Why HR Is The Key Component To Company Success

Crytpo fallout and industry collapse signal weak links in company structures

In a thriving corporate landscape given to evolution with new industries constantly developing and gaining legitimacy, it’s not unusual to overlook the steps required to earn the regard of established industries.
 
Mainstream businesses already dominate the playing field which global commerce is built upon, but they didn’t get there by cutting corners and slashing best practices. They developed them. 
 
We’ve just witnessed the collapse and dissolution of several companies as FTX filed for bankruptcy. Others in the crypto exchange industry like BlockFI, Celsius, and Genesis, have suspended account withdrawals in the avalanche currently reshaping the face of cryptocurrency.

One lesson writ loudly on the growing pile of ashes is that a lack of internal checks and balances—e.g. no HR department amongst many others—played heavily into FTX’s cataclysmic demise.  

Build Internal Systems that Set You Up for Success 

The error we see most often at the granular level of any business structure is how new and emerging markets like cryptocurrency fail to treat their business with the respect and diligence seen in established industries. 
 
The temptation is to cut corners. It always is. When we apply our analysis to what happened with FTX and the other dominoes that continue to fall as the issue spreads through the crypto exchange market, a pattern of neglect surfaces. 
 
We see it in other markets that are still new such as the cannabis market. The refrain might sound like this, “We’re new. We’re young. We’re slick. We don’t want to run like a standard old school corporation.” 
 
When an industry fails to police itself by applying long-standing models and reliable structures, e.g. self-governance, the question we bring to the table is— does this industry deserve to be regarded as legitimate? 
 
We know from decades of applied psychology that taking oneself seriously is the quickest route to earning the respect of one’s peers. But what does that look like, on a corporate level? 
 
Put simply, the application of long-standing models and corporate structures build credibility. Setting up internal audit systems, an HR department, and quality control measures speaks to the expectations a company has for itself. 
 
It’s in the best interest of any new industry hoping to see exponential and healthy growth to adhere to specific models with a healthy dose of internal regulation that tells the rest of the world that you mean business. 
 
Pun intended.  

HR Isn’t Out of Style. People Skills Are Always in Style

As we preach self-awareness here to upstarts like the cryptocurrency and cannabis markets, we’d be remiss to not acknowledge the moth-ball taste in the mouth that “HR department” inspires. 
 
Yes, it’s not tasty. Yes, it makes us all think of a lonely water-cooler, bad coffee, and binders with guidance on how to run things at a company-wide level. What a drag. 
 
Let’s be real—HR is more than just binders and processes and procedures and drug and harassment training. It’s awareness at a people-level of what’s happening at a corporate level and how that trickles down to the employee level. 
 
HR isn’t the only department that we believe could have benefited FTX, although the purported lack of one may have directly contributed to the mass failure to control what was happening within the company. 
 
“Those failures apparently included lax HR practices for a company as complicated as FTX. According to Ray’s filing, ‘FTX Group’s approach to human resources combined employees of various entities and outside contractors, with unclear records and lines of responsibility,’” Quartz reported on November 17th (the article begins with the very cutting opening line of, “No one is sure who works at FTX.”). 
 
Outside watchdogs should not be the parties responsible for policing a corporation. Legitimacy for an industry that wants a place at the table with the big dogs must take matters into its own hands. That begins with self-governance. 
 
As fledgling companies grow into large corporations, the application of long established structures that include internal watchdogs, audit departments, and yes, people departments (HR), are necessary to survive and thrive in the complex world of business.  

Take Control of Your Business and Then Thrive 

While it may be easy to dismiss the implosion of these multiple businesses in a new market space as growing pains (they are), they don’t have to be quite so devastating. It’s our estimation that they wouldn’t be if executives at the forefront took their role seriously enough to organize their businesses. 
 
That may mean seeking outside consultations and expert guidance to understand just how to do that, depending on a business’s size and what its long term goals are. 
 
Within the destructive fires of a catastrophe like what we’ve seen at FTX and inside the cryptocurrency exchange space, we see a beautiful lesson—growth doesn’t have to mean the sacrifice of self-governance and security. Market disruptors, emerging industries, and being on the leading edge of progressive thought doesn’t necessarily imply danger and risk.
 
It can signify progress without the sacrifice of certainty.  

Jason Walker and Rey Ramirez are Co-founders at Thrive HR Consulting, a minority-owned HR advisory that provides value-based HR support for mergers and acquisitions, C-Suite executive coaching, employee relations, DEI and belonging, performance management, employee engagement, and talent acquisition.