The Startup HR Myth: Why ‘We’ll Figure It Out Later’ Costs More Than You Think

The Startup Myth:

Ask any early-stage founder when they plan to hire HR, and the answer is almost always: “Later.” “When we hit 50 employees.” “HR slows things down.”

The Problem:

By the time you realize you need HR, you’ve already made costly hiring mistakes, lost great talent, or built a culture that’s impossible to fix. Startups don’t wait until cash flow is tight to hire a CFO. So why wait until people problems spiral out of control to invest in HR?

Here’s why growing businesses such as start-ups and non-profits need fractional HR consulting, how to set up basic people operations before it’s too late, and how to avoid the painful (and expensive) mistakes that come from neglecting HR.

The Reality: Why "We'll Figure It Out Later" is a Bad Idea

When startups grow fast, people ops tend to take a backseat to product, funding, and sales. It’s easy to think:

✅ “We just need to hire fast.” Until you realize speed without process leads to high turnover.

✅ “HR slows things down.” No, bad hiring decisions and toxic workplaces slow things down.

✅ “We’re too small for HR.” Until an employee issue turns into a lawsuit.

The reality? Your hiring process is already HR. Your performance reviews (or lack of them) are already HR. Your onboarding (or throwing people into Slack and calling it a day) is already HR. The question isn’t whether you “have” HR—it’s whether you’re doing it well.

3 Things Startups Should Do Before It's Too Late

Even if you’re not ready to hire an HR team, here’s what you should do right now:

1️⃣ Get Your Hiring Process in Order

Use an ATS (Applicant Tracking System) instead of managing candidates in Google Sheets.
Stop writing job descriptions that sound like wish lists and focus on what success looks like in the role.
Train hiring managers to interview beyond “vibes”—because hiring for “culture fit” often means hiring people just like you.

2️⃣ Define Your Culture (Before It’s Defined for You)

If your company values are just words on a Notion doc, they don’t count.
Culture isn’t free snacks and a ping-pong table—it’s how decisions get made and how people are treated.
Employees don’t leave because of one bad day—they leave because of 100 small moments that tell them they don’t belong.

3️⃣ Track Basic People Metrics (Because Guessing is Not a Strategy)

You don’t need a fancy HR dashboard, but you do need to track:

Time to hire (How long does it take to fill a role?)
Turnover rate (Are people leaving faster than you can replace them?)
Push-through Rate (Are great candidates ghosting you throughout the interview process?)

When to Bring In HR:

0-10 employees → DIY it, but set up basic processes.
10-50 employees → Bring in fractional HR or an HR consultant.
50+ employees → You’re overdue for an in-house HR hire.

Fractional HR consulting (like US!) helps startups set up hiring, onboarding, and culture processes before they hit growing pains. It’s a cost-effective way to get HR expertise without hiring a full-time team too soon.

Case Study: Scale AI's HR Struggles

San Francisco-based startup Scale AI serves as a cautionary tale for what happens when HR is treated as an afterthought. In 2023, the company faced a lawsuit from a former contractor who alleged worker misclassification, unpaid wages, and poor labour practices. The lawsuit claimed that Scale AI exploited contractors by categorizing them incorrectly to avoid paying overtime, benefits, and proper wages—a move that resulted in legal action and reputational damage.

⚠️ The lesson? Startups that cut corners in hiring, classification, and employee experience often pay the price later—through legal fees, high turnover, and lost trust.

Wrap it Up:

Startups that invest in HR early don’t just avoid problems—they build companies where people want to work. If you’re a founder, hiring manager, or small business leader, ask yourself:

✔ Are you hiring based on strategy or scrambling to fill roles? ✔ Do employees actually know what’s expected of them? ✔ Is your culture happening by design—or by accident?

💡 If you’re not sure, let’s talk. PocketHR helps startups and small businesses build scalable HR systems—without slowing down growth.

📥 Want a free “HR Starter Kit” checklist? Send us an email at info@pockethr.ca