Formalization of human resource management in start-ups

Abstract

This paper deals with a comprehensive study on the formalization and induction of Human Resource Management in Start-ups and young entrepreneurial ventures. In the Indian context, small growing ventures are growing extensively in number but simultaneously, these tiny start-ups are also failing in large numbers. It is estimated that about 90% of start-ups fail [1]. Among those that fail, internal issues contribute to top reasons for failure. This includes inability to scale up, disharmony among the founders, lack of vision or values [2] . Human resource management forms a critical part of every organization but the inception of this division is not uniformly defined. This paper aims to explain the various categorizations of start-ups and how these divisions determine the triggers for introducing a formal HR process into the company’s systems. Our studies involved interactions with different kinds of stake-holders in the start-up process i.e. HR consultants, investors and entrepreneurs. From literature survey, we try to confirm the hypothesis through case studies of significant startups that have succeeded as well as failed. To summarize, this paper aims to identify key triggers for a new firm when the founder and top management decides to introduce a formal HR division into the units.