Understanding The Role Of Leadership In Cultivating A Strong Startup Culture

Is there a universal recipe for creating a great organisational culture? Do common issues exist that could break a culture? Are there simple measures that can revolutionise culture?

The answer to all of these questions is yes! To find out what makes Indian employees happy at work, what organisations are doing well, and what needs improving, we recently surveyed 50,000 employees across 150 startups. Over 2.5 Mn data points were collected from this survey, which measured the eNPS (employee Net Promoter Score) of startups across multiple dimensions.

We found that one of the most important aspects of building a successful company culture is the manager. A company’s greatest asset and competitive advantage are its employees. Organisations strive to attract and retain talent while encouraging them to become integral parts of the organisation. Managers play an important role in this and can make or break it.

We found that 97% of startup employees are proud to be associated with their organisations and resonate with the problems they are addressing. Isn’t that awesome? Moreover, 95% of employees have high trust in their teams. It is easy for them to share ideas with their colleagues because they perceive them to be highly talented. They are huge wins that demonstrate that we, as an ecosystem, are hiring the right talent and giving them missions that inspire pride.

In contrast, we also identified a few areas for immediate improvement.

Over 43% of employees wouldn’t recommend their managers to their friends. Startups with multiple managerial layers are more likely to have these issues. Employee satisfaction is influenced primarily by manager effectiveness.

Conversations with startup employees revealed some startling insights into employee-manager relationships.

What Makes A Manager Great?

It is common for startup leaders to see managers as those who are able to “get things done”. However, what does a team member expect from their manager? Our respondents highlighted certain key traits of a great manager:

• Managers with deep domain knowledge contribute to growth by acting as mentors.
• Good managers guide employees in solving problems when they get stuck.
• Managers should be accessible, and regular conversations will benefit employees’ personal growth. 

As one employee put it, “the best managers I’ve worked with care about me as a person beyond their transactional responsibilities.”

It is clear from this that teams are not looking for someone to oversee their work. They want their manager to be a mentor to them, to guide them, to help them, and to care about them.

As startups grow, many managers are added at different levels. These additional levels can cause cultural problems without adequate training and processes. A junior startup employee summed up a sentiment we’ve heard hundreds of times before, “It was great at first when we had flexibility and freedom. However, as soon as we got micro-managed, we lost our enthusiasm.”

Common Mistakes A Manager Makes

Managers have long been known to be the strongest determinants of employee happiness. A Manager Recommendation Index (MRX) is an indicator of individual manager effectiveness and a powerful measure of the quality of managers in a startup.  When the average MRX falls, so does eNPS; this metric quantifies managers’ control over eNPS. 

Our data suggests that over 20% of startup managers are in deep red with negative MRX scores. Simply put, this means several of their team members actively discourage others from working under them. It is particularly prevalent among first-time managers who aren’t properly trained to manage teams.

From the employee’s perspective, the manager represents the senior leadership and embodies the company culture. Employees who are unhappy with their managers are unlikely to be happy with the company. Some common mistakes that startup managers make include:

Not Valuing Opinions

About 23% of employees feel that their managers do not value their opinions. This system has one-way communication, with managers assigning tasks to employees and employees carrying them out. 

According to one employee, “The issue flows from top to bottom. Senior management takes an authoritative stance, and it’s surprising to see mid-seniors not providing even neutral viewpoints. They expect us to follow suit.”

Unfair Practices Were Also A Major Concern 

About 22% of employees felt their manager was unfair toward them. A disgruntled employee told us, “Favouritism is at play. I don’t feel like my manager cares about me as an individual, he only cares about a select few individuals.”  

Others talked about their managers’ personal grudges and the consequences. Teams rife with such sentiments are prone to discord and can fracture from within.

Employees Felt Their Managers Lacked The Necessary Technical Skills To Lead Their Teams

The problem is more prevalent among employees in specialised fields. A healthtech employee said, “My manager is a good leader and people manager. Despite this, he does not have very much experience in my field.” 

This is not surprising in startups, where employees with less experience tend to be promoted to senior positions simply because they joined the company earlier. A shocking 18% of employees do not feel that their managers have the required technical knowledge to lead their team.

Employees Believe Managers Don’t Care About Their Individual Needs

An edtech company employee described how his team is led. “According to my new manager, effective leadership involves instilling fear in the team. He is a taskmaster, but he doesn’t care about our personal well-being.”

Despite being harsh, these words represent a common sentiment. No one likes managers who treat their team members as resources.

These are all serious issues that require urgent and immediate attention. By using the eNPS survey, one can identify the specific causes of problems in startups and acknowledge them openly. 

Training first-time managers on team management, deploying a continuous feedback system, and providing managers with a framework of how to be empathetic yet assertive with employees are some common best practices used across organisations. 

“Leaders become great, not because of their power, but because of their ability to empower others.” — Stephanie Simpson.

An outstanding culture begins with transforming managers into mentors. Essentially, you are creating micro-happiness champions who can each keep their part of the startup happy and engaged.