Early-stage Startups Approach Building Company Culture

Ever since the Great Resignation began in 2021, organizations all over the world have placed great impetus on improving company cultures. According to MIT researchers, toxic corporate culture is 10.4 times more likely to cause attrition than low or inadequate compensation and 20% of employees leave their jobs because of the company culture.

Gallup, a management consulting firm, noted that replacing an employee can cost up to twice that employee’s annual salary. At a startup stage, this kind of attrition will not only deplete cash reserves but also disrupt productivity and slow down the momentum needed for growth and innovation.

Hence, in this article, we will review some strategies for early-stage startup culture development and how you can go about scaling company culture as your organization grows. Read on to know more!

How to Build a Strong Startup Environment?

To build a strong startup culture several key strategies should be considered consisting of the external ecosystem and internal culture of a startup. In this section, we will explore some strategies for early-stage startup culture development.

Define your mission and vision

Sharing your company’s vision helps attract individuals who are motivated by its mission and eager to contribute to its success. This vision will serve as a North Star or a tether, especially when your employees feel uncertain about the big picture or their role in it. 

The next step is to define your milestones you want to achieve as well as the strategies and core values that will be followed on an organizational level. In addition to defining key metrics, the mission should also outline ethical considerations and specify the kind of attitude and behavior expected from the employees.

Hire the right people

A startup’s culture may be defined by the startup leadership, hence it is important to choose the right people to join your team. As a founder, micromanaging every single department or team that forms over time. You can only prepare a sound foundation upon which the employees must build a positive company culture. 

Promote collaboration

Your managers and team leaders must present themselves in such a way that people feel comfortable asking questions and presenting novel ideas. Startups should also invest in productivity tools that promote seamless collaboration between stakeholders and efficient project management. Such tools play a huge role in catalyzing projects that require cross-department collaboration.

Work-life balance

A common pitfall that startups fall prey to is overworking in pursuit of achieving extraordinary growth. Even the most dedicated employees would lose motivation if they feel that long working hours and unreasonably high expectations are blurring the boundaries between work and personal life.

Founders have the power to effectively reduce the work-life imbalance for your employees. You can do so by providing employees the flexibility to work remotely or balancing demanding days with the option to log out early the next day. Furthermore, instead of managing increased workloads with the same team, you could look into outsourcing certain tasks or expanding the team to ensure that employees are not overburdened and can maintain a healthy work-life balance.

Utilize employee stock ownership plans (ESOPs)

There’s no better tool to align your employee’s efforts with your startup’s goals than employee stock ownership plans (ESOPs). They are widely used to attract and retain talent and for good reason. When an employee comes to own your startup’s shares, they gain a direct financial stake in its success, motivating them to make decisions that align with the company’s growth and valuation.

Such a mindset is extremely beneficial in creating a strong company culture as it truly unifies an organization. ESOPs promote a collaborative mindset, encouraging employees to work together towards shared goals rather than focusing on individual achievements.

At managerial and executive levels, you can offer performance-based equity compensation to incentivize key leaders to proactively remove obstacles and drive your startup’s growth.

Scaling Company Culture

As your company grows and new people join your team, preserving the company culture is quite important. A startup that does not scale its company culture as it scales new heights will experience stunted growth. Two things you can do for scaling company culture are:

Identifying and promoting leaders internally

As your team grows in number, it will become challenging for you to educate each team member about the company culture. Hence, you must delegate these duties to someone internally, with exceptional communication skills who will fail to convey the beliefs behind the company values.

You must identify such individuals, shortlist the ones with leadership qualities, and promote them to managerial positions where they can help reinforce the cultural values that have driven the company’s success.

Fostering communication channels

Effective communication, right from orientation to day-to-day interactions, ensures that a startup’s core values, mission, and vision are understood and inherited by new members. You must ensure that your employee handbook includes easy-to-interpret sections on the company mission and vision. 

Additionally, you must instruct old employees and managers to guide new hires regarding company culture. You can also hold regular town hall meetings where employees can get a firsthand experience of the company culture.

Reevaluate and rebuild organizational culture

As your startup moves forward in its journey, certain aspects of its culture that once accelerated and supported its growth may start hindering its development. Hence, it is important for you to periodically reevaluate your organizational culture and make adjustments as needed to ensure it remains aligned with the company’s evolving needs.

To foster an inclusive environment that supports and empowers employees from all backgrounds, it may be necessary to move away from practices that benefit only certain demographics and introduce more inclusive policies that promote diversity.

Similarly, as the number of employees and teams increases, to avoid micromanagement, you may need to transition from a fluid, informal structure to one with clearer chains of command.

Such changes are essential to maintain core values amid changes.

Eqvista- Strengthening culture through compliant equity! 

By defining your startup’s identity in its mission and vision statement, you are taking the first step toward creating a strong company culture. These statements outline the story you are inviting people to be a part of and guide employees in moments of uncertainty.

Once you have defined your mission and vision statement, identifying people who will fit within your company’s culture will be easier. For a company’s culture to lay roots and grow organically, you must incentivize people to work collaboratively and cohesively. At the same time, it is important to foster innovation arising out of individual brilliance.

As your startup grows, you must identify leaders internally who can share their deep understanding of the company culture with new hires. Another means of ensuring that your company culture endures the company’s growth is effective communication channels.

Offering ESOPs is a good way to unify efforts and boost performance. When you do so, you must get a 409A valuation from an independent valuation expert like Eqvista to stay tax-compliant.