Human Resources: A Key Ingredient Overlooked at Most Ad Tech Companies

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On the whole, the esoteric practice of Human Resources has largely been overlooked by the ad tech industry.

Understandably many cash-strapped tech start-ups are not able to hire full-time HR managers, but the many positive ways HR can impact organizations (both hard and soft costs) is worthy of review as companies seek to make smarter investments with their coveted VC dollars.  As companies launch, partnering with an external recruiter (“headhunter”) can provide immediate, qualified candidates.   However, as a company matures and headcount expands, smart investments in HR should be more strongly considered.

To recap, HR staff can add value in a multitude of ways beyond simple payroll and benefits administration.  Here is a snapshot of just a few:

Recruiting and retaining the best employees. Many times ad tech companies are paying out hefty fees (ranging from 15-30 percent of first-year salary) to recruiters who simply troll the shores of LinkedIn These recruiters may or may not ultimately be aligned with the candidate’s or company’s best interests after a 15-minute call to tee up a first interview with a hiring manager.

On the outside, even a part-time in-house HR representative would appear to be a wise financial choice for hard-working VC dollars versus reliance on a recruiter carrying a book of ad tech companies (some of which may directly compete with one another!).

If internal-external alliances are the best fit, rules of engagement should be clearly defined.  For example, I was once caught in an outside recruiter versus internal HR department tug-of-war.  I decided if there was this much confusion before walking in the door, there would likely be bigger concerns down the road.

Acting as liaison between employees and upper management. HR can be an impartial sounding board where employees can voice thoughts, concerns, etc. (Who wants to potentially be labeled as a malcontent by their direct report by suggesting a new way of doing things or reporting something that is damaging morale?). HR staff can help management to address areas of concern before key staff jettisons the stage.

Setting fair/consistent compensation plans for all staff. You’d be amazed at how many moving performance goals are still out there (even for sales teams —  yikes!).  Clearly defined expectations will pave the way for a healthier employer/employee relationship.  A “trust me” approach tends to put employees on edge at the very least and may make them more open to a conversation with one of your competitors.

Continuing education. Companies that invest in their employees tend to have higher retention rates than those who do not.  In lieu of reimbursing cost for expensive classes/tuition, this can be as simple as a 1-day workshop or inviting a guest speaker (ad tech folks tend to be intellectually curious —  feed them).

Regarding retention rates in particular, PwC has conducted studies which indicate the average cost of replacing a fully trained was equivalent to 50-200 percent of that employee’s annual base pay.  About.com has similar figures in “What Good People Really Cost.” Studies such as these take a number of variables into consideration ( i.e. interviewing costs, training, etc).  Food for thought before hiring/firing at will.

If creating internal HR teams isn’t a funding issue in ad tech, then it would appear our fast-paced industry is reticent to invest in HR because it has determined technology (or perhaps outsourcing) can solve its personnel challenges.

My belief is that the companies who view HR as a strategic component will be well positioned for success in the days ahead, while those who continue to treat it as an afterthought will be at a disadvantage.   VC firms are understandably keeping a watchful eye on revenue and profitability; perhaps a more thoughtful approach to HR would serve them well.

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