Small Company or Big Company- An Employer Comparison
We’ve had many types of clients in 40 years. We have sent invoices to companies like GE, Lockheed, and Haliburton as well as companies like the auto dealer and mechanical contractor down the street. Over the last few years, we’ve mostly focused on our small and mid-sized clients because, with a few exceptions, it is a more satisfying experience. We are usually dealing with the owner or a C or VP level contact who is directly involved in the project. To them, each open position is important no matter the level. That is less true in larger companies and in Corporate America.
There are large company people and small company people, and, over the last 10 years, those distinctions have become more pronounced. Being the wrong person in the wrong sized company can be a terrible experience. In this White Paper we want to explain the differences between large and small employers. That will help you make better choices, both as an employee and an employer.
If you draw a horizontal line in which the left side represents good places to work and the right side represents bad places, most large companies are in the middle. They are run by organizations, not people, and there are only a handful of ways to manage 10,000 to 100,000 people. You will be treated the same way whether you work for Merck or General Motors, for example. You will interact with different individuals, but the organizational structures are similar. There is not a lot of variance in work experience and culture anywhere in the Fortune 500.
Smaller companies tend to aggregate on either end of that line. Candidly, they are either great or horrible places in which to work. The variance in the employee experience among small companies is considerable. Why? Because people matter more at a small company and organization matters less. Smaller companies have a more active ownership and leadership team and the employee experience directly reflects their styles and personalities. We’ve seen some that are good, much better than Corporate America and, frankly others that are totally destructive. As an aside, we work for the former ones, of course. But you already knew that, right?
Let’s get to the evaluation:
Large companies are perceived as being more stable, but this is not always true. They buy, close and sell facilities, locations and plants all the time. Mergers and acquisitions result in redundancies which leads to layoffs. Small companies may be less well capitalized but, at a small company if you do your job well you are important to the company. The layoff decisions at large firms are accounting decisions. If you are great at what you do but are in the wrong place/department/project at the wrong time, Bye Bye. That is much less true at smaller firms. Of course, small companies do get sold to big companies but there are clues to warn you of that so you can prepare. We will talk about that in another White Paper.
Benefits are usually better at larger firms but that is changing. Well run small companies can be more creative with benefits because they have a smaller workforce. For example, we have a small client (200 people) that pays all the benefit costs for their employees. Other small clients have Safe Harbor 401k’s as well. As in the continuum I mentioned above, the best small companies can have better benefits than most Fortune 500 firms.
Large companies have higher starting salaries and if you are an average performer, you will probably make more money at a larger firm. But if you are a high-level performer you will probably make more money over time at a smaller firm. Why? Because you will be promoted more quickly. You are more visible, have less internal competition and, more importantly, have more opportunities to advance- see below.
Small companies can double in size every 3 years. We’ve seen clients do that. Growth creates new promotional opportunities. Large companies don’t grow as quickly, if they grow at all. Many large companies grow by acquisition. An acquisition can be negative to you and can cause your job to be redundant- see stability above. At a small company organic growth creates opportunity. At a large company acquisitive growth can create layoffs.
You have more decision-making opportunities at a smaller firm. Fewer rules. Decades ago, I had a client who managed all the construction of Mobil Oil’s gas stations on the East Coast. I was sitting in his office one day, and I mentioned that the books behind him reminded me of a law office. He said those were policy manuals- a quote “Jeff, I can spend a million dollars tomorrow if those books say I can, but I can’t spend a dime unless they say I can.” Over the last few years this difference has gotten more pronounced. At large companies, it is not unusual for HR to tell a manager who to hire. That never happens at smaller firms. Managers at smaller firms have the ability to exercise more personal judgement. They run their departments and their business units by making decisions. Not so much at larger firms. A Business Unit Manager may run a $60,000,000/yr. business in Corporate America but get shared accounting, IT and HR services from corporate. A CEO who runs a stand alone $60,000,000/yr. company has all of those functions reporting into him or her. That means the CEO has to decide when, how and who to hire to staff those functions. The Business Unit Manager has a corporate 800 number to call for services.
This one is hard to quantify. Maybe we should call it life prep or disaster prevention. Consider two candidates at the same skill level, functional area and experience. One has worked at Enormous Incorporated for 25 years and the other has had 4 mid-sized employers over the same period. Now they have both been laid off. Who is better prepared? The answer, I think, is obvious.
The smaller company background has more experience in changing jobs AND, within any given location there are more small companies than huge Fortune 500 companies. The smaller company background is likely to be a better interviewee because he or she has had more experience AND has a more comfortable universe of employers in their region. Small company experiences tend to revolve around change, which better prepares people for the inevitable change that life will bring you at some point.
Conclusion and Self Evaluation
It may seem like this evaluation is biased towards working at a small company. It is. That’s because we think that the right small company background can give you a better career and employment experience than a Fortune level career. Of course, the opposite is true as well. A bad small company experience can be truly awful. So, it’s a question of personal choice and a personal risk/reward calculation.
Here is something that we do here to help people with that calculation:
Our process with candidates starts with a 30-minute detailed description of our client, the job and their industry. That part of the conversation covers a lot of ground. It is very detailed. Then, we ask them if they have any questions. Here is the revealing part. Think about what your first question would be:
1) If your first questions are focused on specific job details and day to day responsibilities, then you should consider employment at larger firms.
2) If your first questions would be about company growth, management style and business plan then you should consider a career in small company America.
Why? The small company mindset knows that no matter what their initial day to day responsibilities would be, that will change quickly if the company is growing. If the business is sound, the initial job will expand anyway. The large company mindset believes that since the pace of change at his or her employer will be slow, the job duties are extremely important because they won’t be changing for a long time.
What would be your first question?