Why Startups Need HR Tech

Trouble at Uber and other startups shows how important proper workforce practices are and how people management apps can help.

Welcome to the age of startups that don’t think they need human resources to build a business. How else to explain the steady stream of companies behaving badly toward employees and potential new hires?

By using some of the cloud-based HR software flooding the market, though, startups could avoid problems that companies like Uber, Thinx and Skip the Dishes have caused for themselves.

I’m not suggesting HR tech alone can make a difference. After all, startup CEOs and investors who bankroll them ultimately are responsible for what happens on their watch.

But these relatively low-cost, highly automated tools can assist with some of the work that startup founders undertake to build and manage a staff. Things like recruiting, hiring, verifying and onboarding new employees, managing and compensating people fairly, tracking time and attendance — even basics like making sure people get paid on time. When you’re in charge of all that plus product development, production, marketing, customer service, finance and other business operations, it can be easy to cut corners — or not care about HR in the first place. Having tools at their disposal to handle HR basics could give executives more time to contemplate loftier things, like what their company stands for, and how they want the world and job seekers to view their employer brand.

Because it’s software, HR platforms should appeal to startups and tech companies that appear to prefer tools over people for supporting operations, including for people-related issues.

Uber Looks to Top List of Worst Offenders
The problems that startups’ lack of HR and HR systems create aren’t minor. A 2016 Vice investigation found significant repercussions for women employees at Silicon Valley startups that routinely wait until they have dozens or even hundreds of employees before formalizing HR.

Uber looks to be one of the worst offenders. That became clear in February when a former Uber engineer published a blog post outlining the many ways the company failed to act on her complaints of sexual harassment and sexism. The post was quickly followed by another from a different ex-Uber female employee with similar complaints, and a widely shared video of Uber CEO Travis Kalanick getting into it with an Uber driver.

According to Recode, Uber’s HR problems stemmed from Kalanick, who believed spending on recruiting was more important than on managerial coaching or other workplace issues, and resisted having HR collect or distribute diversity data. In weeks since, Kalanick has apologized, and Uber launched an internal investigation into harassment and sexism claims and dismissed a top exec who had been accused of sexual harassment at his previous company. Uber’s newish head of HR has vowed to clean up its culture problems and issued its first-ever diversity report.

Uber may be the most well known example of startups operating with minimal HR policies or oversight, but not the only one. Last month, Thinx co-founder Miki Agrawal stepped down as CEO of the company she’d started to sell underwear for menstruating women right before online publication Racked reported widespread complaints from current and former employees about low pay, minimal benefits and Agrawal’s often-troubling behavior. In the aftermath, Agrawal attempted to defend herself. Writing in a blog post, she said she didn’t have time for HR because the company was growing so fast and she was wearing too many other hats. “I didn’t take time to think through it,” she wrote.

Also in March, a job hunter following up on an initial phone screen with a Canadian restaurant delivery startup called Skip the Dishes sent a polite email inquiring about salary and benefits. She was told her questions about pay “reveal that your priorities are not in sync” with the company’s and her invitation for a follow-up interview was rescinded, according to BuzzFeed. A company co-founder apologized after the fact and said staff would get more training “to avoid similar situations in the future.”

Don’t Risk Leaving People Management to Happenstance
Investigations, excuses and apologies aside, all three cases show that lack of time and proper people practices left interviewing, training, managing and reviewing employees up to happenstance, or worse, oversights that could cost the respective businesses a lot more than bad publicity in the long run.

Given how much of it is available, founders of even the smallest startup have no excuse to ignore people management software.

Modern HR tech platforms let customers add features or modules as their workforce grows. Partnerships between vendors and open application programming interfaces mean companies can run people management tools from different suppliers off the same employee database — so they can pick and choose what works best for their situation. Best of all, cloud-based services are relatively affordable, priced at a few dollars per employee per month, in some cases even lower.

Figuring out which services are best for your particular situation, niche, industry, location or type of workforce can be tough if you don’t have previous experience running a business or hiring people. The sheer number of HR tech platforms out there makes it even more overwhelming. More than 400 companies showed off their latest wares at the year’s biggest HR tech convention last October in Chicago. RecruitingDaily recently published this list of more than 100 primarily recruiting apps. Deal watcher CB Insights broke its list of 131 privately held HR tech companies into a periodic table divided by categories such as workforce management, payroll and benefits. An app directory on Slack’s website lists dozens of Slack-dependent chatbots for everything from team collaboration to tracking paid time off.

Fortunately, the rising tide of HR software has seen an increase in software review sites, ratings services, directories — and consultants — eager to help business owners sort through what’s out there. Use review sites such as Capterra, GetApp, Software Advice, G2 Crowd or PCMag.com (Disclosure: I previously wrote some PCMag.com HR tech reviews) to get details, and in some cases, read what other users think about products. Use LinkedIn’s search function to discover LinkedIn Groups in and outside the U.S. chatting about HR tech (there are tons). Follow my HR Tech list on Twitter, which I use to track 137 companies and counting.

HR tech alone won’t fix startups that discriminate against certain job seekers or employees, lack diversity or treat people poorly, unintentionally or otherwise. If founders are serious about doing better, using available services to automate basic HR functions could buy them the time they need to get things right.

Michelle V. Rafter is a business journalist in Portland, Oregon, reporting on workforce and tech for Talent Economy and other publications. If you have a comment or a column idea for her, email editor@talenteconomy.io.