Talent management is often associated with large corporations with complex systems, complete with structured recruitment processes and hierarchical career development. However, for startups and micro, small, and medium enterprises (MSMEs), talent can determine whether a new business survives long before such formal systems are even established.
This phenomenon was highlighted by Naya Hapsari, Ph.D., an academic in the Department of Management at the Faculty of Economics and Business, Universitas Gadjah Mada (FEB UGM), who explored talent management transitions in startups for her doctoral dissertation in Norway. She shared her findings on the FEB UGM Podcast titled “Talent Management in Startups and MSMEs: Challenges and Strategies,” alongside Arthur Koentjorowibowo, Founding Partner of Metamorph.
Naya explained that her interest in the topic began with conversations with startup founders in Yogyakarta. At the time, she was asked how a startup should manage its team when members leave, and its organizational structure continues to change, while the company is still struggling simply to survive.
“They asked how a startup should manage its team when a member decides to leave. The organizational structure also often changes, even though we are still struggling to survive,” she said during the podcast.
The question led her to interview startup founders and CEOs, as well as representatives from the external startup ecosystem in Southern Norway, for her dissertation. From these interviews, Naya found that the academic definition of talent management, which generally refers to formal and structured recruitment and development systems, shifts significantly when applied to the startup context.
“They see it not as something formal or a structured system, but rather as providing opportunities for people on their teams to grow while continuously giving them autonomy and flexibility,” she explained.
In her research, Naya mapped three stages of talent management development in startups: the early-stage, transition, and scale-up phases. During the early stage, teams are still very small, and recruitment relies heavily on the founders’ personal networks due to limited capital. Naya noted that around 70 to 80 percent of startup teams break up at this stage because team members feel that they do not receive adequate financial support.
As startups enter the transition phase, they become profitable and require more team members. Naya explained that recruitment based on personal networks affects team composition, prompting companies to gradually adopt more formal recruitment processes. The final phase is the scale-up stage, when the organization grows significantly and greater formalization becomes necessary as processes involve more people.
Arthur considered these three stages relevant to the Indonesian context, although recruitment networks during the early stage often involve family members, rather than simply friends. He highlighted the transition phase as the most challenging period, as founders who have spent years handling everything themselves often struggle when the organization begins to require more people.
“Because they have usually been doing everything themselves for years, the founder’s transition to leveraging team members becomes a challenge. They are accustomed to doing things on their own, so when the time comes to delegate, they are not used to it. As a result, team members become frustrated because they are not empowered,” Arthur said.
During the scale-up phase, Arthur noted that new challenges emerged, including the need for middle management. According to him, this layer can become a new obstacle to executing leadership directives because the speed of thinking at the top management level does not always translate smoothly into implementation.
“If we are hindered from moving from idea to action, the speed at which top management develops ideas does not necessarily translate into execution as expected, because middle management may not be capable or may not be able to keep up with the way top management thinks,” he explained.
In addition to organizational structure, limited capital during the early stage often leads startups to offer equity ownership as a substitute for adequate salaries. Naya gave an example of a source who joined a startup as an early partner, was subsequently offered equity ownership, and eventually became the company’s CEO when it reached the scale-up stage.
Meanwhile, Arthur highlighted Indonesia’s cultural diversity as a factor that can either strengthen or hinder talent management. He noted that founders who tend to recruit people from similar backgrounds for ease of communication and familiarity may overlook the potential benefits of Indonesia’s vast ethnic and cultural diversity.
“Diversity can be optimized for business development. However, diversity can also become a barrier because some founders tend to recruit people from similar backgrounds. As a result, the cultural diversity of people across Indonesia is not fully optimized,” he said.
Despite these challenges, Naya and Arthur agreed that as times continue to change, human qualities such as character and people skills are becoming increasingly important in talent recruitment. Arthur emphasized the importance of recruiting based on character, while Naya added that communication skills and empathy are among the factors most frequently identified as determinants of team success.
“We have to emphasize that finding talent or team members to join our business is all about behavior, about attitude,” Arthur said.
The full episode of the FEB UGM Podcast, titled “Talent Management in Startups and MSMEs: Challenges and Strategies,” is available at: http://ugm.id/ManajemenTalentaStartUp.
Report: Dwi Zhafirah Meiliani
Editor: Kurnia Ekaptiningrum
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