“We need HR” is the comforting lie companies tell themselves when they scale

At the start, you do not need HR.

When there are two of you, or five, or maybe even ten, work is close enough to manage through conversation. You know what people are doing. You know when someone is struggling. You know the mood of the room because you are in the room.

Culture is not something you design. It is something you live.

Then the business grows.

The founder cannot be in every conversation. The team becomes several teams. The number of relationships multiplies. What used to be obvious becomes invisible. What used to happen naturally starts to need structure.

And this is where many companies reach for the familiar answer.

“We need HR.”

Maybe they do.

But often, that sentence hides a much better question.

What are we actually trying to protect, improve or scale?

HR is not one thing

Part of the problem is that “HR” means too many things.

It can mean policies, handbooks, contracts, payroll, compliance and risk management. It can mean recruitment, onboarding, performance, learning, internal communications, employee relations, culture, leadership development and employee experience.

That is a lot to put on one person.

Yet many growing companies hire an HR generalist and hope they will somehow cover every base. The logic is understandable. It is what companies do. It feels like the next grown-up step.

But if the business is scaling quickly, the real need might be recruitment. If the culture is becoming inconsistent, the need might be manager capability. If people are leaving after six months, the need might be onboarding or expectation-setting. If the founder is becoming a bottleneck, the need might be leadership infrastructure.

“We need HR” is too vague to be useful.

It is like saying, “We need technology.”
What kind? For what problem? With what outcome?

Scale breaks closeness

In the episode, Toby shared a simple visual idea: when a company has three people, there are three lines of communication. By the time it reaches fourteen people, there are ninety-one.

That is the scaling problem in miniature.

Growth does not just add people. It multiplies relationships.

The founder who once shaped the employee experience through daily contact now has to shape it through others. Culture becomes less about personal presence and more about systems, rituals, behaviours and decisions.

This is often the moment companies misunderstand.

They try to replace closeness with policy.

But policy cannot do the emotional work of leadership. It cannot recreate trust. It cannot carry the founder’s intent into every team. It cannot decide how different people need to be supported in different contexts.

Policy gives you a floor.

It does not give you a culture.

Consistency is not the same as fairness

Traditional HR often solves for consistency.

Everyone gets the same process.
The same form.
The same review cycle.
The same benefit.
The same handbook.
The same answer.

There is value in that. Consistency protects fairness. It reduces bias. It makes expectations clearer. It helps people know where they stand.

But consistency can become a blunt instrument.

When every manager has to lead in the same way, teams lose what they actually need. When every employee experience is standardised, difference gets flattened. When every process is designed for control, trust gets squeezed out.

Growing companies need foundations, yes. Contracts, policies, basic compliance and clear standards matter.

But on top of those foundations, they need adaptability.

A team doing complex creative work may need a different cadence from a delivery team. A new manager may need more support than an experienced one. A parent, a graduate, a neurodivergent employee and a senior commercial lead may all need different things to thrive.

Fairness is not always giving everyone the same thing.

Sometimes fairness is designing a system that can respond to real human difference.

The founder cannot be bottled — but the principles can

As companies scale, people often look to the founder as the source of culture.

And often, they are right.

In smaller businesses, the founder sets the tone. They model what gets rewarded, what gets challenged, what gets ignored and what gets protected. People can feel their influence directly.

But that model does not scale forever.

At some point, the question becomes: how do you bottle the founder without cloning them?

The answer is not to make every manager act like the founder. That would be strange, exhausting and probably impossible.

The answer is to translate founder instinct into operating principles.

What do we believe about people?
How do we make decisions?
What do we protect when pressure rises?
What does good management look like here?
How do we balance humanity and performance?
Where do we need consistency, and where do we need freedom?

That is not just HR work.

That is business design.

The insurance model of HR is not enough

There is a version of HR that functions like insurance.

You hope you never need it, but when something goes wrong, you are relieved it exists.

Redundancies. Employee relations issues. Legal risk. Policies. Difficult exits. Compliance. The moments where the business needs expert guidance because the stakes are high.

That work matters.

But if HR is only positioned as risk mitigation, it will struggle to be loved. More importantly, it will struggle to drive growth.

Protecting the business is necessary. Improving the business is the bigger opportunity.

A people function should not only stop things going wrong. It should help more things go right.

Better managers. Faster onboarding. Stronger internal communication. More useful development. Clearer expectations. Healthier performance. A culture that does not collapse when the founder leaves the room.

That is where people work becomes commercial work.

Not soft. Not fluffy. Not separate from performance.

Central to it.

Look beyond HR for the answer

One of the strongest provocations from the episode was that the best person to design your employee experience may not always be a traditional HR hire.

That does not mean HR skills are unnecessary. They are vital, especially when it comes to employment law, employee relations and policy.

But employee experience design is not owned by HR alone.

Customer experience teams have been thinking for years about journeys, friction, moments that matter, behavioural insight, onboarding, loyalty and value exchange. Many of those principles apply directly to employees.

How do people find you?
How do they join?
How do they learn the system?
Where do they get stuck?
What makes them stay?
What makes them advocate?
What makes them leave?

A customer-facing leader who understands experience design may be better placed to shape the employee journey than a policy-heavy HR generalist. Equally, a fractional HR specialist may be enough for compliance, while internal leaders build the culture.

The point is not to reject HR.

The point is to stop assuming one default model will solve every scaling problem.

Spend where value is created

The episode also touched on learning and development in smaller businesses.

One example was a personal development budget: give people money to invest in their own growth, with a light business case behind it. Another was using external platforms or providers for technical learning, while focusing internal effort on the human skills most specific to the business.

That is the kind of thinking growing companies need more of.

Not “what would a bigger company do?”
But “where will this create the most value for our people and the business?”

A small company probably does not need a fully built internal L&D function. It may not need a complex performance review system. It may not need a heavyweight HR platform.

It may need sharper manager conversations.
It may need clearer onboarding.
It may need a few simple policies.
It may need external HR support on retainer.
It may need a brilliant recruiter for six months.
It may need to give employees more agency over their development.

The right answer depends on the problem.

Which means the first step is not hiring HR.

It is diagnosis.

Ask better questions before you hire

Before a growing company hires its first HR person, it should pause.

Not forever. Not to avoid the work. But long enough to ask the questions that matter.

What is breaking as we scale?
Is this a compliance problem, a capacity problem or a culture problem?
Where is the founder currently acting as the system?
What do employees need that they are no longer getting naturally?
What do managers need to carry the culture well?
Which risks need expert support?
Which experiences need better design?
What would improve performance, not just protect it?

Those questions lead to better choices.

Maybe you need a full-time HR lead.
Maybe you need a fractional people partner.
Maybe you need recruitment support.
Maybe you need manager development.
Maybe you need someone with customer experience instincts to redesign the employee journey.
Maybe you need all of those things, but not in one person and not all at once.

That is the work.

Not copying the shape of a larger company, but designing the people system your business actually needs next.

The takeaway

“We need HR” is comforting because it sounds responsible.

It signals maturity. It says the business is growing up. It offers a familiar answer to the messiness of scale.

But growth does not ask for familiarity. It asks for intention.

The real question is not whether HR matters. It does.

The real question is what kind of people capability will help your business grow without losing its humanity, energy or edge.

Sometimes that is HR. Sometimes it is leadership. Sometimes it is experience design. Sometimes it is a smart mix of internal ownership and external expertise.

The companies that scale well will not be the ones that simply add HR because everyone else did.

They will be the ones that build people systems around balance: enough structure to protect fairness, enough adaptability to honour difference, enough commercial focus to drive performance, and enough humanity to make growth worth being part of.

Because culture should not be the casualty of success.

It should be what fuels it.