Date: 18 Jan 2022

Start-up stage is the early stage of an organisation. As business evolves so do various functions. More complexities come in as organisations go through expansion. They need to manage both the business challenges and internal stakeholders as they expand. Therefore, as business grows the change and impact of HR policies at various stages of the organisation also changes. Typically, there are two phases of an organisation i.e. start-up and fast growth phases.

A start-up company will have limited number of employees and resources. The size of the organisation is below 100 members. The first three to five years are crucial as it is the budding phase, and the organisation will have limited accomplishments to show up to the rest of the world.

Entrepreneurs will put off the task of writing up a human resource policy as business is in its infancy. However, the importance of having a clearly written human-resource policy is paramount in both the phases, even when the business is still in its infancy.

Establishment of policies can help an organisation demonstrate that it meets requirements for diversity, inclusion, ethics, and training.

A well-drafted human resource policy serves the following purposes:

• A clear-cut policy binds every employee in the business and helps in applying the same consistently and fairly across the organization. It sets expectations both the ways.
• It serves to preempt any misunderstandings between employees and the employer about their rights and obligations in the business place.
• It enables entrepreneurs to save valuable time and resources on policy disputes or potentially legal cases.
• The absence of a clear policy may result in the decline in worker morale, deterioration in employee loyalty, and increased vulnerability to legal penalties.
• It provides uniformity in many respects, otherwise these can come in the way of business growth
• It speaks about the nature of the business, vision, mission, and values
• It mitigates operational risks and creates resilience to changing work environment
• It attracts better talent and promotes talent management
• It helps compliance to Industry Laws as applicable
• Creating a basic organization structure supports you during critical decision making, communication flow and prioritizing work accordingly.

HR policies may exist as written policies, as digital and/or printable policies, and in locations that are easily accessible by employees (e.g., company intranets or shared drives). They are often found in employment contracts, employee handbooks, and company policy manuals. However, the level of detail in each of these will vary.

In a start-up stage the process of hiring becomes a perennial process as retention is tricky. As a start-up, you still do not have a brand name in the market. In most start-ups, hiring is through referrals. Personal bonding plays a key role. The degree of formalization is less.

HR Policy must include “Ethical behaviour at workplace policy”. Emphasize the importance of ethical behaviour to your employees. Unethical behaviour is often a result of company culture and must be addressed early on else it may be detrimental to reputation. HR Policy is applicable at all levels of the organisation (junior most to senior most).

Other important HR policies for a start-up company include:

1. Work Timings:

Mention working days, timings for the employees to reach and leave the office, as well as their lunch and tea break duration. Many start-ups offer flexible work timings and ‘working from home’ options too, but that’s based entirely on your comfort and trust.

For overtime and night shifts, check out the applicable labor laws especially when dealing with women employees.

2. Leave Application:

There are several categories of leaves that employees are entitled to e.g. sick leave, casual leave, maternity leave, annual leave, half-day leave, etc. Make clear-cut policies for types of leaves which the organization provides in order to avoid ambiguity and confusion.

3. Joining and Exit Policies:

Establish detailed policies that an employee should follow while joining and quitting your business and also what she/he could expect from the company.

Similarly, you should state that either party can end employment at any time and that no policy constitutes a contractual obligation to employees on the part of the company. Sample employment contract or offer letter and appointment letter must be vetted by company lawyer or legal team. All issues between Employer and Employee must be resolved amicably and should not lead to legal way.

4. Salary, Employee Benefits and Rewards:

An employee should have a thorough understanding of the salary break up, bonus or commission structure if any, policy regarding obtaining company loan or advance and its re-payment/adjustment, overtime pays, promotions and pay increase. If you are offering life insurance, health cover etc. mention them in your policy as well.

Compensation systems at most of the startups are through stock options or profit/revenue sharing. A start-up lacks the financial liberty and offer stock options that can be redeemed at a later stage for the organisation. Some start-ups follow informal compensation system. This is not a fair practise as inconsistency in compensation results in complexities at later stages of the organisation. Rationalisation becomes a challenge if the number is more.

5. Use of Company Resources:

For resources like the internet (accessing emails and social networking sites like Facebook, YouTube, and Twitter) and telephone; define a policy that works best for you.

You may respect personal space of your employees and leave the use to their discretion as long as they manage their time effectively and deliver or make strict rules demanding adherence.

6. Work Culture:

Ethical behavior, equal opportunity, and respect for other employees are keys to the employment relationship. This must be clearly written in the HR policy document. Dress code policy must be clearly written to avoid confusion and generate awareness. In addition, workshops, trainings, awareness programs, micro-learnings, theatre shows etc. will sensitize employees to the policies.

Sexual harassment, customer misbehavior, and disrespect to colleagues and breaking confidentiality (data leakage) are considered serious disciplinary issues.

A good way is to get people buy-in when drafting your HR policy, is to ask your employees what they think should be included. You might be surprised with the input and insights they provide.

7. Onboarding and Recruiting Procedures: Even if it is a startup and it is small in size, you need to consider how to make hiring decisions. This includes whether to post job ads, how to determine who your target candidates are, and how to structure the onboarding process.  Employees remember how their first few days experience once they joined. Infact, the entire recruitment process.

As the start-ups grows, other key policies are (but not limited to):

• Any Employment Agreements (non-compete, intellectual property, non-discrimination, etc. and contract terms)
• Code of Conduct
• Car Lease policy
• Gratuity Policy
• Employee Provident Fund
• Leave Policy
• Prevention of Sexual Harassment in The Workplace
• Maternity and Paternity leave Policy
• Termination of Employment and Offboarding Policy
• Adaptive Work Culture Policy
• Communications Policy
• Dress Code Policy
• Probation and Confirmation Policy
• Work from Home Policy
• Grievance Policy
• Awards and Recognition Policy
• Travel Policy
• Performance Management and Appraisal
• Health, Safety and Environment Policy
• Recruitment and Selection Policy
• Payroll deductions document: This policy refers to the mandatory deductions done on the gross value of the employee’s salary. These deductions are for the taxes and the lacking rendered hours of work.
• Internal Job posting Policy

And more…

Lastly, it should be clear that the company reserves the right to change any policy at any time. It is important that apart from the above-mentioned policies, you draft your own detailed policies as every start-up is unique and one policy does not fit all.

It should be also noted that blindly adopting best practices in your startup may not serve the purpose or may not address your internal gaps. As every startup is unique, need assessment and analysis must be done before implementing the best practices – customizing them to your needs might just work in your favor and organization’s too and eventually you come out with your best-case examples or practices what other’s will appreciate and look up to.

Setting up a proactive company culture in the new age economy is a daunting task. But a few steps right from the beginning can help create a great brand value for your company.

A well-run startup is the one that is meticulous about all the nitty-gritty impacting their environment. While the task of setting up the right culture through the right processes is not easy, the results might surprise you with built employee trust and involvement.

Reach out to us: info@skillzy.in for HR Department checklist for startups and HR Consulting projects