Entrepreneurship & Innovation

Startup vs. Corporate: Which Culture Is the Right Fit for You?

By Rachel Kerrigan on November 1, 2018

Launching a startup isn’t for everyone. But would you work for one?

The type of organization you work for matters just as much as the position itself. You might be aware of the stereotypes surrounding startups and corporations—startups are young, innovative, and collaborative, while corporations are slow-moving, formal, and hierarchical.

There are benefits and downsides to both, so how do you pick between the two? The key is finding a work environment in which you can thrive. Here’s an overview of the difference between startup and corporate culture and how to decide which one is right for you.

The Difference Between Startup and Corporate Culture

Every company is different—regardless of size—and there are a few key characteristics that ring true about startup and corporate culture.

Startup Culture

A startup environment is typically a fast-paced culture in which creativity and communication are valued. Here are three key elements:

Small size: Startups tend to be smaller than large corporations, especially in the early stages of growth, enabling employees to build strong relationships and freely exchange thoughts and ideas.
Flexible structure: Startups can act nimbly to adjust business practices and hit shifting goals.
Informal environment: Startup culture is often perceived as being less formal than a corporate environment, and usually puts less emphasis on hierarchy within teams.

Corporate Culture

A corporate environment, on the other hand, is often characterized by a more structured, formal approach to company culture.

Larger size: Because many corporations employ thousands of workers, it’s not uncommon for employees to be unfamiliar with colleagues outside of their immediate teams or departments.
Rigid structure: With years of experience under their belts, corporations tend to have concrete procedures, protocols, and guidelines that govern daily operations.
Formal environment: The structure of corporations can often result in a more formal environment that puts a greater emphasis on hierarchy. This rigidity can sometimes have the effect of slowing down innovative processes.

How do you know which work environment you’ll thrive in? There are a few major considerations you should make before deciding to join a startup or corporation, which may indicate which culture is a better fit for your personality. Read the five statements below and see which traits resonate most.

Startup Culture Could Be Right for You If…

You Love a Fast-Paced, Ever-Changing Work Environment

Startups pride themselves on moving quickly. It’s likely that the role you were hired for will look drastically different after a few months. This means working through ambiguity, wearing multiple hats, and embracing change. If this sounds exciting to you, a startup might be a good choice.

If this sounds a little unnerving, you might prefer corporate culture. In a corporate environment, you can benefit from greater stability and well-defined roles. You’re expected to hit the ground running on day one with little to no orientation at some startups, but in a corporate environment, there’s typically a well-developed protocol for onboarding, setting you up for success in your role.

Check out the video below for questions to ask before joining a startup, and subscribe to our YouTube channel for more explainer content.

Deciding
whether to join a startup isn’t easy. Before submitting your application and
interviewing with the founders, consider these four questions to ensure you
make the right decision.

Visit our Business Insights Blog for more
questions to ask before joining a startup: https://hbs.me/mr3prw3b

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However, according to the online course Launching Tech Ventures, there’s been a recent movement to shift this fast-paced thinking to a more purposeful mentality.

“Perhaps we can reframe the common startup mantras to incorporate ethical behavior,” says Harvard Business School Senior Lecturer Jeffrey Bussgang in Launching Tech Ventures.

Some examples of these shifts include:

Instead of “Beg for forgiveness,” ask for permission.
Instead of “Fake it ‘til you make it,” don’t fake it at all.
Instead of “Move fast and break things,” hurry, but don’t rush.

Creative minds will thrive in a startup environment. Small companies often encourage experimentation and out-of-the-box thinking. The larger the company, however, typically the more regimented and resistant to change.

You Don’t Shy Away From Responsibility

Being in an early-stage startup means having a lot of responsibility—not only to perform your duties, but to take responsibility in the event the company or your team fails. If this sounds stressful, you might consider taking the corporate route, where your individual role is less visible.

But you may thrive in this high-pressure environment. A smaller team means the ability to take on more responsibility and the flexibility to get involved in different projects. If well-defined roles and responsibilities are more your speed, though, you might consider pursuing a corporate role.

With the flexibility of working in a startup environment comes the opportunity to advance quickly. Corporations typically have a more rigid, slow path to the C-suite. After all, it’s called climbing the corporate ladder not sprinting. At a startup, it’s not rare for someone to start in an entry-level role and quickly ascend to a senior-level one.

You’re Passionate About the Work

Succeeding in a startup environment isn’t always easy. In a new venture’s early stages, budgets are often tight and teams tend to be small, forcing many employees to wear multiple hats and perform a range of tasks, often without commensurate compensation.

While salary is important, it isn’t the only reason individuals choose to work at a company or in a particular industry. Other factors, such as passion, play an important role in boosting employee engagement and zeal. When you’re passionate about the work you’re doing or the mission your company is pursuing, it’s easier to put up with the inherent uncertainties of startup life.

Corporate Culture Could Be Right for You If…

You Value Work-Life Balance

If you prefer a nine-to-five role, you’ll likely enjoy working in a corporate environment. The lines between work and home blur in a startup. With limited resources and staff, it’s common to work long or unusual hours. You might be expected to answer an email after 5 p.m. on a Friday or hop on a Sunday conference call.

You should also consider your hourly rate. Keep in mind that even if two jobs have the same annual salary, you may be faced with working 60 hours per week at a startup versus 40 hours at a corporation. In this scenario, you’d earn a lower hourly rate at the startup since you’d be working more hours than you would at the corporation.

You Prioritize Compensation Over Passion

Startup success stories might give you the impression that you can get rich if you work for a company that takes off. The reality is that 90 percent of startups ultimately fail, 10 percent within the first year. Even if you join one of the few startups that succeed, you won’t reap the benefits immediately.

“This is why it’s so important that you as a founder, joiner, or investor, know how to identify high-quality startups,” says Bussgang in Launching Tech Ventures.

To be in on the ground floor of a new venture can be exciting, but far from glamorous. In the early stages, founders often scramble to secure funding since money is tight. Startups typically can’t offer competitive salaries, and benefits like health insurance or paid time off might not be available until the team grows.

You could also face a slashed salary early on depending on whether a founder used alternative sources of funding. For example, bootstrapping can limit staff salaries based on monthly revenue.

According to the online course Launching Tech Ventures, this is an ideal funding option for companies that don't need a large amount of investment in time and capital upfront.

To make up for this, several startups offer equity in the company, which, again, only benefits you if the company succeeds. Of course, there are often other more intangible benefits, like free lunches, weekly happy hours, nap pods, casual dress code, and a more laid-back, social work culture.

At a corporation, you can count on competitive salaries and benefits packages, as well as the stability of being part of an established organization.

Essentially, it’s a choice about your priorities and stage in life. Are you willing to accept a lower salary to pursue your passions? Is financial stability a priority right now? Thinking through these questions should provide a clearer answer.

Choosing a Path

Startups and corporations aren’t mutually exclusive. You may find qualities of startups in large companies and vice versa. In fact, many corporations have started creating teams dedicated to innovation in an effort to respond more quickly to change. The question is: Are you interested in entrepreneurial work?

The principles of entrepreneurship aren’t strictly related to starting your own business. Instead, they focus on being able to identify business opportunities, explore the risks and rewards of pursuing a venture, and develop a thorough business strategy. Each of these skills are valuable to startups and can help you prepare for a leadership position at a startup company.

If you want to become a valued member of the next big startup, explore Entrepreneurship Essentials or Launching Tech Ventures. These online entrepreneurship and innovation courses can help you identify opportunities, evaluate and validate an idea, and understand how to pitch investors. Not sure which is the right fit? Download our free flowchart.

This post was updated on August 21, 2023. It was originally published on November 1, 2018.

Author:

Rachel Kerrigan

Topics:

Entrepreneurship & InnovationCareer Development