The People Infrastructure Behind Growth

For many founder-led, lower-middle market companies, HR starts out as a set of tactical functions, such as running payroll, managing benefits, and handling the basics of compliance. But as businesses scale, this patchwork approach to human capital begins to falter. Without a strong human capital foundation, companies struggle to scale their teams effectively, integrate new employees post-acquisitions, retain top talent, or align performance with business objectives. Culture becomes inconsistent, systems can’t keep up, and leadership spends more time fixing issues than driving growth.

The magic of human capital isn’t in the payroll system, it’s in creating the space to focus on engagement, alignment, and scalability. That shift only happens when the fundamentals are in place. By building an operational HR backbone early, companies gain the ability to grow intentionally with processes, people, and leadership structures that evolve alongside the business. The companies that succeed in scaling are the ones that get their people strategy right from the start.

Here are three critical components to building a human capital infrastructure to support future growth:

1. Laying the Operational Foundation

To build a human capital infrastructure that can support scale, it is essential to put foundational systems like HRIS, employee benefits programs, and detailed policies and procedures in place. These building blocks are critical to supporting future success and cannot be overlooked. We typically see opportunities in growing organizations to strengthen employee policies, connect HR systems, enhance benefits programs, and create more structured onboarding experiences. While these functions are not directly revenue-generating, they are crucial to attracting top talent.

Across the NewSpring Holdings portfolio, we’ve seen growing companies transform their HR operations by automating manual administrative tasks and connecting systems that previously operated in silos. In one example, a 100-person technology and engineering services company eliminated 16 hours of manual payroll and benefits processing each pay period by integrating its systems. The result was not only efficiency but also a shift in focus, freeing HR leadership to spend time on engagement and development initiatives that strengthen culture and drive long-term value.

2. Scaling Intelligently from Ops to Engagement

Once the basics are in place, companies can shift their focus from compliance to effective employee engagement. Employee engagement can take many forms, including performance reviews, compensation frameworks with incentive components, employee development plans, and succession planning. When creating a structure for engagement, it is important to keep in mind the ultimate objective -- helping CEOs build and retain high-performing teams that align with the business’ long-term goals. While performance and compensation typically receive most of the focus and attention from HR departments, leaders must spend time developing a consistent and repeatable process to evaluate, rank, and grow talent. This process is essential in maintaining order and structure that keeps the overall HR system in place and drives business value.

Integrated talent management (ITM) systems add significant value to the employee experience. ITM is the holistic and strategic approach of connecting all facets of the employee lifecycle to develop and grow employees. ITM goes beyond ensuring individual employees receive the development they need. It’s the entrepreneurial approach of investing in your people in ways that drive business growth. By leveraging ITM, business leaders can ensure their efforts lead to overall company value and success.   

3. HR in M&A: Setting the Stage for People Integration

M&A is an important chapter in many middle-market companies’ growth stories, and HR has a critical role to play in integrating the acquired teams effectively. Having foundational systems and processes in place allows new employees to be mapped faster, engaged quicker, and brought into a unified culture. Without a plan, people can fall through the cracks of integration, minimizing their impact on business value. By aligning talent strategy with the combined company’s growth vision and long-term organizational design, acquired employees feel more closely connected to the business mission and can start creating a positive impact right away.

We’ve seen the most successful integrations happen when planning begins early, often during diligence. For example, a mid-sized government services firm serving the national security and defense sectors that completed a series of acquisitions over several years began mapping benefits, reporting lines, and compensation structures before the deal closed. That early planning was matched by a vigorous and highly structured communication effort, with leadership hosting Q&A sessions, distributing detailed FAQs, and holding team-level meetings to ensure every employee understood how the integration would affect them personally. By maintaining this steady cadence of clear, empathetic communication, the leadership team built trust, reduced uncertainty, and accelerated alignment across newly combined teams.

Human Capital is a Catalyst for Growth

In early growth stages, it’s easy to view HR as a checklist of hiring and payroll runs. But building a scalable company requires intentional systems, leadership alignment, and a clear plan for how your team grows with your business. At NewSpring Holdings, we partner with CEOs to build the kind of Human Capital infrastructure that supports performance, engagement, and M&A readiness. When done right, human capital becomes a catalyst for growth.