I once worked with a founder who took their company from 3 people to over 60 in under two years. I know that doesn’t even sound possible to some people. But it happened. They were riding a wave of product-market fit in the gaming industry, had capital, and had momentum. Every quarter, they blew past their sales targets and kept filling process gaps with more bodies. Each hire was “urgent,” meant to “fix a problem.” Meanwhile, the problems kept piling up.
By the time they hit 60 employees, the whole thing came apart. They were out of business almost as fast as they’d grown.
The product and market were fine. But they were fighting people fires with a partially blocked hose.
At 60 people without structure, here’s what you get: employees clinging to old reporting lines, demanding face time with founders who don’t have it to give. People are developing their own agendas because no one has told them what the actual agenda is. New hires are excited about being part of something, but also wonder where this role will actually take them. And the founders? They are still treating everyone like they’re part of the original “project” that requires no explanation.
The company didn’t fail because it grew fast. It failed because they didn’t prepare for any growth at all.
The 25-Employee Inflection Point
Most founders don’t realize that 25 employees isn’t just a headcount milestone. It’s the point where informal systems break.
You can no longer retain all the context in your head. You can’t personally onboard every hire or mediate every conflict. Communication that used to happen organically now requires intention. A culture that felt cohesive starts to splinter, and your founding team still operates with urgency and ownership, but new hires are looking for structure, feedback, and clarity that you haven’t yet built. Or worse, haven’t thought about.
Legally, the stakes also get higher. Payroll and vacation tracking need to meet legislative standards. Health and safety requirements expand. Terminations, accommodations, and leaves all require documentation. It can be a heavy burden even if you have an HR team. Which you likely don’t.
When a legal issue shows up and you’re unprepared, you’ll try to go back in time to document what should have been reported as it happened. This is nearly impossible to do. And you will, unfortunately, pay the price in settlement dollars or fines.
But I get it. Most founders don’t build HR systems at 25 people. They wait until they “need” it. By then, they have 45 or 60 employees, rapid growth is in full swing, and now every HR issue gets triaged instead of being handled in a logical order.
The Math That Catches Everyone Off Guard
Growth doesn’t scale linearly. It compounds.
You have five teams. Each adds one person—that’s five new hires in a quarter. If those teams are each led by first-time managers, you’ve just created five different onboarding experiences and five interpretations of “how we do things here.”
That’s when founders realize that even if they don’t have a people problem, they definitely have a people systems problem. And systems take time and intention to build.
Minimum Viable Human Resources (MVHR)
A lot of HR consultants will try to sell you enterprise-grade infrastructure when you’re still operating like a scrappy startup. I get why this isn’t appealing. For one thing, it’s expensive. Full performance management platforms, competency matrices, and leadership development programs are almost all designed for institutional cultures with institutional budgets.
In a small business, ROI is critical. HR shouldn’t just add bells and whistles and parties. It should add value.
What you need is Minimum Viable Human Resources. HR systems that are robust enough to protect you as you scale, but lean enough that they don’t slow you down or drain your budget on things you won’t see value from for three to five years.
Here’s what that actually looks like:
Employment agreements that are clear and compliant. Simple, enforceable documents that define the relationship, protect your IP, meet minimum employment standards and provide clarity. If you’re still hiring people on handshake deals or copying templates from the internet, then you are legally exposed.
Job descriptions that actually describe the job. Most startups skip this entirely or write vague wish lists. Sometimes they go the other direction and create overly detailed task lists. What you need is clarity: What does this person own? What does success look like in 30, 60, and 90 days? If your managers can’t answer that, your new hires will be left to guess. And guessing means they’re updating their resume again because this seems precarious.
Onboarding that’s consistent. This doesn’t need to be fancy but it does need to be consistent. A checklist, a 30/60/90-day plan, and a clear point person. The goal is simple: every new hire gets the same foundational experience regardless of which team they join, and they feel supported throughout the first 90 days. That’s when most hires decide—consciously or not—whether to leave or stay. They may not say it out loud, but that’s what they’re doing. Human nature is to protect our sense of security.
A feedback cadence that doesn’t rely on the founder. Monthly one-on-ones with a simple template. That’s it. Train your managers to have the conversation. If feedback only happens when something goes wrong, you’ve likely already lost the employee. And a lot of potential progress.
Pay structures that are explainable. You don’t need a comprehensive compensation philosophy at 25 people, but you do need to understand why you’re paying someone what you’re paying them, and be able to explain and defend it if asked. Salary bands and a basic framework prevent the chaos of one-off negotiations and pay inequity issues down the line. Nothing impacts morale more than pay that seems unfair or inconsistent. Anecdotally, I’ve also seen more founders pay too MUCH than too little. That is not money you can afford to waste.
Policies that people actually read. As legislation becomes more demanding and complex, it’s challenging to avoid the dreaded 90-page employee handbook. But at minimum, provide a concise guide to how things work: vacation, sick days, how to raise a concern, and what happens if performance slips.
A handbook isn’t just a book of rules. It should also serve as a guide for leadership decision-making, helping to create consistency across the organization.
A 10-Minute HR Audit for Growing Companies
Can a manager fire someone without calling you first? If no, you need termination guidelines and documentation standards.
Do you know what you’d pay the next hire in each role? If no, build salary bands before your next offer letter.
Could a new hire find your vacation policy without asking three people? If no, document your basics in a one-page guide.
Has anyone written down what happens when performance slips? If no, create a performance management process—even a simple one.
Do employees know how to raise a concern without fearing retaliation? If no, establish clear reporting channels and train managers on how to respond.
Is your onboarding the same for every hire, or does it depend on who’s doing it? If it varies, create a checklist and train the people responsible for onboarding.
What Founders Get Wrong About HR
Here’s what surprises most founders: HR isn’t about cupcakes and culture posters. It’s about the bottom line. Good HR people know this.
Good HR protects your revenue. It keeps your best people longer, reduces the cost of bad hires, and makes sure you’re not bleeding time and money on avoidable employment issues. It’s a strategic function, not a support function. It’s definitely not the “happiness” department.
Despite all this, most founders treat it like a back-office problem they’ll deal with later. When someone threatens to sue or when half the team quits in the same quarter. (Or your entire marketing team quits in one day—true story.)
The mistake isn’t that they don’t care about people. The mistake is preparing too late to have a lot of people.
The One Thing You Build at 25 That Saves You at 60
If I had to pick one system to implement early, it’s this: tie your HR strategy to your growth targets.
If your sales forecast says you’re hiring 10 people next quarter, your HR plan needs to answer: Who’s onboarding them? Who’s managing them? What do their first 90 days look like? What happens if one of them isn’t working out, and how quickly do we make that decision?
That planning takes two hours for 25 people. At 60 people? It takes—what, two months? Six? I’ve seen both. The point is, you won’t have that time because you need to hire more people in the meantime. The chances of actually having time to plan become slim to none.
When you map HR to growth early, you can scale efficiently, but when you wait, you’re retrofitting structure onto chaos.
You Can’t Successfully Scale Chaos
When people know how things work, they stop guessing and start performing. When managers have frameworks, they stop waiting for the founder to make every decision. When expectations are clear, high performers stay longer because they see a path forward and feel a sense of achievement and purpose.
For founders, the payoff isn’t just compliance or peace of mind. It’s speed. It’s agility. With the right structure in place, you can confidently grow from 25 to 60, 100, or beyond.
You don’t need a perfect system. But you do need a working one. And like most systems, the best time to build it is before you think you need it.
