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Why start-up culture matters

Company Culture

Marketing Wizdom is interested in all aspects of building a business, with dozens of posts that extend beyond marketing. One post examined the characteristics of Generation Y and how that affects the present labour force.

But it isn’t just new recruits that come from the 20-something generation; they also climb corporate ladders and run a plethora of start-ups. And even if they aren’t someone’s boss yet, they will be someday. In today’s post, Julianna Davies investigates how the new generation of employees is changing workplace culture with an emphasis on the self as well as the product. Julianna also writes for http://www.mbaonline.com/, a resource for people who are interested in obtaining MBAs.

Out With Old MBAs and Status Quos and in With Openness and Mid-20s CEOs: Start-Up Culture

Much of the job growth in today’s economy is spurred by start-ups. Entrepreneurial ventures often have the energy, talent, and passion necessary to run with creative new ventures. While a good idea and a dedicated CEO are essential to start-up success, corporate culture—the tone and atmosphere of the overall organisation and the relationship between its employees—is also essential.

Many fresh-faced entrepreneurs overlook corporate culture, figuring it will work itself out once things get up and running. But experts agree that being intentional about culture is one of the best ways to ensure success. It typically requires investments of both resources and time at the outset, but it pays out in kind. Happy employees who feel valued can be the difference between a start-up that flourishes and one that flops.

Company culture is often defined as the overall “feeling” of a workplace. How employees interact with both peers and supervisors, how clearly their work expectations are set, and how content they are to be doing their jobs is all part of the equation.

Overarching corporate goals and vision also play a part, but companies that pride themselves on honesty, creativity, and production usually find that these values naturally manifest themselves in their culture.

Recent studies have shown that companies who invest in their people tend to do better in terms of net profits and shareholder rankings than those whose culture is either nonexistent or negative. Most of the time, a positive corporate culture is good for both workplace morale and the bottom line—two things that are particularly important for new businesses and emerging start-ups.

“Engaged managers and employees are much more likely to remain in an organisation, leading directly to fewer recruits from outside the organisation,” James Heskett, Harvard Business School professor, said in his most recent book, The Culture Cycle. “This, in turn, results in lower wage costs for talent; lower recruiting, hiring, and training costs; and higher productivity…Higher employee continuity leads to better customer relationships that contribute to greater customer loyalty, lower marketing costs, and enhanced sales.”

Striking the right balance can be difficult, however. Entrepreneurs must find a way to both encourage employees to express their individuality and to produce quality work that makes the most of their skills and abilities. Too much focus on either area can be devastating.

Zynga, a web gaming start-up, has come under fire recently for working its employees too hard. The culture at Zynga is, from the outside, quite positive: employees enjoy a lot of flexibility, the workspace is designed to be bright and cheerful, and perks include fitness plans and lavish corporate outings.

During the day, however, employees report feeling defeated and overwhelmed. “The heavy focus on metrics, in this already competitive industry, has fostered an uncompromising culture, one where employees are constantly measured and game designers are pushed to meet aggressive deadlines,” the New York Times reported in a 2011 article. “While some staff members thrive in this environment, others find it crushing. Several former employees describe emotionally charged encounters, including loud outbursts, threats from senior leaders and moments when colleagues broke down into tears.”

The opposite extreme—an intense focus on positivity and infallibility—may not be much better. Employees at oil giant BP reported a huge dip in culture and morale after the 2010 Deepwater Horizon oil spill.

According to an article in the San Francisco Chronicle, the spill’s publicity highlighted a major cultural problem. “BP was an example of a company possessing virtually all of the psychological weaknesses of companies headed for disaster: excessive optimism, overconfidence, choosing high risk to avoid having to accept an unfavourable outcome and turning a blind eye to warning signals,” the Chronicle said. “The daily headlines focus almost exclusively on the details associated with Deepwater Horizon. However, an equally important issue for the future involves what BP must do to heal its problematic corporate culture.”

Success usually depends on open communication and mutual respect between employees and employers. Google’s positive corporate culture is an apt example. This company, once an unassuming start-up, has evolved today into an international Internet giant—and founders credit their employees above all else. “It’s really the people that make Google the kind of company it is,” the company says on its culture page. “We strive to maintain the open culture often associated with startups, in which everyone is a hands-on contributor and feels comfortable sharing ideas and opinions.” The company has an open-door policy that encourages dialogue between all employees, regardless of their status.

Once a company’s leaders have established the basics of the culture they want to achieve, identifying the right employees is the next hurdle. “The process of selecting a candidate with appropriate cultural fit can be a ‘make or break situation’ particularly within small businesses,” TribeHR, an industry blog, says.

Much of this comes down to recruitment. Entrepreneurs should use the interview process not just to gauge a candidate’s experience level, but also as a means of determining how that person will uphold, contribute to, or enhance the culture.

“Human resources departments should tweak their recruitment process to include interview questions that ask about the way a candidate approaches a situation,” Linda Sorbera, global human resources director at business consulting company MRM Worldwide, advised in an article for Direct Marketing News. “Even if it means turning away a highly skilled employee, recruiting the right culture fit will produce results.”

Creating a corporate culture is about vision, people, and communication. When all three work together, the results can be staggering. This does not happen by accident, though. Entrepreneurs and young executives must take steps to plan out their cultures; adjust when necessary; and actively seek the right team members. Few things about succeeding in a start-up are easy, but this is one place where getting it right shouldn’t cause a lot of stress.

Please share your thoughts and add your questions to the comments below. I’ll try to provide as many answers as possible in my future online videos, seminars, workshops, masterclasses and blog posts.

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