Why do startups fail? – This seems like a straightforward question, and, depending on who you ask, a lot of answers will pop up except perhaps the most important one as far as long-term startup success is important: culture.
Being funded is important, marketing is critical and creating the right products that the market wants is absolutely essential. However, company culture is just as critical. Research from Gallup.com shows that 70 percent of employees are unable to work to their full potential, costing the U.S. economy around $550 billion in lost productivity annually. In fact, statistics show that productivity in the U.S. has declined by more than 8 percent since 2005.
Big corporations can afford to have their employees underperform, but as a startup, you can’t afford not to get the best from employees. How do you boost productivity then? Work on company culture.
According to a Columbia University study, job turnover at an organization with low company culture is a whopping 48.4 percent compared to just 13.9 percent at an organization with high company culture. More interestingly, research shows that having unhappy and unmotivated employees can reduce revenue by up to 28 percent. As a startup, working on culture not only helps you retain your valued employees, but it will also maximize employee productivity and have ripple effects across your organization.
A great study to the power of company culture is Sony Pictures: used to having employees work like automatons and trying to get as much as they can out of employees without regards for their needs, like many other companies, Sony Pictures decided it was time for a change. By addressing the issue of company culture — first by stopping their expectation that employees need to act like automatons, and second by meeting employees’ physical and emotional needs — Sony Pictures had its most profitable year ever in 2008 and its highest revenue year in 2009, despite the recession.
Here are some tips to help you improve company culture at your startup:
1. Make Your Vision and Purpose Clear: Why are you in business? What do you stand for? The first step towards creating a strong company culture is to clearly articulate your vision and purpose; employees need to know what they are working for beyond the pay.
Just as important, make sure you identify your company’s core values and ensure that every employee is aware of it. This should drive day-to-day activities as well as employee action.
2. Focus on Your Employees’ Well-Being: There’s no point in trying to separate the personal and professional lives of your employees — both are inextricably intertwined, and you can either ignore that fact or key into it. How is the personal and emotional wellbeing of your employees? If this suffers, then very likely their ability to perform at work will suffer too. Research shows that an employee’s emotional stability plays a great role in the employee’s success at a job.
You don’t have to start digging into the personal affairs of employees. Instead, create initiatives that take care of their well-being; for example, make sure employees do not have to worry about healthcare as well as life after working at your organization and you instantly increase their commitment to your success. More importantly, make sure your employees do not just feel like automatons; actively solicit their input and make sure they see that their input is valued and considered in the decision-making process.
3. Emphasize the “WE”: Great cultures are built on teamwork. As a leader, one of the worst ways to destroy the spirit of your employees as well as your startup culture is by ignoring the “we” when it comes to celebrating successes. In many organizations, it is only a teamwork when it’s time to do the job. When it’s time to take credit, however, it all goes to the leader. This will only kill employees’ spirit and motivation to give their best.
When it’s time to get into the trenches and do the work, make it a team effort. When employees make things happen, and it’s time to take the glory, let them know it is their work — and that it couldn’t have happened without them.
4. Ruthlessly Protect Your Company Culture and Team Spirit: Many startups constantly work to define and improve company culture, but very few realize and take action against factors that could be undermining the company culture. A study found that having a jerk or slacker in a group can reduce team performance by 40 percent. Nothing kills the spirit of a team more than having to work with an unrepentant sloth and jerk who gets rewarded the same as them.
If a particular employee isn’t aligning with your company culture, work with that employee to fix things. If your approach to fixing things isn’t working, perhaps it’s time to let that employee go.
Author Bio: John Stevens is an editor on HostingFacts.com (best hosting reviews). He is also a regular contributor to Adweek, BusinessInsider and Internet Retailer.