Fast growth startups present risks for company culture

Josh Peachey's picture

Mark Loftus, Founder and CEO of CharacterScope, takes a look at the balance between growth and company culture. Here, he details how a successful startup should get the best from both.

 

A founder’s journey, when embarking on the startup life, is a precarious balancing act of realising hopes and dreams and building a team around you. A founder’s vision is their singular focus, their ultimate goal. But in order to achieve it, they need to grow the company into a viable, functioning business, with a healthy workforce and a viable proposition for investors and buyers alike. 

But in most cases, running a fast-growth business leads to internal and external pressures. As startups embark on that quickly accelerating upwards trajectory, the commercial realities of fast growth will begin to bite. The need to balance both investor expectations and business goals, as well as growing a workforce to keep on track with the day-to-day workload and need, will create an inevitable dichotomy between workplace culture and the need to hire.  

While a founder may have set their stall out with a set of values at the beginning of their journey, at some point a hiring manager will have to make a decision relating to the needs of the business vs. the cultural needs of the workplace. This can create a team of competent individuals at odds with each others’ values, but this doesn’t have to be the case.

Fast growth shouldn’t mean fast and loose with company values. Of course, there will always be a need for compromise from both parties but businesses should always consider prioritising the needs of their staff ahead of anything else. A workforce with shared goals, values, and cultural need, will create a more disciplined and focussed team - and create dividends for the business.

You only have to look at the column inches dedicated to recent missteps at companies like Revolut to show you how a mistreated workforce can backfire on your business. The mistakes made at Revolut when chasing growth were splashed across the news, baring the companies issues for all to see. In the midst of chasing gains, they involved prospective employees in suspect interview practices. And by compromising themselves, they’ve been on the end of some less than complimentary Glassdoor reviews, exposing the shady practices to the world. 

And while from the outside it might not look like this had a particularly detrimental impact on growth, the splash of news coverage that revealed these issues was enough to bring down a series of high profile employees while the CEO embarked on a media relations tour to soothe staff and investors alike. The damage may be long lasting…

Of course, Revolut aren’t the only ones guilty of this - they are simply the most high profile cases of a widespread challenge within the startup community. Glassdoor, as is their name and prerogative, have been opening people’s eyes to what goes on behind the curtain at startups across the world. Culture Trip, a digital publisher, has also seen the wrath of their staff on Glassdoor. Reviews highlight a lack of standards across the business, bad management, and lack of any culture at all. 

A negative or imbalanced workplace culture offers more risk than it does reward. Consider the employees of your business: if the culture within their office environment is detrimental to their work, it’s likely they will seek a new place to work once their patience has worn thin. And that’s when the negativity travels. They will have a renewed sense of what they are looking for and a greater understanding of their own worth within the workplace. A previous bad experience will make them aware of the signals to look out for in terms of bad vibes.

But how do these businesses get it so wrong? The simple answer is that values and culture get a lot of lip service but it’s simply not backed up. Founders and CEOs can talk in glib terms about building a business, splashing phrases like teamwork across the walls, and offering up platitudes about how the investment is only because of the strength of the team, but if they don’t back it up, then it will only ring hollow. 

Indeed, there is an intrinsic relationship between company culture and employee values. They work together, hand in glove, and you simply can’t create a workplace culture that fulfills the needs of your employees without clear staff values.

While this is a management-led process, you need to know what makes your staff tick and what will help guide them through their daily work.

Fast growth and good company culture aren’t at two ends of a scale. If you get the latter right, it will contribute to the former. A business with a good strategy executed effectively can succeed. A business with a good strategy and a focussed, engaged workforce will succeed at an even more effective rate. 

How to get it right 

First, focus on your shared sense of purpose. Your staff are there to help build and deliver your vision. They can have as much autonomy and purpose as you allow - and the more you trust your staff, the greater the reward. But they also need to trust you: fast-growth startups are often seen as vehicles to make board members and investors a quick buck, rather than somewhere employees can thrive and grow in a job. They need to know that the statement of purpose is more than a bunch of words on a powerpoint slide, but something that truly excites and drives the founders. 

Second, actively instil the culture you and your staff require and desire from the outset. Be open about what aspects of this culture are a natural fit with you and your co-founders’ characters, and which aspects are going to be difficult. Give your staff scope to influence and own these values and ensure that it is they who identify ways of bringing them to life. 

Third, as a founder, keep actively involved in the hiring decisions. You may feel you don’t have time, but make it a priority. Make one or two tough calls on people who don’t share your values, no matter how stellar their CV, and the rest of your team will get how serious you are. 

Fourth, stay involved in the firing decisions and be prepared to exit people who play fast and loose with your culture - no matter how technically competent they are. Cultural bandits can be like cancers that sap the life-spirit from teams. 

As a business, your ability to grow ultimately will completely depend upon staff retention. In an era where culture so often means nothing more than a couple of free beers and a table tennis table, companies that invest in getting their culture right will open themselves to benefiting from a strategically important source of competitive advantage.