5 HR strategies you need to run startups

Building a successful and sustainable business as a startup or scaleup goes beyond developing great products or services.

Your people are arguably the most critical success factor for growth, and having strong HR strategies in place is essential.

Overlooking HR can lead to significant long-term issues, including high employee turnover, misaligned team goals, legal and compliance risks, and significant founder or CEO time taken to deal with and resolve day-to-day people issues.

Below are five essential HR strategies for continued growth.

1. Talent Attraction and Retention

An effective recruitment and onboarding strategy is crucial for attracting and retaining top talent. This begins with developing clear, compelling job descriptions that outline the skills, experience, values, and culture of the organisation. Using data-driven recruitment tools can streamline the hiring process and help identify the best candidates, saving time and resources.

Once hired, a well-structured onboarding program ensures new employees feel welcomed, understand their roles, and align with the company’s vision.

This step is critical in fostering a positive employee experience from day one. Early engagement reduces turnover and enhances long-term satisfaction, especially in startups where each new hire plays a pivotal role.

2. Performance Management Systems

Establishing a comprehensive performance management system is crucial for driving productivity and growth.

For startups, this often means implementing processes like setting measurable goals, providing regular feedback, and conducting performance reviews. These systems align individual contributions with organisational goals, ensuring every team member works towards the company’s success.

McKinsey & Company’s 2024 paper demonstrates the research-backed benefits of prioritising people’s performance, from enhanced revenue growth to lower attrition rates, underscoring the strategic importance of these systems. Effective systems should be tailored to the size, scale and maturity of the startup or scaleup.

3. Learning and Development Opportunities

Often learning and development for employees is the last priority for founders as they grow their businesses. However, considering these requirements early in a company’s evolution is essential for creating a skilled, adaptable workforce.

In startups and scaleups, employees often wear multiple hats, making it vital for them to grow their skills and knowledge. Offering targeted training programs based on identified skills gaps can help employees stay ahead of industry changes.

Prioritising learning and development enhances employees’ capabilities and job satisfaction. Opportunities for professional growth foster loyalty, reduce turnover and strengthen the company’s ability to innovate.

Well-structured development plans also help in succession planning, preparing high-potential employees for leadership roles as the company expands.

4. Employee Engagement and Culture

In startups, the culture is often shaped by the founders’ behaviours and management approaches.

Most founders believe they have built a strong and engaging culture, the challenge is in sustaining it as the organisation grows. Consciously building a positive workplace culture and clearly articulating expected behaviours enable all leaders to embed the desired culture, not just the founders.

Culture is everyone’s responsibility and goes beyond perks — it’s about creating an environment where employees feel valued, motivated, and aligned with the company’s purpose.

A well-designed employee engagement strategy can significantly reduce turnover, enhance productivity, and contribute to a positive work environment. Startups should define their desired culture early on, as changing it later can be difficult.

5. Compliance and Risk Management

In the rush to grow, startups and scaleups may overlook the importance of compliance with employment laws and regulations. For startups, understanding and prioritising legal compliance is critical.

This involves staying up to date with legislation, implementing policies that align with legal requirements, and conducting regular audits to identify potential risks. Compliance, often seen as a ‘tick the box’ exercise, is essential for avoiding costly legal issues and reputational damage.

For startups and scaleups, implementing effective HR strategies early sets the tone for future growth and sustainability. Building a strong HR foundation allows companies to attract and retain top talent, manage performance effectively, invest in employee growth, and create an engaging workplace culture.

Ensuring compliance and mitigating legal risks protects the business and contributes to sustainable growth.

By making conscious decisions about the people requirements and HR early in a company’s evolution, startups can set themselves up for success — creating a workforce that is skilled, motivated and committed to driving the company’s purpose forward.