Human resource management is an important functional activity that has a great impact on the success or failure of businesses, especially start-up businesses.
However, start-up businesses with limited resources, especially the limitation of financial resources, are not really interested in human resource management
In this article, the author will discuss some important issues that entrepreneurs should be noted during the start-up period.
1. Human resource management based on personal experience and subjectivity
In the early start-up years, business owners often focus on technology and market. Business owners in the start-up phase must simultaneously take care of multiple tasks from strategic issues to technology, market, finance, accounting, personnel, etc.
This process suitable for the requirements of fast, flexible, low-cost, appropriate handling of problems with organizational structure and uncompleted personnel.
But in return, in the start-up phase, the enterprise management capacity of the business owner is considered as a too tight shirt compared with the goal and development ambition of the business owner himself. Therefore, a lot of business problems arise and it’s hard to breakthrough or have a systematic solution because business owners face difficulties in making decisions.
The most remarkable thing here is that very few business owner recognize the limitations of them-self and take action to solve it like learning, hiring expert, etc.
If the business owner overcomes himself to learning and has a reasonable solution to complement his own limitations on human resource management, the success probability of the business will be much higher. Because after all, all the causes of business failure also come from the lack of qualified personnel to run and drive businesses with lead to unadaptable to market changes.
2. Unclear in roles and weak in manage conflicts between co-founders
Many people choose to start a business together. Group start-ups help business owners deploy ideas, promote each other’s strengths, mobilize resources and share risks. According to “Startup Insider”, most successful private enterprises have a starting point from a start-up group.
But everything has the other side of the coin. Risk comes from conflicts between co-founders because of differences in views, disputes about benefits and failure to manage changes in decision-making methods appropriate to development period.
In the beginning, when things were difficult, co-founders were quite united and bite the bullet together; but when the business is prosperous, having good financial results is also the time when conflicts arise. Many co-founders have to part ways in the early years because of personal conflict in executive management.
This problem comes from the basic reason is that the management system is not running well. Co-founders not assigned roles and clear agreement with each other to management. The management process does not change from “instinct” to the “system”.
This issue requires co-founders to agree with each other right from the beginning days when starting a business about management method to prepare for future periods. Because when businesses go into orbit, the company needs to have a leader who has ability and capable of making decisions.
3. Lack of solutions to retain talents
The reason usually given is that the start-up period is lack of resources, especially with finance, so it’s difficult to attract talents. Therefore, enterprises tend to hire and use manpower with low salary, and with capacity sometimes not meet the requirements.
This is a big mistake for ambitious start-ups want to have fast growth due to innovation, and want to attract investors.
Attracting talents is one key point for a successful start-up. There are two elements that impact the ability to attract talents:
- Owner do not have capacity to use talents:
When working with an expert employee, owner easily loses their vision and cannot control the talent. Moreover, lack of HR management skill can also make personnel to discouraged with their job and soon will lead to giving up.
- The attractiveness of the start-up idea:
When the start-up idea is clear and has a high potential to succeed, this is the key to attract talents. In opposite, if you are not sure about your vision and future, candidates will feel not stable and hard to attract talents to become your companion.
There are diversity solutions for this issue, most start-up use company’s stock to attract talent employee to join them in running business. With creative or technology start-up, the company’s value after 5 years may multiply a thousand or million times the present value.
Another regular solution is to hire or collaboration with experts. This will help start-up to use the expert skills and knowledge with a very low fee. Vision and passion of startups also receive assistance and support from experts.
4. Lack of invest in system and building corporate culture
Due to the size of small businesses, many businesses do not focus on recruiting specialized personnel to manage human resources; as well as lack of attention to standardization of processes and human resource management systems.
Inadequately focused activities include recruitment, assessment regulations, application of KPI systems, wages and benefits, labour regulations and corporate culture … Due to lack of systematic, works are handled much according to the affair and affection.
In particular, common problems arise in terms of employment contracts, job vacancies, intellectual property violations, loss of business secrets due to employee quit. On the other hand, company culture is also a strong weapon to keep talents by your side.
5. Loss the control of the business due to lack of understanding of corporate governance
Enterprises in the start-up period have a large growth and high investment demand. The main capital mobilization solution of enterprises in the start-up phase is by calls for funding to increase capital and expand owners.
However, many business owners refuse to develop and accept strategic investors because of the risk of losing control of the business. In contrast, many business owners chose wrong strategic investors, so they quickly have to transfer control of their own business, losing their “spiritual children”.
The solution is that business owners need to consult from legal, human resource experts, and study about corporate governance.
There are many possible solutions. First of all, you need to choose the right investor.
The right strategic investor often does not require control of business management because they respect the holder of the business idea and believe that only when this person continues to run the business than the business can succeed.
And finally, there are many forms of investment contracts to attract more shareholders to contribute to capital. Shareholders enjoy preferential dividends, but still, can maintain voting and veto rights.