When Should a Tech Scale-Up Hire Its First Head of People?

At first, people and HR matters sit naturally with the Founder. The team is small, communication is direct, culture feels intuitive, many hires come through trusted networks, the organisation is informal, fluid and fast-moving.

Then the company grows and, suddenly, the founder is spending a disproportionate amount of time dealing with hiring decisions, performance issues, employee questions, manager problems, awkward people situations, and the general messiness that comes with a growing team. At a certain point, it becomes clear that the sheer weight of this is beginning to inhibit their ability to focus on the things they should really be spending their time on – product, customers, growth, fundraising, and building the company.

That is usually when the conversation about hiring a Head of People or, perhaps, a Fractional Head of People begins. Sometimes the founder arrives at that conclusion themselves, and sometimes it is impressed upon them by investors. Often, VCs can see that the founder is either spending too much time on people issues, lacks experience as a people leader, or is about to take the company into a much steeper phase of growth and needs stronger foundations in place before the strain intensifies.

Initially, most founders think about this hire in reactive terms. They want somebody to take things off their plate, they want the immediate problems handled, and they want their time back.

Then, through conversations with peers, investors, or sometimes a fractional People consultant, they begin to realise that a strong Head of People can do much more than absorb reactive HR work. They can help strengthen leadership, improve performance, sharpen the employer value proposition, create greater clarity across the organisation, and put the foundations in place for rapid scaling.

A decision that can be delayed

In our experience, it is actually quite rare for a founder CEO to decide they want to hire a Head of People before the business is truly ready – the opposite is far more common.

As a a cost function, the hire is often delayed until it feels absolutely necessary. On top of that, founders are understandably reluctant to relinquish control over anything people-related. Culture, standards, hiring quality, behaviour and performance all feel too important – and often too bound up with the founder’s own identity – to hand over lightly.

That tendency can be especially strong in first-time Founders. Repeat Founders are often a little more willing to bring in experienced operators earlier because they have already lived through the cost of trying to hold too much for too long.

Signs the time could be now

There is no single perfect moment to hire your first Head of People, but there are some very clear symptoms that tend to show up when a scale-up has outgrown Founder-led people management.

One of the biggest is that the CEO is still too involved in the minutiae. They are involved in every part of the hiring process, firefighting manager issues, dealing with awkward employee relations matters, and acting as the final escalation point for far too many day-to-day problems. All of that consumes time and energy that ought to be going into driving the business forward.

Alongside that, management capability issues often start to become more visible. New leaders are not yet adept in leadership roles, role responsibilities and objectives are unclear, employees are not properly onboarded, people do not have enough clarity on how success is measured, or what good really looks like in their role.

At the same time, the entire people infrastructure can become highly reactive. Policies are unclear, the growing number of new employees generate a large volume of inbound questions because they are unsure how things work, career progression is vague, manager feedback is inconsistent, values may exist in principle, but they are not truly operationalised in a way that helps people make better decisions by them day to day.

This is where the business begins to accrue what you might call, People debt. By that, we mean the gradual build-up of unresolved people issues, weak systems, inconsistent leadership behaviours, unclear expectations and cultural problems that become progressively harder to unwind as the company grows. The longer that debt is allowed to build, the more it starts to show up in morale, retention, employer reputation and ultimately performance.

In the early days, momentum can mask a lot of this. Everyone is bought in, the team is small, the founding group knows one another well meaning informality is tolerable, and sometimes even helpful.

However, as the company grows, those informal ways of working stop scaling very well – at that point, the absence of strong People leadership starts to show up everywhere.

Using headcount as a guide

Headcount is a useful guide as to the potential need to hire a Head of People, as there is definitely a point where reactive people issues begin to pile up more quickly, and the need for clearer progression, more robust management and better-defined expectations becomes more pressing.

Historically, within venture-backed technology businesses, many investors would encourage Founders to hire a Head of People by around 50 employees. Since 2022, we have seen that move out somewhat, as companies have generally wanted to operate more leanly, and it is increasingly common to see Founders pushing this decision closer to 100 people, or opting first for a People Operations Manager who can take more of the day-to-day HR burden without necessarily becoming a fully strategic leadership hire.

That said, headcount on its own is too simplistic. A 45-person business can need a Head of People more urgently than an 85-person business if it is hiring aggressively, operating across multiple geographies, employing inexperienced leaders, or about to enter a much more demanding stage of growth.

What tends to matter more than employee number alone is the interaction between several things:

• how fast the company is growing
• how experienced the Founding team is in people leadership
• how strong the wider leadership bench is
• how complex the organisation is becoming (inc. multiple locations)
• how competitive the talent market is
• how much strain the current setup is already under (inc. morale issues)

In other words, this is not really a question of headcount in isolation – it is a question of whether the company’s people foundations are strong enough for the next phase of growth.

There’s always work to be done

If a company is growing, hiring competitively, and trying to build a healthy, high-performing culture, there is almost always enough meaningful work for a strong People leader to get their teeth into. Unless the company is already full of highly engaged, high-performing people, has excellent leadership capability, low attrition, strong systems, great hiring outcomes and very few cultural growing pains, there is usually plenty to improve.

What the first Head of People should do

Broadly speaking, the remit of a Head of People should be to ensure the company is able to attract, retain and set up for success the talent it needs to fulfil its mission.

In one business, the immediate challenge may be building better hiring processes and improving the company’s ability to compete for talent. In another, it may be manager capability, poor onboarding, culture drift, lack of clarity around roles and progression, or insufficient people data to make informed decisions. The Head of People needs to understand the business model deeply, grasp the organisational challenges quickly, and work out where they can create the greatest commercial impact. 

One misconception is that the Head of People can also be the internal recruiter; operating effectively in a dual-role. In practice, this typically works less well as the skill sets are very different. To do in-house recruitment well in highly competitive markets – particularly in talent-short areas like software engineering or sales – a recruiter really needs to be living in those markets day in, day out. Trying to combine that with responsibility for the full People remit becomes difficult very quickly.

Sometimes a strong recruiter can join an early-stage business, drive talent acquisition, and gradually begin building out parts of the People function over time. In time, one of two things tends to happen – either the recruiter hires another recruiter beneath them so they can broaden out into People leadership, or the business eventually brings in a more established People leader above them as the organisation becomes more sophisticated.

Sometimes the right first step could be a Fractional People Consultant

There are businesses that are not yet ready for a full-time Head of People, or where a different interim solution makes more sense.

Sometimes a COO or Head of Operations has a strong enough grasp of the people and culture of the business to hold the oversee these areas for a period of time, while leaning on employment lawyers or external advisors where needed.

In other cases, hiring a fractional Head of People can be a very smart precursor to making the full-time hire. A good fractional consultant can audit the existing people infrastructure, assess leadership quality, identify the biggest risks and gaps, and begin implementing improvements. Over time, they can also help define the permanent role more clearly, assess Head of People candidates, and set the eventual hire up for success.

It’s arguable that a strong fractional People consultant can potentially be more candid with a founder CEO than a newly appointed permanent Head of People hire might feel they can be during the early days. A permanent Head of People will naturally tend to pick their battles at first, which is often sensible, but an external HR Consultant can potentially be more direct in explaining where the founder’s leadership style, culture or organisational habits may be creating problems that will make scaling harder later, alerting leadership to these risks more quickly. Of course, there are countless exceptions to this, but we have seen this manifest.

Why these hires sometimes fail

The first Head of People hire is not without risk, indeed we see many of them fail, but the reasons are usually quite predictable.

In almost every case, it is because the chemistry between the CEO and the Head of People is not right – the values are not aligned. The founder thinks they are ready to empower their new Head of People, but in practice they are not willing to relinquish enough control. This can be because the Head of People fails to build sufficient confidence due to their inability to truly grasp the company strategy well enough, or they cannot use communication to influence effectively, or they do not back their recommendations with enough data and commercial logic. In other instances, it can be that the CEO is excessively forthright and controlling, such that the People function typically continues to see regular churn thereafter.

A founder CEO should think carefully about hiring their first Head of People in almost the same way they would think about hiring an executive coach. There needs to be trust, there needs to be openness, there needs to be enough natural chemistry that both sides can be candid with one another. The CEO needs to feel that the person understands what matters to them, how they think, what frustrates them, and where the company is trying to go. The Head of People needs to feel they can challenge constructively without being shut down every time they raise something uncomfortable.

Where those things are absent, the relationship tends to break down. We often see this when Founders dismiss initiatives out of hand because they disagree with them philosophically, or when a Head of People proposes changes that seem disconnected from the commercial realities of the business. If the CEO and Head of People are regularly at odds, it is often a sign that the company hired the wrong Head of People for that Founder, that business, and that stage.

A good example of timing done well

At Hawkwood, we recruited the first VP People at Vitesse, an Octopus Ventures-backed FinTech startup. At the point of hire, the business had meaningful commercial traction, significant funding, an experienced leadership team, and around 50 employees. It also had the foundations of a strong culture and some adept leaders, but only very basic HR processes.

The incoming VP People joined at a point where there was already enough substance in the business to build on, but still plenty of room to shape what came next. Through deeply understanding what Vitesse uniquely required from this crucial role, we were able to match them with a VP People who matched their company ethos, while also constructively stretching them to evolve how they thought about and managed their people. Through this, they were able to help prepare the company for scale and support its growth to more than 250 people.

So, when should you hire your first Head of People?

You should seriously consider hiring your first Head of People at the first sign that the cost of founder-led people management is starting hold back the organisational growth.

That is usually the point at which people issues are taking too much CEO time, but hopefully before the point that leadership quality coming into question, the employee experience is causing frustration, hiring is getting noticeably harder, and the business is starting to churn talent.

What matters is not whether you have reached an arbitrary headcount. It is whether your current people foundations are strong enough for the next phase of growth, and whether the absence of a strategy around how to attract, retain and develop talent is becoming an inhibitor to growth.

Since 2016, Hawkwood have been recruiting Head of People, People Director or VP People hires into Technology scale-ups, meaning we are very adept at assessing a company’s readiness for their first Head of People (versus partnering with a Fractional Head of People), and identifying the profile and characteristics of a Head of People that will succeed in each unique company.

If you are interested in an exploratory discussion as to how we can guide you through this process, you can enquire via our contact form.