As a founder, you're used to doing a lot of the heavy lifting. You created the business plan, developed the minimum viable product, and even generated the first batch of sales. But, with success comes new challenges -- and now it's time to grow the business. Like everything else up until this point, your knee-jerk reaction is telling you to do it yourself. It can't be that hard, right? Hire a few new faces, give them some work, and turn them loose. Not quite.
If it were that easy, maybe the five-year success rate for new businesses would be higher than 50 percent.
After the initial allure of "new and exciting" wears off, and your business is past the honeymoon-phase, you'll have to rely on these HR best-practices, to sustain your startup.
1. Create and maintain a great culture
Culture is a big deal. In one of the first comprehensive studies of how company culture influences performance, John Kotter and James Heskett, authors of Corporate Culture and Performance, found that organizations with strong, performance-enhancing cultures experienced four-times the revenue growth, created seven-times more jobs, and saw net income grow by over 700 percent compared to those organizations who didn't.
Also, in today's market where top talent is scarce, companies with great cultures stand out as employers-of-choice and attract passive candidates.
Before you start hiring new employees, make sure you have a clear definition of your culture -- it's critical to your organization's success. Even one wrong hire can undermine your efforts and have a negative impact on your company -- especially within the first few years. Here's how to start:
Tell your story and define core values.
Was the company born out of struggle or success? What problem/s are you solving for? What's unique about your company's DNA that would make it attractive to customers and potential employees?
After you've answered questions like these, it's important to get something down on paper. Having a great story that people can relate to will create an emotional appeal that inspires others to join and stay at your company.
Next, distill that story down to a few core values that describe what's it's like to work for your company and how things get done in your environment. For example, kindness, integrity, courage, etc. I know that a massive list of descriptors can seem corny, but values help employees navigate ambiguous situations when founders aren't present.
Hire candidates who can perpetuate the culture.
Once you have a list of core values, you and your hiring managers can use them to filter out candidates that don't fit your culture. This is tough, especially in the early phases when you're desperate for particular skill sets. However, a single negative employee can cause a 30 to 40 percent drop in a team's performance. Don't sacrifice principles for capability -- it won't work out for you or the employee.
Teach and reinforce the culture.
Whether it's through company events, murals on the walls, or new employee onboarding, it's critical to find ways to teach and reinforce your culture continually. Educating and rewarding employees on desired behavior, company values, and the future vision ensures that they can live it and articulate it to others.
Also, having a unified and robust culture will act as a bonding agent for new and existing employees. Although many are skeptics of "cultural-fit," it's listed as one of the top ten reasons people decide to stay, according to a survey done by Beverly Kaye and Sharon Jordan-Evans in their book Love 'em or Lose 'em.
2. Manage performance
The key to a high-performing organization is creating an environment that's rich in coaching and feedback opportunities. To cultivate these types of conversations, it's essential that you develop a formalized process for goal setting, conducting employee performance check-ins, and rewards and recognition.
Before you can expect a high level of performance from your employees, you must clarify expectations, provide support and development, and be able to recognize exceptional performance.
A great start includes crafting accurate job descriptions and explicitly explaining role responsibilities, investing in learning tools and resources, and creating an incentive program that motivates top performers.
3. Measure results
We've all heard it before, you can't control what you can't measure. After you've assembled a great team, it's important to track key HR metrics to ensure your workforce and workplace are healthy and happy.
A few of my culture-essential metrics include turnover rate, acceptance rate, and employee engagement.
Turnover feedback is difficult to stomach, but provides vital information to improve your culture as you analyze reasons for involuntary/voluntary turnover. Tracking acceptance rates will give you a good idea of how your employer brand (attractiveness as an employer) stacks up against others in your market. And last, employee engagement is an indicator of how happy and committed your employees are to the organization.
Starting a business is the easy part. Sustaining the momentum and successfully scaling the platform you've built is the real achievement. Incorporating these HR best practices into your strategy will help you and your company withstand the five-year test.