Process isn’t free. You’ll probably need to spend money on tools, and your team needs to devote real time to the process—time that finance will have to account for.
You Need a People & Culture Budget
Unfortunately, most early-stage startups don’t have a People & Culture budget. Headhunter fees, job boards, team lunches, and tools like LinkedIn Recruiter are usually paid for with whatever’s left over on an ad hoc basis.
That’s not sustainable, though. If finance needs to sign off on every single recruiting expense, hiring managers will take a lot longer to hire and could miss out on great candidates.
To scale effectively, you’ll need a budget devoted to long-term investments in your team.
Who Foots the Bill?
People & Culture usually falls under the General & Administrative (G&A) budget. This means it’s lumped together with Operating Expenses: everything, from rent to legal, that’s necessary for daily operations, but doesn’t contribute directly to revenue.
Look for Alternate Sources of Budget
G&A budgets don’t usually have much wiggle room for “extras”, even ones that can bring down costs in other areas. So if your company’s like most, you’ll need to find other budgets to pull from. Fortunately, the two biggest beneficiaries of process also happen to be the biggest drivers of expense and revenue: Engineering and Sales.
Good engineers and sales reps are incredibly expensive to replace, and have average ramp times of 6–9 months. Preventing one engineer from quitting can easily save $25,000 in hiring costs alone. And shaving a month off the sales ramp could be the deciding factor in closing a 6-figure deal.
Talk to your stakeholders in Engineering and Sales about the costs they’re incurring and see how they can help defray the cost so you’re not forced to do everything on a shoestring.
What’s Your Monthly Spend Right Now?
According to data from Betterworks, every month, teams under 25 employees spend an average of $130 per employee on perks alone.
According to Lightspeed Venture Partners, the average early-stage startup spends $15,000/month on recruiters, referral bonuses, and other hiring-related expenses.
Even if you don’t pay for things like commuter benefits or gym memberships, you’ll still end up spending at least $250/month on each employee for health insurance, adding up to $2,500 for a 10-person company.
Catering: : $1,000
Even if you only buy lunch once a week, at $15–25/head, catering can easily add up to $1,000 for a 10-person company.
Snacks & Coffee: $500
You don’t need to buy organic to rack up $50/month on each employee over 20 work days, adding up to $500 for a 10-person company.