team will help you balance regulations in multiple locations. This is crucial since some states have at-will employment laws. Workplace safety is another concern you must address. HR will create an emergency action plan for unexpected situations.

Streamlining HR functions includes mapping out emergency exits and routes and information about accessing first aid and medical supplies. Non-compliance with workplace safety and employment laws can lead to consequences like injunctions, fines, and stop-work orders.

Issues like these can result in huge losses for the company and raise risks for investors. This is why how you structure your workplace and compliance especially interests the people offering you capital.

Nurturing Employee Engagement and Relationships

Employee engagement and satisfaction are indispensable for retention and low turnover. Companies that deal with frequent employee attrition and dissatisfaction find it challenging to grow. Operations will stall because there are not enough people to work in the facility.

Further, such companies incur high expenses for frequent recruitment and onboarding. Having a good HR team helps you minimize this risk since they can create programs for job satisfaction. Happier employees result in higher morale, boosted motivation, and optimum productivity.

You can expect them to take the initiative to innovate and build better products and features. Here’s another advantage: A company with a reputation for a progressive work culture easily attracts better talent. When you’re ready for expansion, expect job openings to fill up quickly.

An expert HR team also ensures that employees grow professionally and personally along with the company. They sponsor training programs and workshops so workers can expand their skills even further. Opportunities for promotions open up, and workers remain with the company for a long time.

Employee feedback is another area where HR teams can help. They’ll create an open atmosphere so workers can openly talk about their concerns and expect speedy resolutions. People like to be heard, and building relationships with the drivers of success is always advantageous for the company.

Factors like these lead to accelerated growth because of higher demand for your products. Building a market presence will be easier not just because of product quality but also the brand value you’ll generate within the community. Streamlining HR functions can get you there.

Offering Competitive Compensation Packages

HR teams can assist you with structuring compensation packages and benefits for employees. You can rely on them for guidance when working out competitive salaries to attract and retain talent. Get expert advice on industry standards and typical policies for paid vacations and sick leaves.

You’ll discuss fair retirement benefits and option pools if you intend to offer them as part of their salaries. The HR expert will also direct you on evolving payment structures in response to the changing economy and market.

This expertise is crucial to staying compliant with regulations relevant to benefits. For instance, employers are liable to provide mandatory medical, dental, and life insurance. You’ll also create retirement accounts like the IRA and 401K and work out employer contributions.

Depending on the state’s laws where you work, you may have to provide disability insurance, workers’ compensation, and unemployment insurance. Trained HR personnel can help you stay on top of your obligations and avoid penalties and fines for non-compliance.

Most importantly, they’ll build a checklist to prepare the company for possible audits.

Anticipating the Company’s Future Hiring Needs

Aside from managing recruitment and retention activities, HR personnel are trained to anticipate the company’s growing needs for fresh talent. You can work with them to strategize growth and align it with your hiring approaches.

An optimum growth structure should factor in three to six months’ projections to understand the direction to take the company. You’ll also plan for the roles and talent you want to hire and the total costs, including compensation.

Creating the proper roadmap will also help you anticipate funding needs. You’ll factor in these costs when reaching out to investors with an estimate of the asking amount. Of course, investors will want to see how you intend to allocate the funds and the returns they can expect.

Keep in mind that storytelling is everything in fundraising. For a winning pitch deck to help you here, take a look at the template created by Silicon Valley legend Peter Thiel (see it here), which I recently covered. Thiel was the first angel investor on Facebook, with a $500K check that turned into more than $1 billion in cash.

Remember to unlock the pitch deck template that founders worldwide are using to raise millions below.

Delegating HR Functions to Experts Frees Up Your Time

Most entrepreneurs prefer to manage their teams personally as long as the company is in the pre-seed and seed stages. Typically, the founding team is small, and one-on-one interactions are advantageous when building the company from the ground up.

However, streamlining HR functions will likely take up more time when the company’s workforce is growing. You’ll want to delegate their management to professionals who can take care of them. For starters, build a top-notch HR department comprising experts with impressive backgrounds.

Further, your focus should be on quality rather than quantity. Depending on the company’s needs, hire one or two people for the team. You’ll also make software, tools, and applications available to help them do their jobs efficiently.

Streamlining HR functions by hiring the right people can equip your company with the best talent for consistent growth. You can also use expert assistance to manage this valuable resource for the company’s assured success.

Keep in mind that investors are keenly interested in how you handle this crucial aspect of company operations considering that the workforce is the most dynamic resource your company has.

You may find our free library of business templates interesting as well. There, you will find every template you need when building and scaling your business completely for free. See it here.