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From Founder-Led to Scalable People Ops: How to Build HR That Actually Works
February 4, 2025 | Edition 1
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Scaling startups isn’t just about product and funding—it’s about people. Yet, too many founders rely on gut feel for hiring, performance management, and culture until things start breaking. The truth? People Operations is critical to successfully scaling from 20 to 250 employees.
Let’s talk about how to move from reactive, founder-led HR to a strategic, scalable People function—without adding unnecessary bureaucracy.
Where Does Your Startup Fall? The 3 Stages of People Ops Maturity
Most People functions evolve through three distinct stages:
🚀 Stage 1: Scrappy & Reactive (1-50 employees)
✅ Hiring is founder-led and ad hoc
✅ No formal HR—admin tasks handled by ops, finance, or an office manager
✅ Culture is organic, shaped by early employees
✅ Performance management is informal (if it exists at all)
🔴 Biggest Risk: Hiring mistakes, inconsistent pay, and cultural drift start compounding fast.
📌 Gut check: Are we hiring for business needs—or just putting out fires?
📈 Stage 2: Foundation Building (50-150 employees)
✅ First dedicated People leader hired (often a People Operations Lead, Head of People, or VP People)
✅ Hiring is structured with defined roles, compensation bands, and interview processes
✅ Core People processes (onboarding, performance reviews, feedback loops) are introduced
✅ Culture still feels “startup-y” but is becoming more intentional
🔴 Biggest Risk: Over-engineering HR too soon or hiring the wrong first People leader.
📌 Gut check: Are we striking the right balance between structure and flexibility?
🏆 Stage 3: Strategic & Scalable (150-250+ employees)
✅ People function is proactive, with dedicated specialists (e.g., recruiting, L&D, HRBP)
✅ Leadership development programs are in place to grow internal talent
✅ Compensation, promotions, and feedback loops are standardized
✅ Culture is intentionally scaled across teams and locations
🔴 Biggest Risk: Bureaucracy creeping in and slowing down decision-making.
📌 Gut check: Is our People function fueling business growth or holding us back?
When to Hire Your First People Leader (And What They Should Own)
💡 The right time? Around 50 employees. Before this, you can get by with a fractional HR consultant or operations generalist. By 50 employees, you need someone owning People strategy.
🛠 What they should focus on first:
1️⃣ Core Legal and Compliance Infrastructure → Make sure you’re not accidentally doing anything illegal and that you’ve covered major risks (e.g., I9s, CIAA agreement, separation agreements, etc).
2️⃣ Hiring & Org Design → Prioritize the right roles, build structured hiring processes, and ensure smooth onboarding.
3️⃣ Compensation & Performance → Set pay bands and feedback cycles early to avoid pay inequity and stagnation.
4️⃣ Culture & Retention → Define company values and create systems to reinforce them as the team scales.
📌 Red Flag: If your first People leader is drowning in admin (payroll, benefits, compliance), you’ve hired too junior. Your first strategic hire should level up your People function—not just run paperwork.
Scaling People Ops Without Bureaucracy
Startups fear “big company HR” for good reason—too many rules can kill agility. The goal isn’t to add complexity; it’s to create just enough structure so teams can operate efficiently.
💡 How to keep it lean but effective:
✔️ Automate admin early → Payroll, benefits, and compliance should be tech-powered, not manual. I recommend Gusto or Rippling (payroll / HRIS for 5 or fewer states), Rippling or JustWorks (PEO for 5+ states with <200 employees), and Deel (international employer of record).
✔️ Use lightweight tools → In order of when you most often need to implement them, I recommend Ashby (ATS for hiring), Lattice (performance management tool), and Pave (compensation data / bands).
✔️ Train managers, not just HR → Your People team can’t own culture alone. Invest in manager capability early. Monthly management guilds following along with a management book like The Leader Lab (#paid-link) or third-party vendors like Hone can support manager training before you have an in-house L&D specialist.
Take Action: Use the People Ops Organizational Diagnostic
Want to assess where your startup’s People function stands? I’ve built a People Operations Organizational Diagnostic Google Sheet to help you benchmark your maturity level and spot gaps before they become problems.
Final Thought: Where does your startup fall on this maturity scale? What’s been your biggest People Ops challenge while scaling? Reply and let me know—I’d love to hear from you!
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