Building blocks of success: The power of early values in startups

The beginning of a startup’s journey is a vital time to establish its character. While product development and winning your first customers are pivotal at this stage–defining the company's soul can’t be overlooked. Any notion that this is some “soft” endeavour must be disregarded. According to a Deloitte study, 94% of executives and 88% of employees believe a distinct workplace culture is essential for business success.

The clear message is that startups must build a lasting and positive culture based on robust core values. Such values will guide early-stage companies through the complexities of growth and change that will be numerous in their early years.      

Company values pave the way for success by determining what kind of a place the startup is to work in. Establishing solid values early on does more than just set the workplace environment's tone. They are instrumental in attracting top talent, enhancing employee satisfaction, and fostering loyalty.

Naturally, the founder sets a startup's first set of values. Articulating these values, however, requires more than a town hall meeting or poster on a wall. Founders need to embody their company values by “showing” rather than “telling” in a way that’s always mindful of employee well-being and gives everyone the tools to represent the values. 

But how can founders lead by example when setting values? And what are the pivotal points throughout a startup's journey when they're most at risk of slipping?

Creating a solid set of values

Our behaviour is typically shaped by our role models, whether our parents, peers, or teachers. Therefore, founders should recognise the importance of their behaviour in helping their employees navigate the new working environment they are creating.

The founder should aim to use their actions as a guidebook for the team. Founders must be able to communicate their core beliefs and systems while making it clear how they live by them and what they expect from others.

Take 'hard work' for instance. Founders should consider what this means to them and act on it. Some founders believe hard work means showing up early and staying late. But more importantly, it means being responsive and available to the team, offering guidance where the team needs input, and demonstrating a willingness to learn. This reflects that a founder is hardworking but also sincere about their beliefs, which can help to foster a sense of trust within the organization. If values don't manifest positively, it is difficult for them to guide the mission, accelerating the drift of values.

Growth and shifting values

Instilling strong values is a continual process within a startup. As the business grows, responsibilities initially undertaken by the founder will start to be delegated to new team members, and these moments can cause a shift in values.

To prevent the values initially laid out in the company from shifting, it's essential to introduce leaders who align with them. For instance, if the first manager's operating style doesn't embody the founder's values, this will affect the wider team and impacting the overall company culture.

This will become increasingly pronounced as the founder pivots away from day-to-day operations and allows others to own and execute these responsibilities, like a chief of staff leading key meetings or a CTO taking on more responsibility for and overseeing product development.

Instilling the core values into the business early protects against them evaporating as the founder moves away from everyday operations.

When shifting values damage startup success

Some evolution of the startup's values will be inevitable as it matures. However, returning to its core values is essential for an organisation if team and operational changes harm the workforce.

Signs of declining headcount are strong indicators of values slipping. This is especially true when people want to exit the business quickly. This might emerge as a pattern of employees leaving the company immediately after receiving their bonus when their shares are fully vested or if employees start negotiating accelerated leaving dates. Employees wanting a swift exit are symptomatic of deep workplace dissatisfaction.

The optimal way to prevent this is to look inwards at essential growth points where change could result in the fraying of employee connection to values – whether that's when organizational structure shifts, leadership changes, or funding rounds occur. Maintaining the celebration of employees despite growth, for example, ensures that the community feeling of an early-stage startup sticks around. Gallup has found that, on average, effective recognition means employees are five times as likely to be connected to company culture and four times as likely to be engaged.

Or it could be as substantial as hiring a dedicated HR lead. There are no set-in-stone rules for when the time is right to make a hire—it will vary from startup to startup. If founders maintain good levels of self-awareness, however, they'll be able to spot things like missed personal commitments to employees and HR administrative work becoming a drag on time and resources. These are two of the more common signs that it could be time to make the hire.

Values are the key to a successful startup.

Defining a company's soul may be daunting, particularly for startup founders whose knowledge and experience of HR are limited.

Value setting is more than just a one-and-done job. Founders must continually invest in upholding values—through their own leadership and senior hiring decisions—to ensure their stickiness and continued influence as the startup grows. By developing and maintaining solid foundations, founders can ensure a clear set of values is passed down through the organization to foster a workplace that supports and encourages all of its members.

(Babu Vittal is People and Practice Leader at RTP Global, an early-stage venture capital firm)