In a down economy, it’s natural for startups to question and scrutinize any new initiatives or expenses. As startup finance and HR advisors, we’ve been hearing a lot of questions like, “should my startup bring on People Operations support now, or wait until the economy improves?”.
In fact, a down economy is an ideal time to focus on People Operations, and bringing in outside support can make good business sense for many startups right now. Slower business cycles present opportunities to focus on internal initiatives like team and culture. Doing so can help your startup weather the tough times and emerge with a solid competitive edge when the economy inevitably begins to improve.
7 Ways People Operations Can Help Startups Succeed in a Down Economy
- Optimizing Hiring Plans – The economic shift in 2022 has led many companies to slow down their hiring plans, and many startups are putting off new hires they had initially planned for this year. However, a down economy can also present opportunities to find exceptional candidates for key hires. Determining which hires to delay and which hires to proceed with is one crucial way People Operations can help startups succeed in a down economy.
- Avoiding Costly Bad Hires – Bad hires cost an average of nearly $15,000 each in lost time, lost productivity, and compromised work quality, according to CareerBuilder. Every dollar is incredibly precious right now. A good People Operations team can help your startup avoid wasting time and money on bad hires with professional recruiting, screening, and onboarding.
- Maintaining Compliance – People Operations helps startups avoid costly and time-consuming legal pitfalls by maintaining regulatory compliance. Examples include ensuring that job descriptions and job postings have EEO/AA compliant information, employee classifications are correct, state filings and tax laws are observed, and HR paperwork is up-to-date and designed to protect your company’s intellectual property and assets.
- Increasing Customer Profits – Research has shown that, on average, it costs 5x more to acquire a new customer than to retain an existing one. Just a 5% increase in retention rate has been shown to increase profits by 25% to 95%. And, a 2019 Glassdoor study demonstrated a strong correlation between employee satisfaction and customer satisfaction. By prioritizing employee experience and satisfaction, People Operations directly supports increased customer loyalty and higher profits.
- Optimizing Benefits – Your employees deserve and expect competitive benefits; they’re a major key to employee satisfaction and performance. Employee benefits are also complex, and understanding your options and ensuring that you’re getting the best benefits for the best price can be challenging. Your startup’s People Operations partner can help you identify the best benefits packages for your employees and even negotiate the best deal on your behalf.
- Fostering a Winning Culture – Salaries, benefits, and opportunities are important for employee satisfaction and retention, but they aren’t everything. Just as important is your company’s culture. More than ever, people want to work for companies that offer an incredible culture that’s compatible with their lifestyle, personality, and values. In an economy where your startup might not be able to pay sky-high salaries or offer all of the benefits and perks you’d ideally like, culture can go a long way. Your People Operations partner can help you foster a culture that founders, employees, investors, and customers love.
- Improving Fundraising Outcomes – By now, most startup founders understand that the fundraising market in 2022 is considerably different from the past few years. VCs and other investors are more cautious about opening their checkbooks, and when they do, it’s usually for a significantly lower valuation. That said, the best startups are still getting funded, and there are steps you can take to maximize your chances of a successful funding round. People Operations improves fundraising success by helping startups avoid regulatory pitfalls, boost performance, and foster culture and values.
As advisors to hundreds of venture-backed startups, Burkland has guided our clients through all types of weather. Our People Operations team can help your startup make the most of today’s cloudy economy and prepare for the bright future ahead.