Human Resource Essentials for Entrepreneurship


Large organizations have staff specifically assigned to the Human Resources department, but in smaller organizations and startups, the business owner or a general staff member often has to fill the role. The entrepreneur and small business owner are faced with the same Human Resource Management obstacles as faced by large organizations, without equal technological or human resource available to them. Usually, HR practices are the last thing on the agenda of start-ups, but has often featured that organizations using best HR practices since the beginning have a higher productivity and stronger performance when compared to their competitors. People are the assets that organizations unquestionably can’t do without and it’s advisable for the entrepreneurs to have a good understanding on different aspects of the HR function; which plays an integral role in functioning of the organization as explained below:

Hiring and Firing

o Hiring practices: Regardless of whether the employee leaving the organization was voluntary, the costs associated with the loss are tremendous. There is lost productivity because of a vacant position & the time until the new employee becomes a more efficient part of the new team. There may even be unemployment costs, legal fees and awarded damages. However, employers can take several steps to proactively protect themselves in the hiring process.
 Have a good Job Description
 Conduct job interviews wherein candidates are asked to highlight specific examples of the skills they posses
 Well defined resume screening guidelines
 Summary lists of tasks and duties to be performed
 Employee Concurrence
 Compliance of labour laws

o Compensation Design: In the context of compensation design, simply copying something being done elsewhere ignores important issues of context, the real problem being addressed, reasons for why the approach chosen is the preferred solution, along with the organization’s history. To that end, an organization or an entrepreneur needs to keep in mind the key process principles when developing, designing, and implementing a compensation system.
 Participation and agreement of all the stake holders of the process
 Performance measurement should be quantified and must be fair and justifiable
 General conditions related to work must be taken into consideration
 Commitment to review and alter the plan until it is “perfected”, is the key to long-term success

o Firing Practices: Improperly handled employee terminations generate a significant number of lawsuits against corporations. Firing generates stress for the employee being discharged, the one who does the termination, and the employees who stay with the company. Human errors made before, during, and after the termination is completed can considerably affect the attitudes and reactions of all involved as well as the vulnerability of the employer, hence our entrepreneurs should keep in mind all the laws, policies and procedures applicable to their organization during, after and while carrying out the firing process.

Employee Management: Employee management is the first and foremost concern if you are an employer. Effective management and leadership of employees allow you to accomplish your goals. Effective employee management and leadership help you to make the most of the strengths of other employees and their ability to contribute to the accomplishment of work goals. Following practices as shown in the figure below will help in implementing a successful employee management system.

o Training and development: Effective ongoing training and development, ensures employee success in their current role and also, guarantees that you have employees ready for their next promotion or lateral move. Succession planning for each position depends on training and development.

o Performance management: Performance management eliminates the performance appraisal and evaluation as the focus and concentrates instead on the entire range of performance management and improvement strategies. These consist of employee performance improvement and development, challenging assignments, 360 degree feedback and regular performance feedback.

o Mentoring: Employees are developed and educated through methods that are management responsibilities of coaching, mentoring, and building an organization into a learning organization.

o Employee engagement: Employee motivation, engagement, positive morale, rewards and recognition are essentials of employee management. How do you create engaged, motivated, contributing employees? How do you maintain high employee morale when the people are working for long hours? : are the questions one needs understand for better output and results.

o Employee empowerment: Employee empowerment and employee involvement are strategies and philosophies that enable employees to make decisions about their jobs, help employees own their work and take responsibility for their results. Employee empowerment and participation help employees serve their clients in a better way.

o Grievance redressal: Managing employee grievance is the key to an effective employee management system wherein one can have a simple procedure to be followed in case of any grievance that is put up by the employee such that each they feel motivated in the organization.

Entrepreneurship involves organizational learning, driven by collaboration, innovativeness and individual commitment. Therefore, it is widely held that Human Resource Management practices are an important driver of success. However, there is a pressing need for entrepreneurs to address the contributions that HRM makes to a firm’s ability to accept risk, be proactive and innovative.


  1. Rohit says:

    Nice article , cant afford to miss HR perspective in the startup !

  2. PPD says:

    its a comprehensive article on the subject.gud work guys.  carry on

  3. sreearsenic says:

    Great article! Covers all the aspects of HR practices.

  4. Sahil Manocha says:

    good article guys…good to know all this 🙂

  5. Harsh Mishra says:

    Great article. Does a commendable job in describing HR practices at startups

Reply to Sahil Manocha Cancel Reply

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