Growing Quickly? The 4 HR things startups & growth companies need to worry about.

By Jamie Danziger

Partner, COO at IQ PARTNERS, parent company of AugmentHR

As someone who has been in and around start-ups and growth companies for most of my career as both a lawyer and recruitment business operator, it’s been a recurring theme that these companies underestimate the need and importance of HR matters and requirements.

For startups and growth companies, building a strong HR function while launching a new company, product or service can be a significant challenge. Most new or rapidly expanding businesses are focused on opening their doors, acquiring customers and getting day-to-day operations underway. Most new or quickly growing businesses put HR on the back burner. Many don't even think about HR plans or hiring an HR professional until they have over 20 employees. However, an HR plan for a growth or startup company can help you thrive now and avoid potential hiccups as your company grows.

Below, we’ll discuss common HR questions growing companies need to worry about now :

Do startups and growth companies need HR?
What is the role of HR in a growth company or startup?
4 things HR needs to prioritize
How to create an HR plan for startups and growth companies

1. Do startups and growth companies need HR?

Yes, all companies do! Typically, early-stage startups often focus on product development and growth. However, having a strong HR function is essential for hiring the right talent, building a positive company culture, ensuring compliance with labour laws, and setting up policies that support long-term success. Even if a startup doesn't have a dedicated HR professional or team initially, implementing basic HR practices or outsourcing HR can help prevent issues and create a strong foundation for future growth.

Is it legal to have a company without HR?

It’s perfectly legal to operate a company in Canada without a human resources department. Many smaller companies operate without one but they do need one or more people responsible for HR. They often achieve this by outsourcing HR to an HR consulting firm to ensure they operate in compliance with all labour laws and regulations and reduce their legal risks.

When should a startup or growth company hire HR?

The sooner the better. The earlier you can hire a human resources professional the quicker you can get your HR functions organized. While there isn't a specific time or number of employees, many companies establish an HR department when they have about 20-30 employees. That doesn’t mean adding a full-time HR headcount. Many startups and growth companies outsource their HR to gain the benefits of seasoned HR consultants first. Check out Christine Fowler’s post on 5 Scenarios Leaders When Outsourcing HR Makes Sense.

2. What’s the role of HR in a startup or growth company?

All startups and growth companies require some degree of flexibility to match their growth curves. However, too much flexibility and not enough oversight or development of internal processes could do more harm than good. The role of HR in a startup or growth company is to build a strong foundation for the company’s workforce and culture. Even in the early stages, a well-structured HR function helps startups and growth companies attract top talent, reduce risks, and create a scalable organization for long-term success.

What are the core HR activities?

HR provides startups and growth companies with a vast array of supporting activities. They include:

Talent Acquisition, hiring, retention: Recruiting the right employees to support business growth.
Onboarding: Training and ramping up new employees to ensure they have the support they need to thrive.
Employee relations and culture: Creating a positive work environment, fostering teamwork, and promoting company values.
Compliance: Ensuring adherence to labour laws, workplace regulations, and company policies.
Compensation and benefits: Establishing fair and competitive salaries, benefits, and performance incentives.
Training and development: Supporting employee growth through training, mentorship, and career development programs.
HR Policies and Processes: Implementing guidelines for workplace conduct, leave management, and performance reviews.
Organization development: Create new roles, and organizational charts, and evolve the company hierarchy.

3. How should I prioritize HR initiatives? What are the 6 things I should worry about?

Prioritizing HR initiatives starts by aligning with your company’s overall objectives. You’ll need to conduct a needs assessment to understand employee, management and organizational concerns. Then you can key into the main HR needs of your business whether starting up or heading into a rapid growth phase. Consider both the potential impact on business goals and the feasibility of implementation.

Here are the steps follow these steps:

Align HR with business goals: Ensure HR initiatives support the company’s strategic objectives and address key business challenges.
Conduct a needs assessment: Gather employee feedback, analyze workplace trends, and identify critical areas for improvement.
Rank tasks based on urgency: Focus on initiatives that will have the most significant and immediate impact on employee engagement, productivity, and compliance.
Assess feasibility: Consider available resources, budget, and timeline to determine which initiatives are realistic to implement.
Perform a cost-benefit analysis: Compare the costs of each initiative against its potential benefits and return on investment (ROI).
Scalability: Choose initiatives that create long-term value and can grow with the company.

4. How do I start an HR plan for a startup or growth company? What are the steps involved in the HR planning process?

Creating an HR plan for either a growth company or a startup is essential to build a strong foundation for growth and success. Follow these steps:

Define HR goals: Align HR objectives with your startup’s business goals, such as hiring top talent, fostering a positive work culture, and ensuring legal compliance.
Create HR policies & procedures: Outline policies for workplace conduct, leave management, performance expectations, and conflict resolution.
Ensure legal compliance: Familiarize yourself with labour laws, employee rights, contracts, and payroll regulations to avoid legal risks.
Develop compensation & benefits plans: Set competitive salary structures and consider benefits like health insurance, stock options, and flexible work arrangements.
Implement performance management: Establish a system for employee feedback, goal-setting, and professional development.
Develop a recruitment strategy: Create a hiring process, and interview process, and establish onboarding and training plans.
Plan for Future Growth – Design scalable HR processes that can evolve as the company expands.

A well-structured HR plan helps startups and growth companies attract and retain talent, maintain compliance, and build a thriving organizational culture.

Outcome of successful HR planning for startups

However, that’s easier said than done. For that reason, many startups and companies planning for growth outsource the development of HR plans to firms with expertise in offering HR startup services vs creating an HR department.

Whether you're starting a new business, growing quickly or expanding your international company into Canada, AugmentHR has a proven track record of helping organizations succeed with our expert HR startup services.

Where can I find a sample HR plan for a startup or growth company?

There are a lot of places you can find an HR plan for startups online or growth companies. But, it's important to use reputable sources. Use sites like SHRM or the Business Development Centre (BDC) to find HR planning tools. At AugmentHR, we have a 90-day, 6 / 12 / 24-month start-up checklist to help guide and set priorities for companies starting up in Canada and planning for growth. Reach out today to learn how our HR startup services can help you.

A final word about HR plans for startups & growth companies…

While startups and growth companies often prioritize product development and customer acquisition, establishing a solid HR foundation before growing is crucial for long-term success. A well-structured HR function ensures compliance with labour laws, fosters a positive workplace culture, and supports talent acquisition and retention. By proactively implementing HR strategies—whether through in-house efforts or outsourcing—startups and growth companies can minimize risks, enhance employee engagement, and scale effectively. Investing in HR from the start not only helps companies avoid future challenges but also sets the stage for sustainable growth and a thriving business.

Jamie Danziger is a Partner & Chief Operating Officer at IQ PARTNERS, the parent company of AugmentHR. Jamie left the private practice of law to become instrumental in the growth of a Canadian software company in a senior operations management position. He built on that to specialize in providing management consulting to growth-mode organizations. He joined IQ PARTNERS in 2009 and has been instrumental in its year-over-year growth as attested by the company’s six PROFIT 500 awards recognizing Canada’s fastest-growing companies.

AugmentHR is a Toronto-based HR outsourcing company providing seasoned HR consultants on an as-needed basis to companies across Canada and companies expanding to Canada. AugmentHR and IQ PARTNERS are both part of the Humanis Network, providing talent advisory, recruitment and other HR services coast-to-coast.