Culture Before The Cart

You may have heard the age old idiom “put the cart before the horse.” Since the horse is best found pulling the cart, this expression refers to doing something opposite to which the natural relationship would suggest. In our particular case, culture is the horsepower and your business is the cart. Not only is there an essential relationship between the two but as a startup looking to prosper, you need to work at creating your own culture and prioritize culture in order to maximize its speed and growth.

Culture can include anything from the desks employees sit at to being transparent about who you are as a company, what you are doing and why you add what kind of people to your team. We talked to Andreas Fischler of frontify about managing culture in a company from three employees to seventy and why nailing your recruiting process is really about marrying your culture with employee fit. We’ve broken down the recipe to scaling and culture into three elements:

Know Your Culture

If the Shoe Fits

Checking In and Checking Out

To listen to the entire episode with Andreas, click here.

Know Your Culture

Knowing your culture means having a transparent understanding of your processes and values surrounding them. In other words, know how you want to work and how you want people to be treated at work. It seems intuitive that your employees want to be treated fairly, trusted with responsibility and approached with honesty but such elements should never be taken for granted. Sit down with your team and jot down your values so not only is every voice heard but everyone is on the same page.

The bigger your company grows the bigger the gap between employees and higher up will become. Communication becomes distorted and the relationships between various levels becomes incredibly complex. Rest assured that culture is based on every single person in your company and by those on the outside like clients and your competitors and what they say about you. Invest time in going face to face with the people who are connected to your company in one way or another and when you do put in the face time, make sure to:

• Actively listen to people and their needs
• Create a comfortable discussion platform
• Be as simple and clear as possible
• Find time after discussions or meeting for self-reflection and self-evaluation

If The Shoe Fits

A motivational poster might fill a blank space on the wall, but know that the people you hire will say a lot more about the culture and motivation in your company than any decorative attempt at inspiration will. An employee who doesn’t fit your vision will leave you with blisters and an uncomfortable work environment so it’s critical to hire people who connect well to your vision.

Ensure that you bring the right people in by

• Evaluating their motivational letter
• Evaluating their CV
• Starting with a 30 minute video call
• Visiting on site for an hour long discussion one on one
• Inviting candidate for half day visit where they can engage with a large amount of the team

Ask the right questions by assessing

• What is the candidates motivation for applying
• How they handle responsibility and complexity
• Their openness in character and if it matches your established culture along with their sense on your teams’ culture
• Skills and life experience

Negotiating Culture Friendly Salary

• Be transparent about which pay grade levels exist, with a detailed account of requisites for each level. For example: entry, senior and executive can be clearly defined by years of experience and the role you’re recruiting for.
• Ask potential employees about how much do they need for their living costs
• Create value outside of salary such as offering a true sense of freedom, modern and diversified work environment and work from home flexibility.
• Offer stock and salary options which tailor to employees of the same skill set but different life situations who may be able to afford varying amounts of risk or require more cash. Allowing your future employee to choose how much they want to invest based on their living situation instills a greater sense of control for the employee and encourages their commitment to the company through stock options. Remember to ensure your shares are based on current company valuation to fairly compensate for reduced cash percentages.

Checking In and Checking Out

When it comes to on-boarding new employees, it’s important to create an expectation with your team that the new employee creates more short term work but with the goal of greater long term outcomes. Team members will need to put the effort in to get to know new employees and welcome them in to the team. This, along with a structured on-boarding process from an administrative and technical side will make or break the successful kindling of your evolving cultural flame.

Being productive in managing your company’s culture means holding weekly one on one’s with your direct reporters, taking note of issues coming up and carrying them into weekly management meetings where your CEO and mid-level management can all come together. Try and do an all hands team meetings at least once a month.

As your team grows and your time for a one on one check in or team lunch narrows, try sending out a monthly or quarterly happiness survey as a culture and communication check up that you can react on accordingly. Hopefully, with open and transparent communication about culture and office vibes you’ll be able to recognize inconsistencies early enough to tackle them before they spread. Discuss these issues early and openly, collaborate on problem solving and check in a month later on the state of its progress.

If the culture is still being polluted it might be in the interest of the team to let that individual go. Although it’s certainly challenging to let people leave the family after having invested in them and grown together as a team, the more you explain the issues and have an open discussion about it the more it can alleviate things. The way you handle people leaving the team should be no different to the incentivized way you bring people in. All interactions both inside and outside of the company will have an impact on your team culture.

Lastly, don’t forget to lead by example. Your team notices everything from who you hire in terms of diversity and values to how much holiday you take. A team with a strong example is a strong team.

BONUS: Best Practice in Negotiating Salary

First, evaluate the market compensation for the position based on role and seniority. Market compensation is generally dictated by the same position in a large company such as Microsoft, Facebook, or Google and can be found online through salary surveys such as this one.

Then, determine the amount of cash that the new team member would need to live comfortably by taking into consideration the size of the employee’s family and their required budget for housing, food, transportation, child expenses, etc.

Although your startup may not have the same amount of cash as the large companies have it is still the responsibility of the startup to offer equitable compensation. Offer enough cash for the employee to live comfortably and bridge the difference between the remaining market level compensation by offering equity.

Consider the following example to help calculate your equity offer:

A Level 3 Engineer is paid $300,000 in total compensation at Google. At your startup the prospective employee requires $120,000 in cash to live comfortably, and wants to invest the remainder in startup equity. The amount of equity is calculated by taking the difference between market compensation and cash ($300,000-$120,000=$180,000), and multiplying it by 4 years ($180,000 x 4 = $720,000).

This amount is then divided by an estimate of the increase in value of the equity over four years, usually a factor somewhere between 1 and 2 where 1 represents no expected increase in value and 2 a 2x expected increase. Most commonly the factor of 1.5 is used. In this example $720,000 is divided by 1.5 and results in the amount of $480,000 as equity purchased at the company’s current valuation and vested over four years.