HR challenges for startups: 3 core components to consider

9 MIN READEditorial Policy

Key Takeaways

  • There are several ways HR professionals or startup founders can navigate through talent management, employee relations and compliance, and employee engagement

  • Startups can incentivize talent to join their company by providing a comprehensive benefits package, including health insurance, 401(k) plans, and more

  • A 401(k) provider can help you manage mundane plan administration tasks, including recordkeeping and compliance

Most startup organizations don’t have the luxury of having a dedicated human resources (HR) department. Without a large team of dedicated HR professionals, small businesses and startups might find it difficult to manage legal challenges, employee productivity, and hiring and attracting the right talent. 

What should be on the HR checklist for a startup?

In this guide, we’ll address key components of typical HR functions. This guide will also cover tips on how to scale your HR team, and how outsourcing tools and resources like 401(k) maintenance can help your lean organization run more efficiently.

1. Talent management

Talent onboarding

Unlike larger companies with dedicated HR staff, startups usually do not have the bandwidth to create a smooth and efficient onboarding process, which is critical because it is part of the first impressions that candidates have when applying for and starting a new job. It may be worth hiring a consultant that understands your business and can help you outline the process as well. 

Generally, a strong onboarding process includes: 

  • The pre-onboarding process: Prior to your employee starting their first day, it may be advisable to send new employees information about equipment, tools, and company resources. 

  • Clear expectations: New employees should get an idea of what they should be able to expect over the next one or two weeks, including any mandatory trainings, policies, introductions, and performance expectations. 

  • Swag: A good way to build company culture is to provide swag, or items that represent the company culture. This can include candles, mugs, clothing, and pens. A personalized note may also be good to include. 

  • Forms: All employees should receive necessary forms before or during their onboarding process. These forms include an offer letter, I-9 employment verification, non-compete agreements, and employee information for payroll purposes. 

  • Culture: Including your employees in your company culture from day one can be pivotal in making the right impression. You can include your company mission, values, and history with an orientation. 

Training and development 

Helping your employees grow their skill sets is important not only for the company but to retain your best talent. While there are many possible ways an organization can choose to develop their employees, the two most common ways to improve employee performance and career are: 

  • Mentoring: Providing a mentorship program within your organization may be a cost-effective way for your employees to learn leadership skills and develop relationships within the company. Mentorship programs can help reduce turnover and increase startup engagement, and come in many formats, including individual meetings with a single mentor, a group mentoring program, or peer mentoring. 

  • Classes: Offering your employees a certain budget dedicated to taking online courses, seminars, or workshops to help them develop their soft or hard skills is a common way for employees to upskill. 

Performance management

For startups, it is critical to develop a performance management process so that employees can keep track of their progress and for companies to measure success. At Human Interest, our performance management values are codified in our operating principles, which are essentially how we document and define how our team comes together and does work. 

While there are many types of performance evaluation processes, most startups usually require managers to meet with their employees regularly or have structured performance reviews that are against an objective standard–such as a career ladder, or a rubric. 

A structured performance review can be done quarterly, mid-year, or annually. It generally reviews the employee's performance from a specific time frame and covers the accomplishments and areas of improvement.

Offboarding and alumni relations

When an employee decides to leave your startup, you must have a full offboarding process in place. You must record official documentation and procedures to ensure that you are legally covered. This is also an important time to collect any employee data with an exit interview to uncover useful information about your company culture, your employee’s experience with the company, and areas for improvement.     

2. Employee relations and compliance

Employee relations and conflict resolution

One of the most important functions of an HR department is handling employee conflict and engagement. That is why it is critical to develop written policies (more below) that establish the consequences of what happens if misconduct, harassment, or lesser infractions occur. In addition to handling infractions, it’s part of HR duty to measure and track employee relations through surveys and soliciting and analyzing employee feedback. 

Most HR professionals can measure employee engagement and company performance with one or multiple of the following: 

  • Acceptance rate

  • Talent pipeline

  • Turnover rate

  • Retention rate

  • Diversity and inclusion

  • Rating on external or internal company rating sites

HR policies and compliance

All employers are required to meet federal and local labor regulations related to compliance, health, and safety. Startups are no exception, and they must ensure that they are compliant with healthcare reform, tax codes, and labor laws—and they should have processes ready to roll out on day one.

Employers have a legal responsibility to prevent workplace injuries and illnesses and to comply with the Occupational Safety and Health Act (OSHA). The U.S. Department of Labor (DOL) provides information about workplace safety requirements, including:

  • Emergency action plans

  • Sufficient exit routes

  • Safe walking and working surfaces

  • Medical and first aid supplies (as appropriate for the specific workplace)

As mentioned earlier, all employers should establish policies that set a precedent and understanding among your employees about acceptable behavior. With a small number of employees, it may seem unnecessary to create formal policies, but there are at least two standard policies that a startup should have in place:

The DOL’s FirstStep Employment Law Advisor can help your new business determine which major Federal employment laws administered by the DOL apply to your business, understand record-keeping and reporting requirements, and identify which posters you must post. Be mindful that labor and employment regulations can change. We also recommend working with an HR or a legal expert who can provide you with the information you need to ensure you are complying with the necessary regulations from day one.

3. Employee engagement and support


Because startups move quickly, it can be easy to quickly lose control of your company culture. Without a strong company culture, employee morale can be affected, and possibly even lead to unhealthy work environments. 

That’s why we recommend startups develop their core values immediately. Identifying company values start with answering questions about your company mission, what type of employees you want to hire, or what end result you want for your customers. But ultimately culture does not end with documenting values. It also involves leading by example and being open to making iterations to people’s feedback. 

Once you’ve identified your core values, you can start emphasizing them by building programs and activities around them. For example, if one of your core values is putting customers first, your startup can implement an employee recognition program that rewards employees for results that deliver strong customer satisfaction. 

Compensation, benefits, and payroll

A competitive compensation and benefits package is key to attracting and retaining employees. But it also helps with your bottom line, too. Employees with more wellness support from your startup are likely to help your business scale as well. Based on a Human Interest survey conducted with OnePoll, we found that these are some of the most-wanted benefits that Americans want (ordered from most to least): 

  • Health insurance

  • A 401(k) plan

  • Life insurance

  • Flexible or remote work

  • Dental insurance

  • Wellness perks

  • Paid or unpaid leave

  • Bonus structure

  • Mental health perks

  • Vision insurance

  • Stock options

  • Pet insurance

However, offering a strong compensation and benefits package will require using different platforms and systems to manage your payroll and benefits. 

To help you offload some of these potentially burdensome tasks, we recommend outsourcing some of these specific functions to specialty companies and human resource information systems (HRIS) designed to manage your payroll and benefits. There are many companies and HR software that can help you outsource payroll and even 401(k) retirement plans, like Human Interest.

Consider a 401(k) provider to help streamline HR processes

Whether you’re an HR professional working with lean resources or a startup founder, you may want to consider working with a 401(k) provider that can help streamline your HR processes and can help your team focus on improving your employee experiences. A 401(k) provider can help you manage the mundane tasks of 401(k) administration, including recordkeeping, keeping your plan in compliance (which can reduce your fiduciary liability), and even managing employee contributions. 

At Human Interest, we provide affordable 401(k)s to small to medium-sized businesses and startups. Our payroll integration technology integrates with most popular payroll systems, making it easier for HR professionals or startup business owners to manage employee contributions without worrying about inaccurate payroll deductions. 

Contact us to learn more about what Human Interest can do to help your HR team manage their retirement plans today.

We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment education, and integration with leading payroll providers.

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