Scaling a tech company is chaotic. Your HR infrastructure shouldn't be. Using data from 200+ UK startups, we have mapped the exact "breaking points" where you need to upgrade your people systems.
Stage 1: Founders Only
0-2 PeoplePriorities
- Register as Employer (HMRC)
- Employer's Liability Insurance
- Founder Agreements (Equity)
Common Trap
Not formalizing founder equity. "Handshake deals" at this stage lead to lawsuits at Series A.
Stage 2: First Hires
3-10 PeopleYou are hiring your Lead Dev, Sales Lead, and Product Manager. Stop using "Offer Letters" and get real contracts.
The "Must-Have" Stack
Stage 3: Product-Market Fit
11-20 PeopleDepartments emerge. Your Lead Dev is now a manager (and probably struggling). You need structure.
New Challenges
- Untrained technical managers
- Hiring velocity (2-3/month)
- Culture dilution risk
SaaS Startup (18 Staff)
Moved from Agency Recruitment (£35k/yr) to Sigma.
Saved £14,260/year
Stage 4: Scaling
21-50 PeopleThe Employment Rights Bill fully impacts you now. You need multi-tier performance systems and career ladders to stop churn.
- Compliance: First potential tribunal risks. Need "Tribunal Preparation" support.
- Compensation: Salary banding required to ensure pay equity.
- Recruitment: Hiring VP/Director level. Employer brand is critical.
Stage 5: Scale-Up & Enterprise
51-150+ PeopleThe Decision Point
Do you hire an in-house HR Director or continue outsourcing?
Sigma Enterprise: ~£100k
Strategic Focus
- International Offices (US/EU)
- Gender Pay Gap Reporting
- Investor Due Diligence
HR Cost Benchmark by Stage
| Stage | Employees | DIY Cost (Hidden) | Agency Cost | Sigma Cost | Savings |
|---|---|---|---|---|---|
| Stage 2 | 3-10 | £8,000 | £15,000 | £14,940 | - |
| Stage 3 | 11-20 | £25,000 | £45,000 | £28,740 | 36% |
| Stage 4 | 21-50 | £60,000 | £85,000 | £49,740 | 41% |
| Stage 5 | 51-150 | £120,000 | £180,000 | £70,000 | 42% |
3 Scaling Mistakes to Avoid
Aim for max 20% headcount growth per quarter to preserve culture.
If you wait until 50 people to implement reviews, you will lose your high performers.
By 20 people, you need a Glassdoor presence and careers page, or your acquisition costs will skyrocket.
