The 5 critical mistakes startup founders make when building out teams

Many entrepreneurs are super eager to be unconventional about everything.

Keen to disrupt, they’ve left the comfort of a 9 to 5 and a steady paycheck to build an empire. However, when you’re accountable for a team of people; being unconventional about HR matters is a huge risk.

After consulting with hundreds of startups, I’ve noticed some common themes.

So I’ve outlined five HR startup mistakes to avoid at all costs:

Mistake 1: Not investing in your employer branding

Ever wonder why some people are immediately drawn to work for companies like Google and Microsoft?

It’s because these companies have invested heavily into their employer branding. They have full-time employees who solely look after employer branding. They know that their employees are their biggest customers and advocates.

Your employer branding doesn’t start when you hire your first person — it starts from day one.

Treat every interaction you have with people inside and outside the business as a potential hire or at least a referral to someone amazing. Focus your efforts on making every experience incredible.

Mistake 2: Hiring the wrong people

I’m sure we’ve all worked with a bad hire in the past — the ones who have no idea what they’re doing or are just bad at their jobs.

As founders, we think this won’t happen, but I’m sorry to say, it may happen one day — even if you don’t realise it.

For instance, many founders hire friends and family. There are some benefits, such as lower wages until cash flow kicks in, but there are also downsides.

You have less leverage compared to other colleagues. Emotions are involved, and most of all, business never leaves home life.

I always advise my clients to think carefully if they hire a close friend, family member or spouse.

I’ll happily admit that I’ve hired a few people who didn’t work out. You learn from these experiences.

Lucky for me, I was proactive in managing the situation. When you’re new to hiring and managing staff, it can be stressful. The problem is only worse (and super awkward) if it’s someone close to you.

Another trap startups make is going into panic mode and recruiting in a rush, and without any workforce planning.

It is an extremely costly exercise to hire someone that does not fulfil the gaps required in the business – this takes us to the next mistake we regularly observe.

Mistake 3: Lack of role clarity

It’s typical in startup land for everyone to wear multiple hats.

For example, the Marketing Manager also looks after events, operations, social media, and customer service. However, as your team expands, so does the need for role clarity and diversification.

Lack of role clarity leads to stress, unproductive employees, poor prioritisation, and lack of alignment with strategy.

Questions to consider for role clarity are:

What are the business goals and how will these be achieved?
What are the current pain points or gaps in the business?
What is the purpose of their role, and how is it aligned to your business goals and those gaps?
What are the primary responsibilities?
What are the must-have skills?
As wellbeing is important, are they taking on too much responsibility or taking on too little?
Do you need technical expertise rather than a generalist?

Remember tweaking a role to suit the person can be fantastic for employee experience, but it is not always in the best interest of the business. Each role in the business should be to fulfil a gap and support the success of business objectives. We see far too often startups trying to fit a square into a circle because it is what the employee wants.

Mistake 4: Putting off investing in HR until there’s a significant problem

Startups don’t often expect any employee claims until it actually lands on their lap. Implementing robust HR systems from the start helps prevent any misunderstandings and issues from flaring up. It helps maintain consistency when recruiting, paying, retaining and promoting team members.

The trouble is, many founders want to DIY everything. They Google HR questions and then take advice from something that seems to suit them.

However, the problem is HR matters are never black and white, Australian legislation is one of the most complex in the world to navigate.

In the courts, ignorance cannot be your defence. There are so many variables, such as the industry, award, employee agreement and size of the business, to consider.

My advice is never to risk it. Get professional advice to save you the headache (and money) later on.

Mistake 5: Wasting resources on bean bags and ping-pong tables

Hollywood paints an uber-cool picture of startups. Offices are decked with fancy plants, bean bags, ping-pong tables and kombucha on tap.

Tempting as it may be, the question is whether this is the best use of investor funds?

It’s OK if it reflects your culture; however, it might not be the best use of investor funds in a hybrid working world. There is no point if employees are working remotely or half of the time. Instead, understand what your employees’ motivations are and how you can best support them.

In this pandemic, many businesses are focusing more on wellbeing initiatives. It’s introducing initiatives such as virtual yoga and meditation, trivia nights, lunch and learns, half a day of Friday off every 6 weeks and various team-building activities.

Running a startup business is exciting yet challenging. We should never compromise on HR matters, after all HR is the support arm that brings department units together to help the business succeed in the marketplace. If you don’t have people (and the right people) you don’t have a workplace.

HR brings the talent, HR systems, leadership, and teamwork together to achieve those business objectives.

To us, HR can be one of the most glamorous sides of running a business and for a startup owner covering all the bases and getting a good night’s sleep is surely priceless.