Startups are failing miserably by ignoring Human Resources Strategy – and there’s statistical proof!

Startups are failing miserably by ignoring Human Resources Strategy – and there’s statistical proof!

You’ve heard the statistics about how hard it is to run a business these days but have you considered that neglecting startup Human Resources strategy issues are a major blind spot hurting small businesses across the country? If you talk to many Founders, the reality is that Human Resources is an afterthought and strategic HR is rarely discusses until a) the company is in serious trouble financially or b) a serious HR issue happens that might land the organization in court. Recently, Entrepreneur.com shared an infographic that chronicled why businesses fail, how many companies are started and closed every year, and how long most startups last (hint: 50% fail by year five). When we consider the amount of time, money, and momentum invested in starting and running a business, a 50% failure rate is not okay. I’ve met business owners who’ve dumped their 401k’s into a debt-ridden business and worse – entrepreneurs who’s home life has been wrecked due to the difficult rollercoaster ride of running a startup. Running a startup is a grueling grind and there’s no guarantee that you’ll be successful; but the one area that startups should try to invest in if they want to succeed is their strategic startup human resources operations.

Speak with a Strategic HR Advisor

Here are the five reasons why startups fail and my take on the HR adjustment that can fix or alleviate these challenges:

19% of small businesses fail because they are outcompeted.

The Strategic HR Fix: Small businesses that are outcompeted either need a) faster, smarter decision-making skills or b) talented and qualified people on board who can address business issues of the day and the future. The reality is that some small businesses hire with a collaborative mindset that gives unqualified people chances to do things they’re passionate about but not technically proficient in. I once had a $13million dollar software development client but the CTO had very little experience in modern technologies that were relevant in their field. The company was losing marketshare to competitors who did not offer the total package approach my client offered but instead they offered modern solutions that were easily upgradable and plugged in well with other tech systems in their customer’s organizations.

When you’re losing to competition you need intel and a plan. A strategic HR advisor can identify skills gaps within your organization and set growth goals for your people or suggest new hires that need to come in and breath life into your organization.

Key Takeaway: A strategic HR advisor can be the champion for creating a competitive learning environment which raises the quality of your team output.

23% of small businesses fail because they don’t have the right team.

The Strategic HR Fix: This one is pretty obvious – you need new players on your team – but the “why” behind having the wrong employees varies from small business to small business. In my experience, family businesses tend to struggle with this the most because sons, spouses, and siblings can be given preferential treatment when it comes to hiring and promotions – which means responsibility is being given to someone who hasn’t actually proven they can get the job done. Small businesses can also have a “family” atmosphere which means relationships are formed and it’s harder to make decisions based on a person’s ability to get their job done. Small businesses that ignore sound HR influences suffer from having team members they might love as people but hate from a productivity and results perspective.

When you don’t have the right team, it’s important to assess what’s working and what isn’t. A strategic HR advisor can identify who is making the greatest contributions to your organization and who are the bottlenecks.

Key Takeaway: A strategic HR advisor can be the neutral third party who makes recommendations based less on relationships and more about a small business’s strategic business goals.

29% of small businesses fail because they run out of cash.

The Strategic HR Fix: Did you know that the top expenses in business are 1) insurance 2) taxes and 3) employees? (source). If you do not have a strategic HR advisor there to assist you in managing these expenses, it’s quite possible that you’re paying too much. Recently, a former client of mine was struggling with letting a six-figure executive go who’s impact and skills were no longer felt in a tangible way at the company. To make matters worse, the company was very much cash-strapped and failed to have oversight on employee vacation accrual and use. We were able to put the financial projections and implications on paper and make recommendations for what to do next. The difficult decisions to let the executive go (gracefully) and put in accountability measures for vacation usage wound up saving the organization a significant amount of money that could be re-invested into the business or set aside for a rainy day.

Key Takeaway: A strategic HR advisor can project the financial implications of employee-oriented decisions and recommend a clear path forward.

 

Speak with a Strategic HR Advisor

42% of small businesses fail because there is no market need for products or services.

The Strategic HR Fix: This one can be tricky because in a small business – especially in a startup where the current owners are the founders – there can be a dogged obsession with seeing a singular idea come to fruition. This obsession can pay dividends if there’s a market for the product and/or services the founder wants to bring to market but what happens when there is no market? What happens if there is a market but the company is trying to sell to the wrong demographic or packages it the wrong way? I remember feeling really bad for an older gentleman at my incubator who dumped his entire 401k into entrepreneurial efforts. He was working on developing a mobile game that was so singular in focus that there was no market for it and the cost to bring it to market was too much of a burden to bear. Small businesses who fail because there is no market need for their products or services usually establish an organizational culture where no one can tell the CEO “no.” It doesn’t take a rocket scientist to figure out no one’s buying what you’re selling but it does take a reality check and courage to pivot and say “okay, what’s next?” and to create an environment where subordinate employees feel empowered to add value even if it means disagreeing with senior leadership.

Key Takeaway: A strategic HR advisor can help create a culture of trust and help identify talented professionals who can help your vision become profitable.

82% of small businesses fail because they experience cash flow problems.

The Strategic HR Fix: If we are being totally honest here, most small businesses are one emergency away from going out of business. That emergency could be dried up sales, an inability to make a bloated payroll, a customer who wants to sue the organization, or legal fines and fees due to legal non-compliance (just to name a few). A strategic HR advisor is able to help manage corporate expenses and make smart recommendations – like business and errors and omissions insurance – that reduce overhead and serve as a safety net in the event of a business emergency. Taking an intentional and strategic approach to managing the human resources in your organization is the missing key to small business longevity.

Key Takeaway: A strategic HR advisor can manage costs on the biggest overhead items in your budget while also making recommendations that preserve peace of mind in the midst of the ebbs and flows of business.

 

If you are interested in our services, take a look at the slideshare below and contact us to schedule an introductory call.

Were Comments Made By President Trump Harassment? @InsideEdition asks HR Expert Joey Price

Were Comments Made By President Trump Harassment? @InsideEdition asks HR Expert Joey Price

Sexual Harassment Training is Needed in US Workplaces

Recent reports show that 1 in 3 US women have experienced sexual harassment at work – but did President Trump’s latest run-in with a reporter add to that total? Inside Edition spoke with Jumpstart:HR, LLC CEO Joey V. Price (@JoeyVPriceHR) about this matter and what should happen if someone requests an investigation at your office.

Contact us today for sexual harassment training, investigation, and policy creation.

Sexual harassment is a serious offense that should not be taken lightly. When requested, an investigation requires the utmost due diligence, empathy, trust, and documentation of facts, feelings, and recollections. If you are in need of HR consulting services to help protect your workplace from sexual harassment risk – or to carry out an investigation, contact us right away.

View the segment:

President Trump is taking some heat for singling out an attractive reporter in the Oval Office Tuesday during an important meeting. “Where are you from? Come here, come here,” he told Caitriona Perry, the Washington correspondent for Ireland’s leading TV channel, RTE. Trump was having a phone call with Ireland’s new Prime Minister, Leo Varadkar, when Perry caught his eye. “She has a nice smile on her face so I bet she treats you well,” Trump told the new prime minister. More Inside Edition episodes on YouTube

 

Contact us today for sexual harassment training, investigation, and policy creation.

Expert Interview Series: Joey Price of Jumpstart:HR on Why Good HR People are Compliance Experts, Talent Consultants, and Workforce Planners

An excerpt from a recent Expert HR leader interview of Jumpstart:HR CEO Joey V. Price:

What are some of the recent compliance issues that are causing small businesses to alter their HR practices and procedures?
The false-start on overtime compliance regulation changes, potential minimum wage hikes, and the national conversation on immigration reform have small business HR experts on the edge of our seats trying to strategize for what comes next.

The false-start around overtime compliance caused a ton of headaches since employers invested time and resources into telling staff members about drastic federal policy changes that ultimately never happened – and it made companies evaluate their business practices. Those business practices that were impacted by the threat of overtime rule changes include: employee scheduling, accessing email while off-the-clock, greater emphasis on ROI from a 40-hour workweek, and job misclassification for employees in roles such as administrative assistant and non-managerial corporate employees.

Minimum wage hikes will cause employers to adjust pay scales from the ground up. Some retail and fast food companies are moving towards chatbots and artificial intelligence to manage customer order taking/tracking and reduce labor related expenses. Immigration reform is a huge agenda item for our current president. It’s resulted in a cutback on corporate travel for foreign-born and naturalized citizens, a push for unity and stronger corporate D&I stances, and a look at hiring practices for STEM careers (positions often dominated in the H-1B visa application process). It will be interesting to see how each of these challenges plays out because they all represent external forces that impact the way small businesses conduct themselves.

If a startup business owner were to say to you, “I don’t need to worry about workforce planning for the future. I’ll just hire on more people as I need them,” how might you respond?
I’d simply tell them about the old saying “failure to plan is a plan to fail!” You have to visualize and plan for what a successful organization looks like, or you’ll be driven to change based on the flavor or fire of the day.

Practically speaking, workforce planning while in the startup phase is the best thing you can do to chart a course for where you want a company to be and what values you want it to reflect. This is critical because it allows you to have clarity regarding the right person to attract to your organization and how to support them once they arrive.

This exercise adds value in the following measurable ways:
Read the full interview at JohnMattone.com

Expert Interview Series: Joey Price of Jumpstart:HR on Why Good HR People are Compliance Experts, Talent Consultants, and Workforce Planners

An excerpt from a recent Expert HR leader interview of Jumpstart:HR CEO Joey V. Price:

What are some of the recent compliance issues that are causing small businesses to alter their HR practices and procedures?
The false-start on overtime compliance regulation changes, potential minimum wage hikes, and the national conversation on immigration reform have small business HR experts on the edge of our seats trying to strategize for what comes next.

(more…)

What to Do if Your Job Offer Is Put on Hold

 

I was recently asked by eFinancialCareers.com “what should a person do if a job offer is put on hold?” Here is what I shared:

If a job offer is put on hold, I suggest the following:

  • Follow up with a note of thanks that emphasizes the value that you add to the organization. Sometimes it helps to show that the ROI of offering you a job is more beneficial to the employer than the cost savings of not offering the job at all.
  • Suggest a temp-to-perm or contractor role on a trial basis. This is your best way to get your foot in the door. TTP and Contractors offer a direct cost-savings vs a full-time employee because they are not paid benefits and do not count towards an employers mandatory employer tax burdens. While this may not be an ideal way to start off, it secures income and allows you to perform on the job rather than not having the job at all. Consider it like one of those 30-Day Money Back Guarantees that we see so much on TV these days. Their risk is minimize and you can really excel if you save the employer while they are in a pinch.
  • Continue pursuing other opportunities. Until you have a firm offer, you don’t have a job. It is in your best interest to continue to pursue other job opportunities because you never know – something better may come along and/or the current offer may fall through.

Just as a bonus…

Why job offers are put on hold:

  • Hiring Manager is still unsure that you are the best fit for the job (or they may still be unsure about what they want from the person in the role).
  • The company is considering re-aligning internally and want to give their experiment time to catch on or not.
  • You have a snag in your references or background check (if this is the case then I suggest looking for a new position especially if they uncover a lie or some other misleading information about what you have previously communicated to them).
  • The company wants to wait until a new fiscal season to ensure budget allows bringing someone on.
  • Hiring Manager would like to see more candidates.
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