If you’re a startup founder or CEO, you probably know how important it is to have great workplace culture. If that’s perhaps not on your radar at the moment, buckle up because this resource will make a strong case on why you should start paying attention to your company culture. More importantly, we’ll show you why it’s instrumental when it comes to capital raising.

It’s crucial for any business to have a high-performing team. We all know that. But quite often, it could be the differentiator between your competitors and you. A high-performing team is a direct result of healthy workplace culture. In fact, more than 50% of executives say corporate culture influences productivity, creativity, profitability, firm value, and growth rates.

So, what is workplace culture? Workplace culture is the manifestation of a collective set of values, beliefs, behaviours and actions of your entire team. A great workplace culture unites everyone through a vision, increases employee engagement, and creates a magnet for high performers out there wanting to join the party.

On the other hand, an unhealthy workplace culture can be the one reason your business doesn’t quite make it. More on that later on.

Why Investors care about workplace culture and why you should too

Most startup and scaleup founders believe that investors care about the financials of the business more than anything else. And that could be true. But your workplace culture is just as important and could be the tiebreaker between you and the other startups.

After all, investors want to ascertain and minimise their risks. And one of the risk areas in any business is its people.

Equally important, investors want to understand your WHY. Why did you create the business? Why do you believe in your products? Why do you serve your customers? And why your leadership team, along with you, can be the next unicorn.

Investors invest in people, not products or businesses. And they want to ensure that the people they invest in are committed to creating significant impact and value in the industry they are in. They also want to understand if you are a business leader they can work with, and that works well with others. This all stems from the workplace culture that you create in your business day in and day out.

It’s never been more important to create a strong workplace culture, especially if you want to attract the right investors.

With that said, let’s look at the top 5 reasons why investors care about your workplace culture.

1. Helps attract the right leaders

As your startup grows, you’ll need to grow your leadership team to steer the ship forward. If your culture is well designed, you’re more likely to attract the right C-Level leaders that believe in what you do, why you do it and share the same values. In fact, 46% of job seekers cite company culture as “very important” when finding their next company.

The Culture Equation spoke with multiple C-Level leaders with a collective 49 years experience in tech start-ups to understand exactly what they are looking for when they are moving to a new company. We found that workplace culture was the number one attractor followed by being part of an aligned leadership team. They also cited that purpose influences their decision-making and they look for a company that would support them in making a real difference.

What are X-factor Talent looking for

What are X-factor Talent looking for

 

If your workplace culture is not well defined and designed, you might end up bringing onboard people who, on paper, are a great fit but really aren’t. Embedding your culture into not only your leadership team and workplace but also in your hiring processes puts you three steps ahead of your competition. And that’s what investors are looking for.

2.   Helps improve your financial performance

A strong culture means more productivity, creativity and value creation, which are all fundamental aspects of high financial performance. When your teams are aligned on the goals and values of the business, they’ll work more effectively towards achieving these goals. In fact, highly engaged teams show 21% greater profitability, meaning a positive culture directly affects profits and efficiency. 

From another perspective, an unhealthy workplace culture means low employee engagement which can directly lead to unproductivity, and worse, missing financial KPIs and milestones.

For investors, a great workplace does not correlate to better financial health, it is a direct cause of financial growth.

Equally important, unhealthy teams often experience high employee turnover which is catastrophic to the overall success of any business. When your people leave your business, there’s a significant cost to the business. According to a Work Institute’s Retention report, it can cost up to 33% of an employee’s annual salary to replace them. Let’s break down those costs. For starters, you’ll have higher recruitment and training/onboarding expenses. But there’s more to it. Losing employees leads to loss of intellectual property. When people leave, all their collective ideas, initiatives and creative input often disappear with them. And worse, they can leave you for a competitor, which happens more often than most people think.

When you have a team of engaged leaders and employees, investors find it a big win because they can see that their investment will be properly utilised instead of wasting it on a business that’s constantly losing and replacing it’s people.

3. Helps improve customer retention

When your employees are at their best, your customers have an incredible experience. And in turn, your marketing and customer acquisition capability becomes more effective and your top line grows faster. You don’t have to trust us, trust the 82% of businesses that say good workplace culture is a competitive advantage in customer service.

Customers want a company that will work hard for them. With a culture that fosters those same ideals in its employees, you’re giving your business a major competitive advantage. In the same way, if your ideals, values and goals align with your customers, they won’t want to look elsewhere. 

Investors understand the power and impact of employee experience on customer experience and they want to see how your culture is designed to create an outstanding customer experience.

4. Attracts more business partnerships

Business partnerships can be an incredibly powerful growth strategy. Partnerships can pave the way to build a bigger brand and reach new market segments. A mutually-beneficial partnership provides access to resources and opens doors to new and exciting milestones.

But finding the right partner requires a cultural match. Prospective business partners will assess your workplace culture and ascertain whether your business adds value to them on various levels, including culture.

A strong culture can help you attract the right business partnerships but also ensures that you secure the partnerships your business needs.

5. Helps build your brand equity and reputation

Building upon the way culture can attract customers and x-factor talent, culture also enhances your public image and can grow stronger brand equity. Brand equity emerges from making a business or product memorable, recognisable or known for a specific superiority. Culture can be that factor.

Employees and customers are both important to building reputation through word-of-mouth. If your business is an incredible place to work, your people will want to tell whoever will listen. 

Most workplaces today are quite transparent. People have access to information about your business and can learn what it is like to work for you through word of Mouth, social media platforms (e.g. Linkedin) and review platforms like Glassdoor. 

Your employees are your brand, they literally wear their brand on their sleeve. They talk about work because they are passionate and proud of where they work, they share their experience of work (first day, last day, promotion, etc.)

An exciting, motivating workplace is unique in some industries so when it happens, people want to talk about it. In turn, this boosts your brand equity while also attracting the right talent. Customers do the exact same thing. They share positive experiences with other potential clients, acting as advocates, which then flows on to build a prestigious brand and reputation. 

Reputation is also boosted by recognition for good culture. The “Best place to work” award leads to a 0.75% increase in a company’s stock price

This is key to attracting investors. You want investors to already know your brand, reputation and culture before you step foot into that room, then the hard parts are already over. 

Key Takeaways

If you have a healthy workplace culture, investors will be a lot more interested in your company and will be more likely to invest in your company. If you have a weak workplace culture, investors are less likely to be interested in your company which means getting funding is a lot harder. And without capital investments, you won’t be able to expand your business.

Ironically, if you do get investment, and you can’t attract talent with that investment because of your culture, then you can’t fulfil the promise you made to your investors.Growth requires people, and people expect great workplace culture.

Strong workplace culture can improve your brand reputation and is a great indicator of future success.

So, where should you start?

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