Interim HR Management for Startups: Scaling With Agility and Efficiency

Eric Mochnacz
September 28, 2023

There comes a point in every startup’s growth where they realize they need human resources.  In the early stages, a company can usually get by without HR, but there will always come an inflection point where business leaders need professional human resources expertise.  Whether it be your first hire (exciting!) or your first termination (oh no!), if you aren’t knowledgeable in HR best practices, maybe you shouldn’t be the person executing on these processes.  But, as a startup owner, you may not have the money to spend on a full-time HR resource.  Interim HR management is an ideal, cost-effective solution.  You have access to human resources expertise on a fractional basis who can scale with your business as it grows.   

What is Interim HR Management? 

Simply put, interim HR management is the practice of hiring a consulting firm or temporary, contract resource to manage mission-critical aspects of the human resources function for your business.  Usually, it’s for a specified amount of time, and when you hit that milestone, you decide how you want to move forward.  Do you continue with an interim engagement, do you make your external resource permanent, or do you go to market for an external hire?  

Interim arrangements make the most sense for a startup.  As the founder, you know your business needs and the pressing HR issues you are facing.  Your vetted, interim HR partner helps you build your HR foundation and address your priorities over a set period of time and with a clearly defined scope.  They also do it at a cost savings, as it can be a part-time resource and you’re saving money on payroll tax and benefit costs.  An interim HR engagement provides you high-level HR expertise without a long-term commitment.  The greater benefit of an interim engagement is two-fold.  If you are satisfied with the service you receive, you can always enter into a more permanent arrangement with your outsourced interim HR provider.  If your goal was to eventually bring HR in house, your interim HR manager sources that person for you, because of their intimate knowledge of your business and the HR foundation, and they engage in a knowledge transfer with your new HR hire as a final step in the engagement. 

How Interim HR Management Can Help Your Startup Scale 

Interim HR management plays a crucial role in helping your startup scale by providing expertise, guidance, and support during critical periods of growth and change.  As a business leader, you may have knowledge in how to run and scale a business, but you may not have the human resources experience to scale your people operations in tandem.  Generally, consulting firms or individuals who offer interim management services have direct knowledge of all aspects of the employee lifecycle.  A generalist approach is probably what your startup needs.  Working with an interim HR management resource means you have an embedded HR expert who partners with leadership to align HR growth with the company’s growth and can build a strong, scalable human resources infrastructure with processes that keep pace with your expansion.  

So how does a firm like Red Clover and its interim HR management services help your startup?

Scalable HR Infrastructure

In my opinion, how you start something is how you will continue doing it.  So why wouldn’t you build your HR infrastructure correctly from the start?  You do that by partnering with a skilled HR practitioner who has direct, demonstrated experience in building a company’s HR foundation for sustainable growth and success.  An interim HR solution is an effective solutions because they can either focus on specific immediate needs (like recruiting) or apply general knowledge to the entire employee lifecycle.  You work with your fractional HR resource to address immediate and long-term needs while also articulating the overall impact on the business.  The infrastructure and processes resulting from interim HR management should be repeatable so they can continue to drive results long after the interim resource has left.

Recruitment and Retention

There comes a point in the startup process where you need to make your first external hire.  Before that point, you may have hired family or known resources to fill your vacancies.  But in order to make sure you’re hiring the right people for your company as it scales, you need an effective recruitment process.  Your interim HR management partner builds out your recruitment process so you can hire for technical skill and core value alignment.  You can also partner with HR consultants to offer recruitment process outsourcing, or RPO.  With RPO, your HR resource’s sole focus is building out a recruitment strategy and finding top talent for your startup according to the process they just developed.  

Once you’ve been able to hire the best people so your business can grow, you want to keep them.  Your ability to retain workers is dependent on a number of factors.  The interim HR manager understands what keeps employees at companies and what will keep your employees at your company.  They develop strategies, programs, and processes that support your retention efforts.  This may mean building out an incentive compensation plan or creating career ladders for employees to see how they can grow with the company as it scales.  

Learning and Development 

One other key component of retention is your ability to provide learning and development opportunities to your team.  If you invest in ongoing training for your team to skill them up internally, there is a greater likelihood your employees will reinvest their time back into your company.  Working with an interim HR resource, you build out company and industry-specific curriculum that allows your employees’ knowledge to grow with you.  Integrate industry-standard certifications and requirements as a demonstration you are committed to the long-term development of your workforce.  HR professionals can create their own learning content for implementation and help you vet learning management systems to support the growth of your training program.

Compliance and Risk Management

Once a startup hires their first employee, the risk profile immediately goes up.  It’s one thing to be running the business as the founder, but another when you have other people for which you are responsible.  From payroll to policies, there are certain things you need to do as a business owner to make sure you’re abiding by tax, employment, and payroll laws.  Interim HR management is a solution to ensure you are compliant and mitigating risk.  As your company expands into a higher headcount, your risk profile increases because more employment law applies to your business.  Don’t get caught breaking the law because you didn’t know any better.  Partner with an HR firm who helps you avoid risk and is knowledgeable of employment law to scale policies in tandem with your headcount growth.

Crisis Response and Change Management

Despite every startup’s best efforts and methodical approach to building HR infrastructure, human resources crises happen.  Having an interim HR manager who can provide rapid response to a crisis is critical for risk management.  You don’t want to wing it if you have to run an emergency termination or an employee has a serious issue.  If you have a set plan, but something changes in the market or with the business and you need to pivot or undergo rapid change, it’s going to impact your people.  An interim HR resource is your partner in navigating and communicating the change to your people because the success of any change is dependent on your people’s ability to understand and buy into the change.  

Is Your Startup in Need of Interim HR Management? 

We have direct experience in supporting startups and small businesses through scaling.  If you’re a startup founder and you are looking to grow in Q4 and beyond, you need quality HR to support your growth.  Red Clover may be the firm to build your HR infrastructure, serving as your interim HR resource, and working hand in hand with you and your leadership to drive change and growth.  Are you ready to work with a qualified HR partner?  Contact us!

Photo Credit – Photo by Andreas Klassen on Unsplash!

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