By Jason Richmond, Chief Culture Officer and Founder at Ideal Outcomes
When it comes to growing a small- to medium-sized business (SMB), the saying “starting is easy, finishing is hard” never rang more true. Automated marketing, crowdfunding, and other tools are making it easier than ever to find customers and obtain enough funding to get a small business started. Yet, in research for my upcoming book about overcoming the obstacles of small business growth, I’ve found that even organizations that have achieved success—reaching revenues between $100M to $500M million dollars—are finding that getting to that “next level” is more difficult than anticipated.
Indeed, it takes something special to grow beyond that plateau. I’d argue that the “something special” is your culture. Here’s why.
According to the Small Business Administration (SBA), small businesses (classified as those with less than 500 employees) make up 99.7 percent of all US employer firms, accounting for more than 64% of net new jobs. Wow. Yet, in spite of the fact that small businesses are adding new jobs faster than their larger competitors, their share of total employment remains steady. They are a huge engine of growth—yet most will never make it out of the small business category.
Why is it so hard for a small business to grow beyond the initial start-up phase? Sometimes the market just isn’t there for their product or service; but, more often, it’s a problem with culture. Growth requires companies to successfully answer a variety of questions that relate to culture such as:
When you’re in start-up mode, these answers might be based on the founder’s personal beliefs. But personality-based cultures don’t scale; they plateau. Answers based on personal beliefs cannot become embedded in the organization and enable growth, because people have very different personal beliefs. Answers must contain enough commonalities so that they become meaningful to every person. But how?
Culture is a shared (i.e. adopted) belief system that allows employees to work together toward a common goal. It includes beliefs about mission and values, as well as beliefs about the work experience itself. The challenge (if you have not already picked up on it) is to articulate these ideas and beliefs in a way that is meaningful to employees.
This is more important than ever as younger generations enter the workforce. Many younger workers are said to work for purpose, not paychecks; they want to feel that their work is valued, and that they are valued. They seek development opportunities from managers and the companies where they work. And unlike previous generations, these workers are not afraid to leave if those opportunities don’t exist. These are key considerations for employers that want to attract and retain younger workers.
One of the challenges organizations face, however is that culture is about shared beliefs. Beliefs are hard to change. Instead, successful cultural change depends on discovering a common ground and reflecting on what people already believe. And that means involving and listening to your people.
Why is employee involvement in culture so important? Recent polls indicate that more than 87% of workers worldwide are not engaged with their employers in a meaningful way. When organizations prioritize culture, engagement improves. This drives tangible business outcomes, including a drop in turnover of 24%, a 10% boost in customer satisfaction, and increases of more than 20% in sales and profitability.
Culture is the key to growing beyond the plateau. But it’s not enough just to have a mission statement or a set of values. Culture is about discovering what is already shared as much as what needs to change. That’s what drives engagement, and employees must be involved in its development.
Involving your people in the creation of a shared, scalable culture is a must for businesses that want to grow beyond the plateau. Asking employees certain questions—like why they think the business exists, what its mission should be, and what values they believe should guide the business as it goes forward—is the first step to gaining buy-in and driving engagement. Creating an environment where individuals feel their input is valued and where they can grow along with the business is also key for growth.