I've spent the bulk of my career helping make startups successful.  The failures I've witnessed exhibited shockingly similar root causes.  Right behind a lack of funding, a dysfunctional corporate culture can quickly disable a promising startup.  As if entrepreneurs don't have enough to worry about with payroll, product development, marketing, sales and operations, they also have to closely monitor their developing company culture.

Early stage employees or "Startuppers" require different management and treatment than someone who has been successful in big corporations.  The people who thrive in startups take risks, feel smarter and often perceive changes in the marketplace long before their peers at larger companies.  They are also highly independent and rebellious when not aligned with your corporate goals.  Startuppers are better leaders or co-collaborators than followers.

Here are some telltale signs that your startup culture needs adjustment:

Employees are in late, gone early and don't help you recruit talent. 
Don't get me wrong; work/life balance creates a healthier culture so you should not penalize people for wanting to have a few hours or days off from time to time.  Loosen the reigns a bit (or a lot) and people will be more productive.  The most productive company (in terms of dollars per headcount) I ever worked for had a four-day workweek.  People didn't usually take the 5th day off, but knowing they could without penalty was highly motivating.  If employees are continually out the door as fast as possible, it's because the work or culture is not emotionally satisfying.

You hear "yes" a lot, but projects don't cross the finish line.
As smart as most Startuppers are, most appreciate some direction and collaboration.  They are happy to execute plans they understand and agree with.  Make sure management isn't issuing conflicting requests and competing priorities.  Few behaviors kill management credibility faster than a management team that is not in sync.  It's customary in a startup to make things up as you go, just make sure that your managers are all on the same page before communicating direction.

Turnover is high.
You'd be amazed the number of hours a person will work if they truly believe in what they are doing.  I have literally had to take away phones and put people on a plane to get them to take a vacation.  If they are leaving you for other companies, there is something about your business model or culture that they don't believe in.  Turnover is seldom about the money.  To many early stage employees, a successful startup is the equivalent of climbing Mt. Everest; it is their life's work to reach the summit.  If it's purely about money, they are not a true startupper.  Money serves as a nice public acknowledgement that they had a good climb, but it's seldom the reason for the journey.

Jealousy, pettiness, politics, backstabbing and other toxic behaviors.
Don't mistake passionate opinions for petty bickering.  Building a successful business often includes strong opinions and compromise.  If people are behaving badly, there is a larger issue to investigate.  This can be tricky for managers, since the people acting up are generally good at hiding it from the boss or pointing the fingers at others.  You are likely to hear about these issues through the grapevine.  Don't ignore them, don't trust everything you hear and don't have a spy figure out what is really going on.  You need to tackle toxicity head-on before it spreads to the rest of the company.

So, what causes the dysfunction that is keeping you from fully realizing your company's potential?

Unclear vision or direction.  
People expect an entrepreneur to have a vision, or to work with the team to develop one. If you're in this boat, you know how hard it can be to develop a product or service that is successful. It's critical to be in touch with your market.  It's fine to dream, just don't ignore market facts.  If you think you know better than the market, you are either Steve Jobs or you are wrong.  Your idea might be brilliant, but the execution, pricing or messaging can be wrong.  Talk to potential and existing customers and have an honest and blameless dialog on what is wrong and what needs tweaking.  Few problems are so severe that they can't be resolved with some creative thinking.

It's the startup CEO's job to build trust and engage the entire team as part of the solution.  Never make fun of someone's idea and don't let anyone on your team do it either.  Startuppers must trust that you will listen to them and not criticize.  Startuppers never worry about the changing direction as much as they stress over what they perceive is the wrong direction.  Be prepared to over-communicate and to sell your ideas to your staff. You never know who is going to have the solution to an issue your company is facing.  Remember that without trust you cannot have the level of communication necessary to build a successful business.

Favoritism and false loyalty.
Let's face it, a lot of startups are hard to differentiate from a college fraternity.  This management style sets up an exclusionary environment that is deeply toxic.  If you rely on your inner circle for all feedback and decision-making, the rest of your team will lack motivation.  As much as you love your inner circle, chances are they are telling you what you want to hear instead of what you need to hear.

Reduce favoritism by hiring people for their ability to get the job done and for their track record in small companies with limited resources.  Resist the temptation to hire friends because you think they will be loyal or to use your inner circle to spy on the rest of your employees.  The people closest to you are often the least likely to tell you the truth and the most likely to cause drama, bully others or have an agenda.  They will run off the talent that could be far more valuable so they can remain in your inner circle.

Some (or a lot) of ego is necessary to survive as an entrepreneur.  It's wise to be a little humble around your team, admit your mistakes and own your problems.  People will respect you if you admit that you don't know everything and are not always right.  Early stage employees thrive on equality and collaboration.  People are drawn to startups because they are excited by big ideas, but they must be part of creating the vision in order to buy into it.

Lack of employee recognition.
Maybe you hired the wrong people to begin with, or maybe you just beat the enthusiasm out of them.  If you find yourself always acknowledging the same people, take that as a signal that you need to be more in touch with what people are working on.  Don't overdo it, you don't need to grovel to your employees, just notice what they are doing and learn to legitimately appreciate them.  People work harder if they feel their work matters, but you must be sincere.  Startuppers can spot a fake a mile away.

You're a bully.
I'm sorry to tell you that fear is not a good motivator for startup employees.  Startuppers are risk-takers and can find another startup to work for.  They are not going to kill themselves to make you rich if you're a jerk.  Tell people you're worried about revenue and ask for their help brainstorming how to drive sales.  Tell them you're not sure that the product is lining up with the market and ask for feedback.  Startuppers love solving problems and meeting challenges.  Managing by fear will kill their spirit and productivity.

Best practice tips for managing Startuppers.

- Never forget people are individuals; it's OK to ask people what motivates them.
- Always engage startup teams in problem-solving exercises.
- Create a supportive culture where people are not afraid of sharing "crazy" or innovative ideas.
- Don't pretend to know everything.
- Celebrate success and don't punish failure.  Failure is an inevitable part of growth.
- Recognize people need time to recharge.
- Realize you must earn respect with Startuppers.
- Don't kill their spirit.  There is a reason why Google allows its employees to work on pet projects.
- Make sure "big company" people you hire understand and embrace the differences in styles.
- Build a cult, not a fraternity.  Successful startups are about doing something special as a team.
- Be present and set an example of dedication and hard work.

For more on creating a happier and more productive workplace, see http://www.fastcoexist.com/1679491/building-better-businesses-by-closing-the-happiness-gap