It starts early.
You're a founder and you're super busy just keeping the company afloat. You don't have a lot of time for much more than eating, sleeping, and selling--whether that means raising capital, pitching to investors, marketing your product or ringing the bell with early revenues.
You don't have time to do things like write an HR handbook or a values statement. That's for a bigger company down the line.
You also don't have time to go out of your way to interview a diverse pool of candidates. You posted a job, the candidates were mostly dudes, and a lot of them were really qualified. You were just happy that anyone wanted to work for your company and you need help *now*. The last thing you want to twist your brain around is trying to figure out how to get more female applicants or people of color. It's too hard and you already have candidates that are really promising.
You barely have time to do anything to bring your team together either. It's ok, because the team is tiny. You all sit together and you know each other pretty well. After all, two of you went to grad school together, one was the younger brother of your childhood best friend, and the other guy worked together with you two startups ago.
In fact, you're feeling pretty good about the team. You're always on the same page. You like working together. You go out together after work. You have the same sense of humor. You joke about age old sports rivalries. It works for you.
That's the problem.
It *only* works for you guys.
What feels like a cool little club to you can be a really unwelcoming environment to anyone else not like you. It's not that you're doing anything bad. You're not sending porn around your Slack chat or making racist jokes. You're just not actively managing the culture because you're busy doing other things.
Great cultures have values that everyone can be a part of--and these values need to be built in to everyday life at your company, no matter how small it is. If you don't, bad things start to happen. They're not obvious. They're quite subtle, in fact.
The one woman you ever hired didn't quite work out. There were communication breakdowns. She felt isolated and you felt like she wasn't making an effort to connect with the other people on the team or to just go and get the information and feedback she needed. You wanted her to just get shit done like the guys on your team do and she was frustrated by the lack of direction and support. She left. It didn't bother you much, because you guys are killing it anyway. You don't need the drag on overhead if she's not making it rain.
You do need more help, though, so you ask your team for recommendations on anyone they know.
More white guys fill the pipeline. You don't give much thought to the idea that if you're only hiring white guys, you're only hiring from about 20% of the population in New York City, for example. That's not even counting the age thing either.
You say you want the best people, but you're missing 80% of the top of the funnel in terms of leads. You'd never be comfortable with any other aspect of your business, so why this one?
Aren't people your most important asset?
Moreover, of the 20% you are pulling in, the highest potential professionals value environments that have a diversity of perspective. If your team looks and sounds like a Wall Street trading pit from an 80's movie, are the best people really going to want to work for you? Doubtful.
The best professionals want to work in places that care about culture and values--because they know actively managing that has second order effects. Someone who takes the time to actually write down on a piece of paper that respectful communication is an expectation in your company isn't likely to be the kind of person you get in arguments with. People want to work hard, but they don't want the unnecessary stress of dealing with difficult people.
You're not difficult because you're an asshole--you're not. You're difficult because you don't make it easy to have difficult conversations.
Furthermore, when you've got a team that basically thinks the same way, creativity starts to decline. You get blindsided by things you don't see coming because everyone sees things the same way. You miss opportunities because everyone is paying attention to the same kinds of things.
And nothing creates tension like poor performance. Morale goes down when people start to realize that this isn't the rocket ship you promised. If it's not, then the less than stellar culture you let rot from the inside isn't worth it for people to work at.
The good people you do have will get approached by companies that value and support their people--that make a wide variety of people feel welcome and able to do their best work. The difference in the vibe of those places versus what you've got is night and day. You're getting lapped on environment and in a tight talent market, your people will be gone in a heartbeat.
God forbid a negative cultural reputation gets out in the market. That stuff travels like wildfire.
What can you do to prevent all of this from happening in the beginning?
Here are a few things:
Have both individual and group communications with your team that encourage people to speak up, to superiors and to colleagues alike. Nothing encourages people like support.
Ask people directly: "What do you think of our culture and environment? What would make it better? Do you feel supported? Encouraged? Respected?"
Ask questions in a way that don't necessarily put people on the spot. For example, "In what ways have you felt respected by your teammates? Can you give an example of a difficult conversation that went really well?"
If people are struggling to come up with examples, their might be a problem.
Create safe spaces for conversation. Maybe there's a standing meeting on the calendar that is away from people's normal work environments. Structure it in such a way where your employees can ask for help, thank each other for things they do for each other, and bring up things that aren't great for the company.
Turn the conversation away from specific people to things that go against the companies values. Without stated values, every conversation becomes personal. If you feel like someone was dismissive of you, it's not about them, it's about an environment where dismissiveness is happening. Maybe the root cause is because that person is stressed and overworked--and it has nothing to do with you. Get to the root of these problems in a way that doesn't make anyone feel targeted, to blame, or like a complainer or whiner.
Sometimes, these conversations aren't so much about culture itself, but just about your day to day. If you're the first designer, and you have no structural way by which you talk to the founder or the team on a regular basis, you might feel like you're on an island.
Involve Everyone in the Values Conversation
What do all of the early people at your company want to see as the company's stated values? What's important to them? What ideas do they have? What do they value? Have they seen negative situations in previous jobs that they want to avoid? How do they work best?
Test and Evaluate
The more people know about themselves and how they communicate, and what they value, the better they can contribute to a positive team dynamic. Have you ever tested yourself on what kind of a communicator you are? Have you ever had your team tell you how you're like to work with? Are there things you are actively working to improve?
Each person on your team should have something personal that they were working to improve that also contributed positively to the company's culture. Their efforts should be public. Is your lead engineer trying to be more social, because his natural inclination is to put his earphones on and code in his own little mind palace? Is your head of sales trying to be more caring, because he defaults to focusing only on ringing the bell and the outbound call numbers and not whether or not the members of his team had good weekends?
Write Things Down
When you write something down, you hold yourselves accountable to it. Making a statement of values as well as examples of how you embody them in your day to day makes them something even the lowest level employee can fall back on.
The bottom line is that best cultures are actively created and fostered. They aren't about having a fun time, they're about enabling everyone to feel like they can do their best work, because they are respected and supported. And yes, it will often times feel like a lot of handwaving until the day you realize that it sucks to go to work at your company--and you feel it too.