Did you realize that 14 percent of the American working population is in business for themselves?

5 simple tips for creating an awesome work environment at your new startup

If you’re one of the members of that 14 percent, you’re probably trying to figure out how to make your work environment better. Work environment is absolutely key for any startup.

As any business owner with employees knows, it’s expensive to bring on new employees, and if you’re dealing with high turnover as well you’re going to watch all the money your business makes flow out the front door.

1. Offer competitive pay

There are a large number of startups that think they can get away with paying people as contractors when by the IRS definition, they’re actually employees. Some even skate by at times.

But if you’re doing that, you’re gambling.

Know the rules when you start to bring in employees. Can you actually pay that person as a contractor, or are you exercising enough control that they could be called an employee? 70 percent of all federal tax revenue comes from employee withholding — the IRS takes it very seriously indeed.

Beyond that, what sort of benefits are you offering? If you’re consistently underpaying your employees, that has consequences. Turnover tends to be higher, and it’s one of the chief contributing causes to job dissatisfaction.

Before you bring employees in, check around and see what other companies are paying to make sure you’re not shorting them.

It’ll pay dividends in the long run in retention, satisfaction and overall happiness.

2. Stable leadership

When you’re setting the tone for any work environment, it flows from the top down.

This isn’t just some trite axiom regurgitated in business books, either. It’s a real, quantifiable effect that good leadership makes workers fitter, happier, more productive, more likely to stay, and more likely to even show up to work.

One study notes as its conclusion that “leadership, [workplace health promotion] strategies and leaders’ attitudes towards employee work-related health have importance for implementation processes, as well as affecting employee work attendance.”

Getting this right has huge benefits for your organization down the line. Take Clif, for example. The health bar company is known for a staggering 97 percent retention rate, and much of it stems from the strong leadership at the top of the company.

Gary Erickson and Kit Crawford, the co-founders of the company, decided to use an employee stock option instead of private equity to buy out another owner. That allowed them to keep the leadership stable as well as grow the employees’ feeling of investment in the company. You have to get that leadership right first, or nothing else will matter.

3. An atmosphere of trust

Whole Foods is another employer that’s known for a very high retention rate in an industry that tends to have high employee turnover.

As CEO and founder, John Mackey notes in a seminal, often-quoted blog post, “Fidelity to the mission and values builds trust, while any deviation from these ideals undermines trust. High trust organizations and hypocritical leadership are mutually exclusive.”

Whole Foods and other organizations like it that have high retention tend to also have high levels of employee empowerment. Getting buy-in from the people that work for you starts with treating them like adults, then trusting them with responsibility. That involves risk.

Any time you trust people, you’re giving up some measure of control. But if you want to grow your organization and keep it healthy over the long term, you cannot do it any other way.

4. Recognition

Reward and recognition for your employees is one of the chief ways to help them stay invested in the organization.

There are a lot of different ways to do this. Some rewards can be more fiscal, like raises, extra paid days off, bonuses and advances.

Others can be sending a personal note of congratulations or thanks for someone who’s done a good job on a project — or even stopping by their desk in person. Congratulating departments or teams as a whole is important too.

As in anything, make sure you’re completely sincere. When I reached out in an email to McKenzie Bauer, co-founder and CMO of Thread Wallets, she noted that this is something they’ve implemented in their business.

“My husband and cofounder Colby and I were the two original employees of Thread, and we did all the work ourselves. As the company grew, we had to bring more people on to help. Showing real recognition of their efforts and encouraging them when they did well had a big impact on our overall productivity. Everything from raises to encouraging emails to sharing our excitement about the direction of the business with them — it all matters.”

5. Professional development

Finally, one of the biggest things you can do to make your work environment better is create opportunities for people to grow and develop their skill sets.

Did you realize that 87 percent of millennials say development is one of the most important factors for them in choosing a job? If you’re not providing it, someone else will.

If you’re developing your employees internally, it also opens the door for you to hire internally. As your startup grows, you can start moving people up the corporate ladder as they gain experience and knowledge, with substantial benefits to your workplace culture.

If you’ve been paying attention, you might have noticed that these five points roughly correspond to Maslow’s Hierarchy of Needs, familiar to any business student.

That’s no accident. If you’re fulfilling the needs of your employees and making their lives better, you’ll have a great work environment at your startup. Begin now — start today — and reap the benefits in the future.

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