Many new entrepreneurs make the mistake of thinking human resources (HR) isn’t a strategic portion of a business, just something that needs to get done. So the tendency for startups, especially new ones looking to cut costs, is to spend as little as possible in that department.
No specialists. No software investments. Just good old entrepreneurial determination and MS Excel.
While founders think they’re being smart by doing HR themselves, this way of thinking is counterproductive. Instead of being able to focus on their core business, they end up taking on more responsibilities and spend their time learning about the complex rules, regulations, and requirements of HR processes. But with a lack of training in that field, they risk making costly mistakes and upsetting their employees.
To delve further into this topic, I sat down with my friends Graham Brown of Asia Tech Podcast and Gordon Ng, founder of Talenox, for the third episode of Xero On Air.
We discussed the ways poor HR practices can get in the way of good business, and how making HR easy can maximise a business’ full potential.
You can listen to the full podcast here.
The risks of bad HR
Picture this: you’re a new employee at a promising new startup. The team is competent and motivated. The company’s values align with your own. But in the last few months, you haven’t been getting paid on time. The guy handling the finances—who’s also the IT guy—apologises and says that they’ll fix things as soon as possible. Then he hands over only a portion of your salary.
How would you feel about this company?
In any case, sloppy payroll, nonsensical delegation, and baseless promises all paint a picture of a business that doesn’t have it together. No matter how promising a startup it might be, these sorts of experiences can lead employees to start thinking about other career options.
If you think this is an exaggeration, this is a typical experience for a lot of new founders. Gordon, shares how he initially attempted to take on all the HR duties in his very first business venture and didn’t realise that he needed to process his employee’s IRA8A tax form. So they ended up having to do it themselves.
What founders need is a shift in mindset. Instead of seeing functions like HR, accounting, and legal compliance as “non-core,” they need to start looking at these as essential aspects of their business. HR is valuable to employees—and the process can be less painful and more effective with the right software.
Unleashing the potential of business with software solutions
We once invited a brand scientist to the Xero office for a talk. She mentioned that people make 36,000 decisions a day, from the moment they get out of bed until they get back in it.
Now, if all those required major deliberations, that would likely result in decision fatigue as early as 10AM. But because the brain automates the majority of the decisions we make and turns them into habits, we don’t have to sweat the small stuff.
It’s the same concept in business. For SME founders who need the extra brain space, automation can free up their time so they can focus on high-value tasks and decisions.
Of course, it’s not feasible for new, small businesses to hire dedicated departments full of specialists. So the best option is to take advantage of software.
“[In] our company, we spend lots of money on SaaS platforms because we know that it saves us a lot more time,” says Gordon. As the founder of a HR SaaS (Software-as-a-Service) platform himself, he knows how these tools can automate repetitive tasks, save time and money, and ensure smooth operations.
Helping founders achieve this experience is what SaaS companies like Talenox and Xero are for. Our whole manifesto revolves around making things easier for startups so they can do beautiful business and realise their full potential.
As a customer once said to me: “It’s not what Xero does, but what it allows you to do.”
Caring for people is a core value in our company. We strive to create an environment for our team to deliver their best work, and it’s the same principle for our clients. By creating tools that can take on and automate tasks as well as simplify operations, we’re helping our clients run beautiful businesses too.
HR is about people
HR may not be the most exciting aspect of business, but it’s certainly an essential one. For employees, these so-called “non-core” functions matter because they paint a picture of a business that’s on top of their game and of founders who care about their people.
Automating HR and other non-core functions can increase loyalty, happiness, and productivity in the workspace. It also spells the difference between working on your business versus working in your business.
Did you enjoy this episode? Follow Xero on Air here as we deep-dive with industry leaders on key topics that drive business success.
To support startups, we have put together exclusive promotions for Xero and our complementary app partners in our Xero for Startups bundle. Sign up here to lay a strong and scalable foundation for your startup today.