Hiring the right staff and building a coherent, well-knit team is one of the more difficult barriers that any new start-up has to overcome if it is to grow.
Few start-ups or early stage companies have much experience in recruiting staff and the vast majority of entrepreneurs who are launching their first venture find employment legislation very confusing and somewhat frightening.
(If they had a full grasp of just how extensive the obligations of an employer are, and realised the scale of the potential fines and penalties for non-compliance, many might think twice before going ahead.)
While starting a new business can be hugely exciting and can generate serious wealth for those who succeed, when you take on employees you are taking on all the duties and obligations of an employer.
The Equality Act 2010 specifies nine characteristics that are protected from unlawful discrimination. Employers can fall foul of the act if they are held to discriminate against actual or potential employees on any of the following grounds: age, disability, gender reassignment, marriage and civil partnership, pregnancy and maternity, race, religion or belief, sex and sexual orientation.
A naïve employer can fall foul of the Act well before they ever actually hire an employee simply by placing an advert that is inadvertently discriminatory.
If the wording of the advert for a particular job can be read as making it unduly difficult for a particular group of people to apply the advert is probably discriminatory.
Gender specific titles are out, of course. Anything with “man” in the job description is, of course, out. The point is that being compliant and staying compliant with all aspects of employment law is far from straightforward.
Moreover, any entrepreneur launching a new business based on a new technological development or an innovative service or product is going to have huge demands on their time.
Dealing with all the technical and sales and marketing issues is going to leave very little time left over for compliance and employment issues. In a large, mature organisation these issues are handled by a competent Human Resources (HR) department.
For a small or early stage business, however, hiring a full time HR specialist will look like over-kill.
An effective solution, in many instances, is to contract out the HR function, in the same way that many small businesses outsource day to day accounting and debt control to a firm of accountants.
Lisa Thomson, founder and CEO of PurposeHR specialises in providing HR services to early stage companies and start-ups.
Lisa Thomson, founder of PurposeHR
“We are a specialist HR consultancy, working with a number of angel investors and technology, engineering and life sciences companies. We are often brought in by investors who are funding early-stage businesses.
“They have a vested interest in ensuring that the company is both compliant and has a properly structured HR strategy. This is crucial if the business is going to acquire the skill sets it needs in order to flourish,” she says.
Getting the right HR policies in place right from the start can be absolutely critical for a new company, particularly where the primary value of the company lies in its intellectual property, and where the company is seeking to patent its innovative new product.
“New employers tend not to realise how complex employment law is, and they often do not realise that they need confidentiality agreements and non-disclosure agreements in place right from the outset,” Thomson notes.
“When you hire engineers and/or software developers with deep expertise, they tend to like to go onto social media to discuss their specialisms. Many do not realise that any prior public disclosure invalidates a patent application. If a technical team member has a blog, for example, it is very easy for them to inadvertently reveal information that will be deemed to be disclosure. You need to communicate these risks clearly to staff and know that they fully understand their responsibilities.”
According to Thomson, one of the things that her company does is to help entrepreneurs develop an innovation culture. “Often a company starts with the technology-based founders who have an innovative idea. However, you also want new talent joining the company to feel empowered to bring forward ideas and people need to be able to see good ideas nurtured and brought to fruition.”
That takes a very particular kind of culture in an organisation and that is much more likely to come about by design rather than by accident, she says.
PurposeHR acts as the HR function for businesses that do not need or could not justify the salary for a full time HR professional.
Every business needs expert advice on employment issues since it is all too easy to run foul of employment law legislation and end up in front of a tribunal, facing the prospect of a very heavy fine and the prospect of paying out compensation to a disgruntled employee.
“One of the biggest costs for any early stage company is the salary bill, so investors in that company always want to make sure that the people side of the operation is well managed.
“Having professional HR assistance provides a good level of comfort to the company’s funders, but we also add a great deal of value in day to day advice and in helping them to identify the skill sets that they need to grow,” she says.
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