HBO's Silicon Valley, The Social Network movie, endless articles on Inc. -- startup culture is everywhere. Catered lunch, bouncy-ball desk chairs, blue jeans, and beer on tap: sure, these perks are nice to have. But how much do they actually boost culture and team motivation?

Not much, suggests new research published in the Harvard Business Review. The study found 70 percent of startups hit a morale drop during years 3 - 4. It seems obvious that it takes more than a cool office space and free snacks to keep employees engaged, but given the high percentage of startups that go through this slump, startup leaders are clearly missing something.

The study researched over 100 early-stage ventures, tracking employee happiness. The researchers segmented these ventures into two groups by year-over-year annual revenue growth. One group experienced growth rates of 0 - 20 percent while the other saw growth rates of 20 - 40 percent.

When comparing the two groups, they found the faster-growing startups had higher cultural starting points in years 0 - 2, but their morale drop was worse in years 3 - 4.

You can call this morale drop a growing pain, but a lot can go wrong in two years. Startup growth doesn't counter it, and cool perks don't prevent it.

What can you do to prevent a startup slump? Prioritize these four things.

Overcommunicate your mission

Remind your team of this mission frequently. This goes beyond profits and launching your business. What benefit does your product or service offer, and how are you helping people?

At my current company, beyond selling logos and business cards, our mission is to make it easy for small business owners to brand and market their business. We help the "little guy" -- that's a great motivator.

Create a culture of recognition

Start by saying "thank you" often to let your team know you appreciate their work. It seems basic, but all startup leaders need to frequently acknowledge the importance of a team member's contributions.

You also need to provide a platform for others to recognize good work. One easy way I do this is by encouraging team members to email out milestone updates -- product, content, or any other company news. For example, one of our product managers recently spent hours working on automating a process in our system. She sent out a quick email to the team and within 5 minutes, we had a chain of "Nice work!" and "WOOHOO!"

It's simple, easy, and completely free, but it makes a difference.

Set transparent goals

Every year, I sit down with my whole team to review the prior year and lay out plans for the coming year. We set clear company revenue goals and review each business area to remind us how everyone contributes to this goal.

This includes specific monthly and yearly metrics for the business. My team needs to understand how we will achieve these goals and how their work directly impacts them.

We review our progress monthly and adjust our strategies and tactics as needed.

Be aware of your team's perceptions

Don't assume your opinions are the same as your employees' opinions. Just because you think you give recognition and are transparent doesn't mean your team feels the same way. Keep an open dialogue and when in doubt, ask.

With so much else to worry about, it can be easy to ride the growth high. But as a leader, that only gets you so far. No matter which tactics you use, you need to focus on culture from the very beginning.

Published on: Apr 13, 2017
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