10 HR challenges in fast-growing companies

“So often the problem is in the system, not in the people. If you put good people in bad systems, you get bad results.” — Stephen Covey, Author and keynote speaker

In scaling organizations, the top priorities are usually limited to world-class product development followed by out-of-the box marketing; which pushes human resource issues at the back seat. However, as companies start to expand further, the need for having a high-performing workforce driven by purpose becomes non-negotiable.

Is that easy? Not so much.

Today HR challenges in fast growing companies are often driven by millennial workforce expectations, low bandwidth, long working hours, poor work-life balance, and engagement issues coupled with tight budgets. These people-issues if not handled on time could negatively impact the organization’s culture, employee well-being, and eventually hamper business growth. 

In this article we will explore the top 10 HR challenges faced by growing organizations and ways to overcome them. 

1. Recruitment Challenges 

Problem

Fast-growing companies often need to recruit high-performing talent during the hyper growth stage to drive high performance and rapid output. HR challenges in this stage directly point to identifying roles and determining the candidate’s fitness in the company. Failure to ensure an employee-organization fit often leads to resource wastage due to repeated onboarding, replacing, and recruiting.  

Solution

‍Identifying specific human resource requirements is the first step to successful hiring. The easiest way to attract the right job seekers (under a tight budget) is to exhibit the company culture, quality, and growth potential to the candidates and inspire them to join. Autonomy and flexibility are great replacements for higher CTC. 

2. Building & maintaining a company culture

Problem

All start-ups after the initial phase of their establishment require to build a company culture to improve and stabilize their rapid growth. In a dynamic environment with constantly changing priorities, it is difficult to build a culture that keeps employees engaged and focused towards the greater company vision.

Solution

‍Start with defining core company values. Then break those values into 3-4 behaviors that people can observe. Reinforce these behaviors again and again until they become the norm. To know more about building a great culture, read this. 

3. Lack of systems for administrative processes

“Most bosses know instinctively that their power depends more on employee’s compliance than on threats or sanctions”, 

• Fernanda Bartolome (Management professor and author)

Problem

‍It may be easy to manage 50 employee data — from contact details to quarterly performance review — on an Excel sheet, but the same is not true when you have 200 employees or more. During high growth, having a streamlined administrative process is non-negotiable to reduce time of getting simple HR processes done. Yet, most growing organizations don’t have them. More hire leads to more expenses. More employee turnover leads to more employee management costs. With every new hire increases the risk of legislative exposure, raising the need for compliance and admin burden.

Solution

‍There’s no better solution for repetitive tasks than automating tasks with technology. A great HRMS will reduce the administrative burden exponentially, smoothening the HR process and eliminating the majority of the HR challenges. A predefined system will help fast-growing companies to streamline the tasks, policies, and procedures for the whole organization. The biggest HR challenges involved identifying and implementing an HR Technology that is fool-proof, futuristic, and reliable.

4. Creating fool-proof organizational policies

Problems

‍Start-ups do not usually worry about setting up and implementing futuristic policies and strategies in the initial stages of development. However, as they start to encounter high growth and enter into the transitional stage of advancement, they face several operational HR challenges leading them to find quick fixes instead of a long-term solution.

Solution

‍Once an establishment starts to run successfully, implementing organizational policies like timing, breaks, indiscrimination, equality, diversity, non-harassment, gender equality, etc., will be difficult and add to the HR challenges. Invest time and energy to create  a fool-proof draft and then identify the risk possibilities, eliminate unrealistic points, and train and educate your employees for compliance. 

5. Not having a dedicated HR team

Problem

‍Start-ups do not often employ a dedicated HR team due to its financial constraints to avoid the additional indirect expenses. However, while scaling up or during the stages of high-growth, companies face the recurring need for hiring new people, onboarding joinees, retention, training, and several other processes along with having a standardised performance management system. The non-existence of a dedicated HR team eventually ends up taking away the founder or other employee’s time from important tasks.

Solution

‍It is worth having a qualified team of HR professionals to work dedicatedly for the welfare, growth, and development of the company’s talent and culture. It will reduce the administrative weight from the manager’s shoulder, allowing him to retain employees, respond on time, and create a happy workforce.

6. Monitoring Productivity

Problem

‍Monitoring productivity is crucial not only for performance evaluation and bonuses, but also for keeping employees engaged. In a fast-growing company, the drive for high-performance often leads to  undue performance pressure and lack of work-life balance without systematic guidelines and workflows. Tracking and monitoring productivity continuously without affecting employee morale and losing employee trust is a serious challenge for high growth companies.

Solution

‍Performance tracking begins with creating transparent performance expectations and standards. Set OKR, use KPIs, and implement continuous feedback systems to understand the performance blockers as your company reaches new heights. This helps stop the negative snowball effect.

7. Retaining and rewarding performing employees

Problem

‍If you want to drive hypergrowth, you need to drive high performance. To drive high performance, you need to recognize and reward your employees for their effort. Also, to retain your high performing employees for the long-haul, as a growing organization, you need to provide them growth and development opportunities. With 25% of millennials looking to switch jobs after the pandemic, retaining key employees is going to be more challenging for scaling companies.

Solution

‍Quick fixes do not boost employee morale. Neither do financial incentives once a year. To drive continuous performance through regular reward structure, you need to create a structured process to reward the employees on time and motivate them to do better. Using technology to guide your managers to conduct regular 1:1 check in-s to encourage them, build a recognition policy, and continuously check employee pulse to understand the sentiment of your workforce is a great way to minimize attrition.

8. Aligning employees to a common goal

Problems

‍One of the biggest HR challenges is to align employees towards a common goal, i.e., the company’s vision. In a high growth situation, where time is money, you need to make sure all individual effort is in alignment with company objectives at all times. 

Solution

‍There’s no better way to align individual employee strengths, day-to-day tasks, with business goals than to set clear Objectives and Key Resources (OKR). Create an OKR performance framework and set KPIs against their roles. Let the employees set personal goals with the organizational objectives in mind and let the organization relate the company objectives with the personal goals of the employees. Also, mentor them, guide them, and drive them towards success and satisfaction.

9. Employees training & development

Problem

‍Most start-ups do not have systematic employee development programs. They are great for on-the-job learning due to their autonomy, flexibility, and scope of role they provide. When 59% of millennials consider training and development opportunities before applying for a new job, as a scale-up, if you want to attract top talent, you need to provide them not just a job, but a career path.

Solution

‍Invest in employee development. There’s no way around that. As a scale-up, also train your managers to offer guidance, mentoring, and assistance to employees. Have leaders who create better leaders. This opportunity to develop and train under competent leadership will help employees align their career and personal goals towards your organization’s growth and success.

10. High employee engagement and maintenance costs

Problem

‍Lastly, as a scale-up, you cannot afford to lose momentum due to disengaged employees. It not only leads to an unproductive workforce and higher project turnover time, but also quick attrition, poor company culture, and dissatisfied customers.

Solution

‍This HR challenge can be solved by using employee pulse and analytics to better understand workplace sentiment and real performance blockers. That data can further be used to implement frequent communication, strength-based goal alignment, leadership support, and building a culture that drives engagement.  

Final Thoughts

Business is done by people, for people, with people. No matter what struggles you face as a growing business, it can be resolved by having a highly efficient HR system. 

Invest in your employees and their well-being as you scale. Use people analytics to know your people. Don’t wait for catastrophes to occur to create full-proof organizational policies and HR strategies. Use technology to automate as many processes as you can. Build a work culture that attracts the right talent whenever you need it.