Ishveen Jolly, founder of sports sponsorship tech company OpenSponsorship, said it was vital to have HR as an intermediary between employees and senior management from early on.
Speaking to HR magazine, she said: "It reminded me of the feedback I sometimes got before we had HR and before we had more managers. In theory you think reporting to the CEO is wonderful, but in practice, I think it's actually really stressful."
Sodexo Engage's 2022 study found focusing on culture helps smaller firms retain staff, meaning HR could have a vital role in ensuring success.
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OpenSponsorship made a HR manager its twelfth hire after launching in 2015.
The company currently has two people working in a HR capacity out of 26 employees.
She added: "Thank God we had someone in that department so that employees have someone to talk to if there are any issues. There's just not as much outlet to discuss that and especially in a remote environment.
"HR has probably never been more important, given we're all working remotely and everyone is in different circumstances."
HR's importance in small businesses is also vital at the recruitment stage, Jolly argued, given the CEO is still actively involved in OpenSponsorships's recruitment.
She said: "Candidates may be more nervous being interviewed by the CEO. Who has their first round interview with the CEO?
"[The candidate] told me that when you get interviewed by the CEO you think that you've got the job. Having a HR person explain the interview process is helpful, and a candidate is more likely to talk to a HR person about any issues they might have had."
She therefore argued every start-up should have HR hires high on their list of priorities, especially when they think about expanding as the early stages of employment are crucial.
She added: "If people hate their job, it starts in the first three weeks, where they feel like their onboarding was terrible. They don't feel valued, they feel a bit lost, and they probably start by getting negative sentiments really quickly.
"As soon as you start thinking about scale, you should bring in HR first."
