- Juliana Davies writes for, http://www.mbaonline.com, an online MBA resource dedicated to offering information and advice about enrolling in an MBA program. In today’s post, Juliana explores why start up organizations should rely on openness and communication to create a company culture that promotes employee contentment and in turn, company productivity and profit. Here, Juliana builds upon an ROC series about start ups.
Historically, company culture has been underestimated in its bearing on business performance, but this is changing. Even though the first question posed by angel investors remains, “what’s the business concept?” morale and human capital are quickly catching up.This is probably due to the fact that most of the recent business successes of our time come from cultures that support creativity and the free exchange of ideas between employees. In 1997, when Apple was on the verge of collapse and asked Jobs to return, Jobs enacted a number of long-term, systemic changes that eventually catapulted the firm to the $548 billion market cap it enjoys today. As analyzed by Nilofer Merchant for BusinessWeek, the returned CEO refocused the company around a single vision, and then ejected the parts of the company that did not support that vision, and executed it holistically, through each remaining department. He also created an atmosphere of debate by directly encouraging argument when it erupted. That communicativeness between employees, when combined with common purpose, led the company to create simplified products and innovate new solutions to old problems. Writing for Harvard Business Review about the more recent startup success, Hubspot, Karen Rubin emphasizes communication, but more precisely the openness between employees and management, as contributors to its success. Looking at HubSpot’s example, she notes that managers can maintain points of contact with workers who have the most pull and are, literally, loudmouthed. Sitting down with these employees over dinner and listening to their concerns, problems, and complaints can help a company steer itself back into alignment with its workforce. The important point, however, is to maintain open communication, both between workers and between levels of the chain of command. Some startups have attempted to do away with the traditional tiers of management altogether in order to ensure that anyone may speak, brainstorm, or complain easily with or to anyone else. That said, there are examples that are the polar opposite. Zynga, one of the only tech startups to turn a profit in its early years, created and executed a vision guided by consumer data. According to Evelyn Rusli for New York Times’ Dealbook, the company incentivized employee performance with lavish rewards, including a trip to Las Vegas when Mafia Wars outperformed expectations. On the flipside of this strategy, however, fell the unfortunate employees who did not meet their requisite workloads and were consequently fired. Rusli’s stance toward Zynga’s culture was largely influenced by disgruntled employees who did not want their names to leak out. Whereas some might dislike Zynga’s vision, from a purely analytical perspective, Zynga’s main problem is not its vision or the execution of that vision, which brought about some of the greatest game successes in the last three years. Rather, the main problem lay in the lack of communication between employees and management. If employees were afraid to mention their names to a reporter, then they were likely afraid to voice concerns to management, for fear of being fired. As a result, management may not have known that the company was veering off track, to the tune of losing $22 million in the second quarter 2012. In order for the executive team to respond well, it will start by taking some developers out to dinner.