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Leverage Company Culture to Build a Top-Tier Startup Team The culture you establish should be different from the perks and benefits you offer as part of compensation.

By Nathan Chan Edited by Dan Bova

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Opinions expressed by Entrepreneur contributors are their own.


As a startup founder, one of the most important roles you have is hiring and retaining the very best employees out there. But competition among startups is steep for top talent, so what can you do to stand out from the rest?

Related: 10 Examples of Companies With Fantastic Cultures

The answer: Have a positive company culture that makes smart people want to be part of your team; and offer good benefits and perks. All these factors differ from one other but are equally important for recruiting and retaining top talent. The details:

Building a culture vs. offering perks

When you begin building out your startup team, you should be thinking long and hard about the type of culture you want to establish. Every employee you hire should fit this culture, from your first employee to your hundred-thousandth (hey, dream big!).

What's important here is that the culture you establish be different from the perks and benefits you offer as part of a compensation package. Benefits include things like vacation days, 401K matching and health insurance. Perks might include catered lunches, free snacks complimentary laundry service and a free Uber home if an employee stays late.

Benefits and perks are great for recruiting purposes, but your company culture is how you retain happy employees. So, how, exactly, do you do that?

What is company culture?

Company culture is how your employees collectively define research and development, customer service and human resources. Culture is usually driven by a company's list of core values set by the founder or founding team. For example, Zappos lists ten core values that each employee must be able to get behind to be a good cultural fit:

  • Deliver WOW through service

  • Embrace and drive change

  • Create fun and a little weirdness

  • Be adventurous, creative and open-minded

  • Pursue growth and learning

  • Build open and honest relationships with communication

  • Build a positive team and family spirit

  • Do more with less

  • Be passionate and determined

  • Be humble

"Culture" outlines what's expected of employees when it comes to innovation, customer service and human resources. Yet, while some companies offer great perks, theirs is a negative company culture.

For instance, you may work for a company that offers six weeks' paid vacation, full health insurance coverage, 401K matching and free lunches. But if your boss expects you to work 60 hours a week and you have no flexibility with scheduling, then you're probably not very motivated because you're in a negative corporate culture that doesn't value the benefits of work/life balance.

Tony Hsieh, founder of Zappos, has said that culture is the most important aspect of running a successful business. "Our number one priority is company culture," Hsieh said. "Our whole belief is that if you get the culture right, most of the other stuff like delivering great customer service or building a long-term enduring brand will just happen naturally on its own."

In fact, Zappos actually pays its employees to quit if they are not happy in their work environment.

Related: The 153 Best Company Cultures in America (and What You Can Learn From Them)

The right culture improves productivity.

Why in the world would Zappos pay employees to quit if they're unhappy? Because at least one study has shown that happy employees are 12 percent more productive at work. According to the study researchers at the University of Warwick, "We find that human happiness has large and positive causal effects on productivity. Positive emotions appear to invigorate human beings."

The study also showed that financial incentives, such as a raise or bonus, weren't enough to make the employees who were studied, happier. No matter how much an overworked employee makes, he or she will still be less happy and less productive than one who works in a culture that values work/life balance and positivity.

Fostering a great company culture not only improves employee productivity, it also improves the bottom line. When Johnson & Johnson made a commitment to improving its employees' health, according to the Harvard Business Review, the company saw $250 million in savings. From 2002 to 2008, it saw a $2.71 return for every dollar spend on health and wellness.

On top of that, happy and productive employees at J&J were less likely to quit, and that resulted in low turnover and reduced employee-acquisition costs.

This makes a lot of sense, as study after study has shown that overworked employees are often dealing with impaired sleep, increased stress, higher rates of Type 2 diabetes and an increased likelihood of heart disease. These health concerns lead to absenteeism (sick days), high turnover rate (quitting) and rising health insurance costs. And these things negatively impact a company's bottom line.

On top of that, impaired sleep coupled with higher stress leads to decreased efficiency and an increased potential for employees to make costly mistakes on a daily basis.

A happy culture leads to better profits.

The concept of a positive company culture leading to more profitability isn't new. It actually started in the early 1900s, back when it was common for factory employees to spend nine to 10 hours per day at work for minimal pay.

However, things changed in 1914; and auto magnate Henry Ford was the prime mover. After spending years doing in-house research on his workers and their productivity, Ford took the unprecendented step of doubling his workers' pay, and reducing the number of hours that they had to spend in Ford plants.

Initially, Ford was bitterly criticized for this move, but over the next five years, he witnessed his competitors adopting the same model after they'd seen his production soar. It was at this time that many companies saw that, "If you wanted to keep your workers bright, healthy, productive, safe and efficient over a sustained stretch of time, you kept them to no more than 40 hours a week and eight hours a day."

By reducing hours, companies saw a decrease in worker disability, as well as fewer instances of damaged equipment, fewer lawsuits and happier shareholders.

Creating your own culture

Hopefully, you can see the importance of a positive corporate culture. And, getting started is as simple as writing out your core beliefs about how innovation, customer service and work/life balance should be approached by your employees regardless of seniority or role.

Related: How These 8 Founders Are Innovating Company Culture

Nailing down your core values will shape the future of your company. So, give this task some serious thought.

Nathan Chan

Publisher of Foundr Magazine

Nathan Chan is the publisher of Foundr Magazine, a digital magazine for young, aspiring and novice stage entrepreneurs. He has had the pleasure of interviewing rock star business leaders to find out what it takes to become a successful entrepreneur.

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