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Innovation Blog

How to Start Up HR in a Startup

By Shlomo Maital

(with Sarah Karu)

  (this blog is based on a short piece published in Israel’s on-line HR journal, Mashabei Enosh, vol. 265-266, Jan-Feb. 2010). 

    “You get one chance!”

    This is what legendary entrepreneur Kenneth Levy told us, when we brought a group of Israeli startup managers to visit the company he founded, KLA Tencor, in Silicon Valley. 

    What he meant was:  The corporate culture, the organization’s “DNA”, is set on day one, when the company is founded. After that, it is very difficult to change it, just as it is difficult to change more than one or two of a human being’s 23,000 genes. 

    What principles should be followed, in choosing and directing a startup’s human resources?  Here are seven principles my colleague Sarah Karu and I have identified:

Use the term Human Capital (HC) instead of Human Resources:   Great startups invest in their people from the outset, and make sure each has a Personal Development Plan.  By using the term Human Capital, this is more likely to be sustained.

* Align Human Capital with strategy:   Make sure the people who run human capital have business experience, and not just degrees in organizational psychology.  Otherwise they will  not be able to align human capital with the business strategy of the company.

* Build culture and values from day one:  Decide what your core values are, from the start.  Google did this only three years after their launch. The result was “Don’t Be Evil”.  Google no longer emphasizes that mantra.  It proved unworkable….

  * Get the right people on the bus:  Nothing is more important for a startup than the 3rd, 4th and 10th hires.  They set the tone.  But why should a startup entrepreneur trained in bits and bytes know how to interview or ‘read’ people?  Find someone who does.  This is crucial.   For Israel’s global firewall company Checkpoint, the three founders were brilliant — but the fourth hire, whom I spoke with this week, was the key; he linked the company’s technology with its marketing.  And almost no-one has heard of him. 

* Build HC measures of success:   Treat human capital management the same as you treat profit centers.  Give them measures of success, and run HC as a business, with a bottom line. This is possible. Make them measure the ROI for investment in training programs.

 * Align structure with strategy:   Make sure the organizational structure of your company exists solely to implement the strategy. And make sure this structure is flexible and changes rapidly to match changes in strategy.  Again, HC people must understand business strategy well in order to do this.

Lead change processes:   Like growing snakes, startups shed their ‘skins’ many times.  This change process is vital and exceedingly difficult.  Only if HC people know how to manage change effectively can they succeed.  The CEO alone cannot in general do this.

——————

     Roughly the same time our piece appeared, another excellent piece on a related subject appeared in Business Week’s excellent Entrepreneur’s Journal, February 23, 2010, by Caterina Fake.  She is a social media pioneer and co-founder of the photo-sharing service Flickr;  she led the technology development group at Yahoo (YHOO) after it acquired her company in 2005. In 2008 she left Yahoo and joined Hunch as co-founder. And she’s only 40 years old!

     Here is her ‘take’: 

  “… the idea is just the starting point, just the first step. You also have to find the right people to help you do it. No successful company has have ever been the product of just one person.  As an example, there were probably about 100 companies that were doing a YouTube-like video sharing service in 2005-07. But the reason YouTube succeeded is it had all the essential elements together: the right team, the right product, the right location in Silicon Valley, the right execution. The entrepreneurs were able to raise the capital they needed to build and scale it. Obviously, it was a good idea, but the combination decided who the winner was.  The combination of the idea and who is doing it can’t be emphasized enough. Obviously, lots of factors go into the success of a company, but in my experience, those two are the most significant. You have to be building the right thing, first of all. And the right people can figure out how to build it, how to market it, and how to make it a winner.”

 

 

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Blog entries written by Prof. Shlomo Maital

Shlomo Maital
February 2010
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