HR Issues Limiting Growth of startups

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This post is more of an open discussion on some events that I have been witnessing in our Industry for some time, and I think they cause some serious road blocks for our new startups to grow from a small startup into a larger entity.

Here is the typical scenario.

A new startup is founded the founders work day and night try to hire the best talent in what ever limited budget constraints that they have groom them, stay up at nights to see the business end while mentoring their young team in day time. After several sleepless nights and frustrating days, things finally start to fall in place, they don’t have to monitor every communication of their team can assign tasks and expect things delivered, repeat clients/projects/products start happening around, the startup starts making some profit, and the founders finally feel that the initial issues are done with, they start thinking about growth new areas to explore…. Then suddenly it starts happening, all their senior team, people who they have taught and built up with start leaving one by one, and the drainage is very rapid with in a couple of months the founding members find the with another group of young (and maybe senior developers if they had funds) who they need to start with all over again, and this cycle goes on and on.

I have seen this happen to multiple times to multiple organizations, some times this is so devastating that the organization simply fades away.

And this rapid exit does not happen due to foreign immigrations or studies, because that is a continuous trickle the managing group knows about that trickle and counters it, they are aware of admission times and dates when people leave for studies.

There can be multiple reasons and probably you readers are in a better position to comment on this, but in few instances i saw and was able to identify in one of them was that the drain starts with one senior person going to a competing organization. Since most of our Organizations work in a hierarchy where the immediate Project Manager or Manager is the closest to employees, and we don’t usually rotate the employees from their groups (so in a span of one organization one employee would have worked mostly with the same manager), he starts pulling his best sub-ordinates and as he is aware of in an out of the organization knows the weakness and uses those to lure away the second layer as well.

But that is only one area I was able to pin point, there are I know multiple reasons, and till now I have not seen any counter measures that works to stop this, if you have seen experienced this and had some how managed to survive or counter this, I am sure others would benefit greatly from the experience.

Do speak out, lets see if we can find a solution to this.

UPDATE

TechLahore has written an excellent post on the same topic,here is the link and following is an excerpt of the solution

http://www.techlahore.com/2010/03/03/human-capital-woes-in-the-pakistani-it-industry/

Truth be told, Pakistani software companies share blame for the negative behaviour we see these Lethargians exhibit. If you’re going to get two raises a year when the going is good with no regard for your personal performance, sure you’re going to develop ludicrous and unsustainable expectations! If you’re naturally prone to focusing on the short-term benefits of a slightly higher salary, Pavlovian programming such as this will only ruin you further.

I think it’s time the industry as a whole acknowledged that we’re tolerating lots of C and D players because not nearly enough A players are being produced. And once we acknowledge this, we really need to arrive at some sort of collective agreement that we can’t keep playing the “incent, use and lose” game any longer. It’s ruining the pool of human resources we all have to make do with. Until we do this, it’s each man for himself and victory can only belong to the dark forces of Palpatine.

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6 Comments

  • Hello Qazi, can you please define startup in context of PAK? Because sometime I wonder if PAK has any startups? I mean most of companies here are services based and rarely any one make product, so they need very little chance of failure as compared to a startup which is making product plus they need little investment.

    So if you can define it for your readers, that may help them to answer.

    On a general note:

    * People here only work for money, i am not saying people in US or UK dont work for money, but in PAK, things are quite different, because you have too much responsibility, so you can’t risk your life in startups, which can fail anytime.

  • Adil,
    First Regarding the definition of a startup my definition (and you can choose to disagree) would be a company which is in its early years just turned cash positive (And services companies take time to do that too) have a small management team to see all aspects of organization (the founders doing Hr, Accounts, Business Development etc).

    Second regarding the myth that setting a service company is easy without any risk i sort of disagree with it (again my opinion) For some one settled in a job to get away from the monthly pay check to an uncertain environment where clients give hard time and employees on the other I guess its still a risk, and testament to that is a lot of big service companies going out (Remember CresSoft) so the risk is very much there what ever you are doing.

    And again the risk factor is same for every one i agree its a bit more for Pakistanis but westerners also have to support and feed their families, And even here we have seen people jumping the ship and trying to steer their own small rafts so limitation on each individual is a boundary which he creates for himself.

    And again the focus of the post is not to ask people to stick to their own jobs for indefinite period in startups I am just trying to explore ways in which the Startup can minimize the damage

  • Qazi,

    Thanks for defining what startup means in context of Pakistan, and sorry if my comment was suggesting that setting up service based company has no risk. So i would like to correct this perception, my whole point was that there is less RISK in service company as compared to product based company.

    Now coming towards your actual post, well i really dont know why this happen but i believe it may have to do with our culture (including working culture). Unless someone do proper study on that, its very hard to say anything for sure.

  • Qazi, short answer: I don’t think there is any solution.

    In our case, PMs/ex team members/team leads – everyone has tried to attract other team members to their new organizations. In fact, PMs would do it more to show their loyalty to the new organization and also because they know who is better amongst the team members plus their salary packages. In one some people left for the other organization (from 35 – 45k jump) and asked to join us again (demanding 55k of salary :)).

    A founder’s job is to keep optimizing hiring, sales, accounts, ops, production, delivery processes – just because people jump the ship, or clients jump the ship or a product fails should not make the organization go 10 steps back. Easier said than done – and that is why some organizations grow and proposer and others shut down while a lot more seem like always struggling.

    There is no silver bullet though one easy solution could be to invest in a good HR guy who can handle hiring as well as other HR related issues as soon as the founders can afford it. This is quite necessary in our part of the work where people expect more than 25% of salary jumps yr-on-yr, jump a lot within the industry and the overall resource pool size isnt too big either.

  • great feedback Ali, I agree we wont be able to change the attitudes our organizations need to have a robust system in which some one coming in or going out should not disrupt daily activities.

  • Adil, I agree we wont be able to pin point a specific cause and remedy for it but discussing what other CEOs do would help ones who have to go through this experience

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