Human resources departments: Startups and small businesses need them.

What Is the Point of a Human Resources Department? 

What Is the Point of a Human Resources Department? 

Small businesses, big ideas
Sept. 22 2014 11:42 AM

In Defense of HR

Startups and small businesses shouldn’t skip over a human resources department.

Photo by Steve Jennings/Getty Images for TechCrunch
Snapchat CEO Evan Spiegel speaks at TechCruch Disrupt SF 2013 on Sept. 9, 2013, in San Francisco. Snapchat might have benefited from an HR department early on.

Photo by Steve Jennings/Getty Images for TechCrunch

Lots of people have an HR horror story: forms never filed, emails never answered, simple questions that somehow mushroomed into drawn-out bureaucratic nightmares. The Office’s Toby Flenderson is a quintessential caricature of human resources: boring, dejected, a little pathetic, openly loathed by his boss, and stuck with the most humorless of tasks. (In the words of Michael Scott: “Toby is in HR, which technically means he works for corporate, so he’s really not a part of our family. Also he’s divorced, so he’s really not a part of his family.”) Anti-HR hyperbole flourishes outside of fiction, too. In 2005, Fast Company devoted 4,065 words to the failings of human resource teams in a piece titled “Why We Hate HR”:

After close to 20 years of hopeful rhetoric about becoming “strategic partners” with a “seat at the table” where the business decisions that matter are made, most human-resources professionals aren’t nearly there. They have no seat, and the table is locked inside a conference room to which they have no key. HR people are, for most practical purposes, neither strategic nor leaders.

With glowing endorsements like these, it’s no wonder that company founders and owners can be reluctant to bring HR into the fold—especially when that fold is a small business. For an organization with relatively few employees, many of which are often friends and family members, adding an HR person or team can seem cumbersome, expensive, and ultimately unnecessary. So why bother?

Alison Griswold Alison Griswold

Alison Griswold is a Slate staff writer covering business and economics.


The simple answer: to stay on the right side of the law. “There’s so much regulation that companies don’t know about, which is an HR issue,” says Margaret Spence, president and CEO of Douglas Claims and Risk Consultants Inc. and a member of an advisory board to the Society for Human Resource Management. “Small companies tend to make more mistakes when it comes to federal compliance than a large company might make, and you find that they’re ill-prepared for the consequences.”

Those mistakes can include noncompliance with safety regulations set by OSHA, the Occupational Safety and Health Administration, or hiring practices that don’t appropriately follow the Americans With Disabilities Act. The threshold for being held liable for those mistakes is extremely low: A company with 15 employees is covered by the ADA, and having 50 employees brings one under the Family and Medical Leave Act. “You can be a very small employer with 50 employees,” Spence explains, “and you’re subject to the same guidelines that a multinational corporation is.”

Viewed through the lens of compliance, HR might seem like a necessary evil—the department can be tasked with sifting through piles of government regulations at the federal, state, and local level that could cause real problems if ignored. (“Here in Florida, once you’ve hired your fourth employee, you have to purchase a workers’ compensation policy,” says Spence. “How do you know that? You need an HR person to tell you.”) At the same time, HR professionals also envision for themselves a far more complete and ambitious role—the “strategic partner” and “seat at the table” ideals that were alluded to in the Fast Company piece. From this vantage point, HR is not just a logistically necessary department, but also an important tactical arm that helps a small business grow into a medium or even big one.

“There are people who recognize early on, ‘We’re going to grow into a big company and we’re going to lay the foundations of a big company early on,’ and those people do bring in professional HR,” says Diane Burton, a professor in the human resource studies department at Cornell University’s School of Industrial and Labor Relations. “But then there are lots of people who think, ‘We don’t need it until we get large.’ What we find is that it’s very harmful, because if you have a set of patterns and styles and way of managing that all the people have grown up with, when you try to change that, the organization is resistant.”

This sort of resistance presumably poses a dilemma for many early-stage startups in Silicon Valley, which more often than not seem to spring directly from college frats. Such a culture can practically beg for HR. In May, a series of graphically sleazy emails sent by 24-year-old Snapchat CEO Evan Spiegel during his undergrad days leaked to the press and sparked a fresh round of outrage at the Valley’s “man problem.” Shortly after that incident, Snapchat put out ads seeking a head of HR. Two months later, conflict flared up at dating startup Tinder when Whitney Wolfe, a former executive there, filed sexual harassment and discrimination claims against the company and its CEO.

Aside from all the bad press that such incidents generate, they are emblematic of the bigger failing in tech that has drawn much criticism: its homogeneity. Despite research that a diverse workforce contributes to economic growth and greater innovation, many startups and major tech firms remain overwhelmingly male and white or Asian. “Early diversity predicts later diversity,” Burton explains. “So if the early team is very similar, they tend to replicate that and hire more people who are like them. If you don’t have any diversity early on, you hamstring yourself because you can’t attract the kinds of talent that you need later down the road.”

And what is the role of HR if not to ensure that a company hires the right people? “HR is recruiting; HR is identifying the talent and getting the talent,” Burton says. That’s important for any company—and in Silicon Valley, it might just be the “strategic partner” that can minimize the need for damage control later on.