Why Job Seekers May Choose Larger Firms Over Small Businesses

Woman and man in a job interview at a corporation

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One of the many ways in which the coronavirus pandemic has impacted the workforce is that it has intensified job seekers’ needs to target positions at big, established companies instead of smaller ones—largely because of the potential for greater job security. In fact, researchers from Harvard Business School found that the average size of firms searched by candidates increased by 25% during the economic crisis, and that these candidates are 20% more likely to search for firms with more than 500 employees after the crisis.

However, while the economic downturn may have spurred a form of “flight to safety,” one in which experienced, higher-quality job seekers have been opting for big companies, thus leaving startups and small businesses with a diminished talent pool, the trend is not necessarily new. To help gain an understanding of why candidates would prefer one over the other in general, it’s important to learn the advantages and disadvantages of each. 

Pros and Cons of Working for a Large Company

    • Higher salaries and more robust benefit packages
    • More structured working environment
    • More room for growth
    • More clout and resources

    • Individual value may become lost
    • More rigid policies that can hamper creativity
    • Longer decision-making processes
    • Bigger workloads with little recognition

Pros of Working for a Large Company Explained

Large companies tend to offer higher salaries and provide robust benefit packages. On average, benefits comprise nearly 30% of an employee’s total compensation, making the company’s packages more attractive than startups’.

Large companies are also more structured, with clearly defined departments and units as well as a more formal chain of command, and opportunities for promotions and growth (vertically and horizontally) tend to be more common.

Big companies are usually more well-known, have more clout and resources, and are more likely to be able to withstand failures and setbacks.

Cons of Working for a Large Company Explained

Although working for big companies can come with a lot of perks, there are also some downsides to be aware of. For instance, it’s very easy for employees to feel lost, and viewed as cogs in a wheel rather than a valuable contributor. In addition, employees’ creativity could be stymied because of the need to follow stringent procedures. And due to the bureaucratic nature of larger companies, decision making tends to take much longer than in small companies. 

Not all large companies offer great benefits. For example, if a company is cutting costs to reap greater returns for investors, staff may get the bare minimum in their benefits package, and also find themselves working harder and longer with neither recognition nor remuneration.

Pros and Cons of Working for a Small Company

    • More informal, autonomous culture
    • Opportunities to explore and share new ideas
    • More involved in company mission and direction
    • Greater responsibilities 
    • Less bureaucracy

    • Uncertain job security
    • Limited salary and benefits
    • Infrequent promotions

Pros of Working for a Small Company Explained

Job seekers looking for more autonomy, creativity, innovation, and informality may feel more at home at a small company.

Startups and small businesses can provide a looser, more agile working environment in which there is more room to dabble in various projects, gain knowledge and insight beyond one’s role, and share new skills and ideas. 

Employees in smaller companies also generally have more involvement and investment in the development and direction of the company. Because of this, they may be able to take on greater responsibilities and receive more recognition than in a large firm. There is also the added lure of reaping benefits of any financial successes in the future.

Finally, because a small company’s organizational structure is flatter, it offers more opportunities to build camaraderie with co-workers and management. 

Cons of Working for a Small Company Explained

Job security is one of the main concerns when working for a small company, as disruptions in the economy could lead to the company laying off staff or going out of business.

In addition to the uncertainty of security, salary and benefits could also be fairly limited at a small company, and unions may not be available to advocate on the employees’ behalf.

And lastly, promotions could be few and far between due in part to low staff turnover.

Which Size Employer Is Right for You?

Job security matters, particularly in the face of economic disruptions. Therefore, it’s natural that during times of crisis, job seekers would prefer larger companies that offer stability and more scope for advancement. However, the grass is not always greener on the other side, so carefully evaluate your situation by asking yourself the following questions before taking the next step:

  • Have I done the necessary research before deciding to take the “flight to safety” path?
  • Would I take a pay cut in order to have job security?
  • Could the pandemic provide an avenue to take a risk and start my own business?
  • Do I prefer the laid-back environment of a startup, or the formal structure of a larger company?
  • Are my qualifications and passions better suited to an existing startup where my talents may be recognized and rewarded more than at a large company?
  • What drives me the most—the chance to be challenged or the need for a role that appears more secure?
  • Long-term, what do I value and what does my family need?

For those with the right combination of personality, skills, focus, ambition, and dedication, the future in the startup or small business sector may be more promising. For more traditional job seekers, meanwhile, it could be more sensible to target the familiarity and security of a well-established company that brings employee benefits and, presumably, greater chance of long-term employment.

Whatever path is chosen, the challenges of job searching during a time of economic uncertainty require all job seekers to research opportunities, keep their resumes up-to-date, engage in continuous professional development, and be ready for a workplace that is constantly evolving.