Why entrepreneurial businesses are the happiest places to work

A recent LinkedIn survey of 10,000 employees found that small businesses have the happiest employees. 45 per cent of employees in micro-businesses feel fulfilled in their work, compared to only 33 per cent at corporates with over 5,000 employees.

This is not a surprise. Entrepreneurs strive to create happiness in their team - I see this all the time. In fact, employees are by far the most frequently discussed topic of conversation at Supper Club events. The vast majority of entrepreneurs genuinely care about the wellbeing of those who work for them.

In part that’s because they work so closely with their team: they get to know them personally, rely on them completely for the business’s success, and so they’re emotionally and professionally invested in making sure their team is happy and working to the best of their ability.

While that adds pressure to perform, it can also make the job more fulfilling. Entrepreneurs bring enthusiasm and a sense of mission to the team. Employees get to see the impact of their work in a more direct, immediate sense - they’re not just a cog in the machine, but an integral part of the team.

Large companies spend millions on the environment, the culture and perks. Small companies can’t compete with that, but what they can offer their employees is a greater sense of purpose. Even in a team of 50, everything an employee does has a direct impact on the business and that purpose boosts their happiness at work. With more and more employees, particularly Gen Y, prioritising fulfilment in work above more traditional benefits like higher pay or bonuses, it’s not surprising that entrepreneurial companies perform well on employee satisfaction.

Yet the involvement of the entrepreneur in the team can cause problems. Entrepreneurs naturally create the culture of their business and when a small business thrives, it’s when they actively recruit based on cultural fit above skills. As a result, small teams tend to build a strong bond.

It is very common for entrepreneurs to reward team loyalty, even if someone is no longer performing. This can be detrimental to the happiness of the rest of the team. One of the biggest challenges for early-stage entrepreneurs is knowing when and how to let people go, and creating the distance that’s necessary to be impartial and rational about that.

Read: Why is yoga so good for our wellbeing?

But while there can be difficulties, the characteristics of most small businesses tend to produce a culture that’s open and friendly, where people feel they’re amongst like-minded peers, and which has a great atmosphere within the workplace.

Yet as a business grows, the culture can, all too often, suffer as a result, losing the special qualities that motivate and fulfil employees. The entrepreneur becomes less involved in the day to day running of the business, the team is divided into functional areas, new people are brought in (often at higher levels with the necessary experience or expertise) and the culture changes.

So how can you maintain the positive benefits of a small business culture as the business expands?

As the boss of a growing business, Jonathan Hall, CEO of Cranberry Panda, an award-winning ecommerce recruitment company, is well aware of this challenge. "Happiness is key to all we do," he says, "with our purpose being 'creating happiness – one job at a time'." He believes that having an open and supportive culture is what’s key to driving the team’s happiness, because everyone is able to make mistakes, and so can learn and improve.

Multiple perks back up this culture of supportiveness. "Our Friday Kudos encourages the team to recognise the achievements of others' and a small prize is awarded during the meeting," Jonathan explains. Other incentives focus on cultivating a sense of belonging to the team, such as ski-trips and meals out.

Another Supper Club entrepreneur has implemented what might be considered a rather radical solution to create equality and a sense of shared ownership in the team - flat bonuses. The management team works out the bonus and everyone across the team - from C-level to grads - gets the same.

Incentives work best when they’re bespoke. One business owner I know asked all of his staff what they’d most like as a reward for hitting targets. Most said time off to see family, or money, but one employee asked to wear slippers in the office for a day - done!

Maslow’s influential 'hierarchy of needs' theory offers some explanation of why this is so powerful. Beyond basic human needs such as security and physiological requirements, people flourish when their self-esteem and self-actualisation needs are met - aspects like independence, self-mastery and realising one’s potential.

In a relatively prosperous society, where basic needs are usually met, these higher-level needs make all the difference to happiness levels in the workplace. That’s why entrepreneurial companies win out over corporates in terms of happiness, and why it’s so important for an entrepreneur to retain that focus as they grow their business.

This is a guest blog and may not represent the views of Virgin.com. Please see virgin.com/terms for more details. Thumbnail from gettyimages.

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