Building a Great People Function: 10 Common Pitfalls and How to Overcome Them
We kind of all know it, but then we don’t: building a robust and effective people function and a solid and aligned company culture is critical for the success of any startup. But what does that even mean?!
This article explores ten common pitfalls that founders face and provides strategies to overcome them, focusing on sound people management practices, consistently aligned with culture, that define your leadership and your team’s engagement.
Because every company is built with people and these are the essence of how people collaborate productively and in high spirits.
Content
Pitfall 1: Undefined Company Values and Culture
Pitfall 2: Lack of Leadership Buy-in
Pitfall 3: Ineffective Culture and Performance Assessment
Pitfall 4: Ignoring Employee Conflicts
Pitfall 5: Insufficient Resources for People Management
Pitfall 6: Misalignment with Business Strategy
Pitfall 7: Poor Onboarding Practices
Pitfall 8: Lack of Diversity and Inclusion
Pitfall 9: Inadequate Recognition and Rewards
Pitfall 10: Stagnant Culture and People Practices
Why It All Matters & Where It Leads
Pitfall 1: Undefined Company Values and Culture
Challenge: Without clear values and culture, the recruitment process can lead to bad hires who do not fit well with the organization. This can result in higher turnover, lower productivity, and increased costs. All the things we need to avoid!
It’s Real: According to the Harvard Business Review, up to 80% of employee turnover is due to bad hiring decisions (found on Forbes).
Solution: Define and communicate your core values clearly. Involve your team in this process to ensure buy-in and alignment. Regularly reinforce these values through meetings, training sessions, and internal communications to attract and retain the right talent.
Your Kickstart: Neglecting cultural alignment in candidate interviews can lead to bad hiring decisions that can cost you between 50-200% times the annual salary of the person you need to replace. Dig for cultural alignment in candidate interviews.
Pitfall 2: Lack of Leadership Buy-in and Alignment
Challenge: When leaders don’t prioritize culture and sound people management practices, it undermines efforts to build a cohesive environment. Employees look to leadership for cues on what is truly important, and a lack of buy-in can signal that these aspects are not a priority. This disconnect can lead to disengagement and a fragmented workforce.
It’s Real: Gallup reports that companies with engaged leadership teams are 21% more profitable.
Solution: Ensure that you as the leadership flagship understand the importance of culture and effective people management. Seek out training and regular discussions on cultural initiatives and management best practices. Highlight the positive impact strong culture and management can have on business outcomes to garner support and commitment from your team leads (middle management) and leadership peers (Co-Founders, top management).
Your Kickstart: We have an online course in the making for that: “The Essential Guide to People Management for Tech Startups”. All you need to know about People Management as a founder on a high level in just under 3 hours. Join the waitlist.
Pitfall 3: Ineffective Culture and Performance Assessment
Challenge: Without measuring culture and performance, it’s impossible to know if your efforts are working. You may miss underlying issues or fail to recognize the positive aspects that need to be nurtured. This lack of insight can result in misguided initiatives and wasted resources.
It’s Real: According to Deloitte, companies that regularly measure their culture and employee engagement are 2.5 times more likely to be market leaders.
Solution: Implement regular culture surveys and performance feedback mechanisms. Use this data to make informed decisions and adjustments. Analyze trends over time to understand the evolving needs and sentiments of your workforce.
Your Kickstart: Measure your team culture with an online test, based on the psychological model of the BigFive test: cync. Take your personal values test here, for free. Get in touch if you want to use it for your team and recruiting.
Pitfall 4: Ignoring Employee Conflicts
Challenge: Unaddressed conflicts can fester and undermine morale. They can lead to a toxic work environment, increased turnover, and decreased productivity. Ignoring these issues can also damage trust and openness within the team.
It’s Real: The Society for Human Resource Management (SHRM) estimates that unresolved conflicts cost companies $359 billion in lost productivity annually.
Solution: Create an open environment where issues can be discussed and resolved promptly. Provide conflict resolution training to managers and employees. Encourage a culture of feedback and open communication to address problems before they escalate.
Your Kickstart: Go and start talking to that person you know you need to resolve a conflict with today. Here and here are tips on how to start such a tough conversation.
Pitfall 5: Insufficient Resources for People Management
Challenge: Building a strong culture and effective people management practices requires time and money, which startups often lack. Without adequate resources, initiatives may be poorly implemented or abandoned altogether, leading to a lack of progress and frustration among employees.
It’s Real: According to Forbes, companies that invest in their employees overall perform better financially than companies that don’t.
Solution: Prioritize culture and people management as strategic investments. Allocate necessary resources and consider them crucial parts of your business plan. Seek creative and cost-effective ways to support these initiatives, such as leveraging technology and internal expertise.
Your Kickstart: The ppl.Kickstarter’s goal is to be your go-to resource hub for all things People Management and Culture Building. If you haven’t done it yet, join The ppl.Kickstarter’s Monthly and don’t miss all the good things we’ve got in the pipeline.
Pitfall 6: Misalignment with Business Strategy
Challenge: A culture and people management practices that don’t support your business strategy can lead to inefficiencies. Employees may feel disconnected from the company's goals, resulting in decreased motivation and misaligned efforts. This misalignment can hinder the company’s ability to adapt and thrive in a competitive market.
It’s Real: A survey by PwC found that companies with strong alignment between culture and strategy are 2 times more likely to achieve high performance.
Solution: Ensure that your cultural initiatives and people management practices align with your business goals. Regularly revisit and realign as necessary. Involve all levels of the organization in discussions about how culture and people practices support strategic objectives.
Your Kickstart: We have a template to help you with this: Company Culture Canvas. Starting with the purpose statement, derived from your mission and vision statement, use this canvas to design and build your culture in alignment with your business goals.
Pitfall 7: Poor Onboarding Practices
Challenge: Ineffective onboarding can leave new hires disconnected and unproductive. This can lead to higher turnover rates and longer time-to-productivity, impacting overall team performance and morale. Poor onboarding can also set a negative tone for new employees’ experiences.
It’s Real: According to Glassdoor, effective onboarding can improve new hire retention by 82% and productivity by over 70%.
Solution: Develop a comprehensive onboarding program that introduces new hires to your values, culture, and expectations. Include mentorship and social integration activities to help them feel welcome and supported. Continuously improve the onboarding process based on feedback from recent hires.
Your Kickstart: Go ask your most recent hire about their onboarding experience and note it down. Go ask other recent (or then future) joiners about their view on that precise element and their overall experience. Once you see patterns, improve the onboarding process right there.
Pitfall 8: Lack of Diversity and Inclusion
Challenge: A non-inclusive culture can limit innovation and growth. It can lead to homogeneity in thinking, decreased employee satisfaction, and challenges in attracting diverse talent. This lack of diversity can ultimately weaken your company’s competitive edge.
It’s Real: McKinsey research shows that companies in the top quartile for diversity are 35% more likely to have financial returns above their respective national industry medians.
Solution: Promote diversity and inclusion through hiring practices, training, and policies that support a diverse workforce. Foster an environment where all employees feel valued and heard. Regularly review and adjust your practices to ensure they effectively promote inclusion.
Your Kickstart: We have a Podcast Episode on Diversity for Startups. Tune in for a deep dive and actionable quick wins for a more diverse team.
Pitfall 9: Inadequate Recognition and Rewards
Challenge: Employees need to feel valued for their contributions. Without proper recognition, motivation and engagement can decline, leading to lower productivity and higher turnover rates. A lack of recognition can also create a culture of mediocrity.
It’s Real: According to a survey by O.C. Tanner, companies with strong recognition programs have 31% lower voluntary turnover rates.
Solution: Implement recognition programs that reward behaviors and achievements aligned with your values and goals. Celebrate successes publicly and provide meaningful rewards. Tailor recognition efforts to individual preferences to maximize their impact.
Your Kickstart: Two practical tips you can do today: start saying ‘Thank You’ purposefully if you haven’t yet, or add ‘achievements of the week’ as a topic to your regular team meetings.
Pitfall 10: Neglecting Culture and People Practices During Growth
Challenge: As startups grow and move through different stages, failing to update culture and people practices can lead to significant issues. A culture that worked for a small team may not scale effectively, leading to disengagement and operational inefficiencies.
It’s Real: According to research by Gartner, 70% of scaling startups face challenges in maintaining their culture.
Solution: Continually assess and evolve your culture and people management practices to meet the changing needs of your growing business and workforce. Ensure that your practices are scalable and adaptable to larger groups. Encourage feedback and be proactive in addressing the evolving dynamics of your organization and updating your people management activities and culture cornerstones.
Your Kickstart: We have a template to help you with that:
Why It All Matters & Where It Leads
It’s pretty obvious: avoiding these common pitfalls is essential for building a strong people function and a thriving company culture.
By addressing these challenges proactively, you can create a work environment that supports growth, innovation, team cohesion, and employee satisfaction aka great vibes.
A committed effort to invest in your culture and implement sound people management practices will pay dividends in employee engagement, performance, and your business’ chances of becoming a (huge) success.
Don’t wait - get (kick)started today! 🚀