Why don't startups have CHROs?

There had been a bomb threat and the airport was buzzing with security personnel. I marveled at the golden retriever who was sniffing passengers as they waited for their luggage to be cleared.Some people were not amused. “Maybe I should have got my dog along to do this as well. It would speed up the task.” “Every dog sniffs. But not every dog is a sniffer dog,” replied the master sharply.During the last HR summit held by Nasscom, I got to interview founders of three different startups. These startups have less than a 100 employees at most and had been around for three years. The founders had all been out of college for three years after working for fairly well established brands. One of them had just 15 employees while the other two had 50 and 90 employees respectively. One of the founders had joined Google for a few weeks before starting out on his own. The other two founders had worked for mid-sized companies before heading out to chase their dreams.Each one spoke about the importance of “talent” as a critical factor for success and a differentiator. I asked them if they had a CHRO. None of them did. They may have felt a little queasy saying that in a hall full of human resource (HR) professionals.But a moment later all of them spoke about the need to attract the right talent and the importance of human resources. You might argue that when a firm is relatively small and in its early days, they want to largely hire people who either build the core business or sell to a customer. Scale and complexity seem to be the triggers for afirm to have a formal HR function.A startup operates in a bloody arena. A failed entrepreneur gets pushed into the black hole of anonymity. For each WhatsApp creator who laughs all the way to the bank there are many others who cry their way into bankruptcy. In India, the story is the same. 2014 saw India being the fourth largest hub for startups. The CFO’s job is partly defined by the investment community, the board, outside auditors and regulators. The CEO’s belief in looking at HR to handle tasks beyond payroll and hiring defines when the firm has a specialist to craft the people strategy. In this respect the marketing function often shares the same fate as HR.Digital businesses are known for speed and scale. Since many of them start working with temporary workers or contract labour, there is a need to have formal systems in place. Some etailers are already experiencing these growth pangs. Those who recall the infamous textile strikes of the ’80s will see the early warning signs.The CHRO could set in place the elements of culture by shaping it consciously and not letting it evolve through serendipity.Creating a learning strategy for a small startup can be as critical as a large behemoth. This needs someone who understands learning strategies, social psychology and has a firm grasp of learning technology. Crafting a suitable incentive system or stock options scheme can be one of the most complex challenges that can stump even seasoned HR pundits. When the CEO leverages the CFO and the CHRO in all decisions of the firm, the troika can balance the people strategy in tandem with shifting business scenarios.I remember meeting someone from the fashion industry who had explained to me the many shades of black that she could differentiate. All through that flight, my co-passenger educated me about the different shades — carbon black, ebony, charcoal black and outer space black, to name a few. The specialist can see the subtle differences while a novice like me would describe all of them as ‘black’. Maybe the same goes for the people agenda.-----------------Published in Economic Times 4th Sep 2015