The Pros and Cons of Working for Small vs. Large Companies
When deciding where you want to work, you may be faced with choosing between a small or large company. Each option comes with its own advantages and disadvantages, and one route may be better for you, depending on your career goals.
We’ll outline the pros and cons of working for small and large companies so you can better assess which type of organization is most suitable for you.
How do you define small and large companies?
There’s no universal way to distinguish between small and large companies. However, certain benchmarks are used to classify businesses by size and determine whether they’re eligible for certain government and tax benefits.
One metric used to measure a business’s size is the number of employees. Generally speaking, in the United States, the Small Business Administration defines a small company as one with fewer than 1,500 employees. This definition varies by industry, though. In many wholesale verticals, for example, the SBA’s cutoff is 100 employees.
Another metric for determining a company’s size is revenue. This also varies by industry, but in general, the SBA defines a small business as one with under roughly $40 million in annual revenue.
However, you’re probably not thinking of a 1,500-person organization when you think of a small company. Instead, you’re picturing businesses like family-owned establishments and local chains with a handful of locations. These types of companies make up the majority of businesses in the United States. In fact, 56% of U.S. companies have fewer than five employees. For our purposes, when we talk about “small” companies, we’re referring to organizations with anywhere from a handful to a few dozen employees.
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Pros of working for a small company
Opportunity to learn diverse skills
When there are fewer employees, each person often wears multiple hats. This means you won’t be as confined to a rigid set of job duties. You’ll have the opportunity to dabble in different areas of the business, which can help you develop a multi-faceted skill set.
Leadership experience
As part of a smaller team, you may be called upon to step into a leadership role sooner than you would on a team with dozens of other qualified members to choose from. You may have the chance to manage projects, make decisions, and help train more junior employees, building valuable leadership experience.
Personal relationships
A small team necessitates close working relationships. You’ll likely know all of your coworkers by name and build connections with them more personally than you would in a sea of thousands of employees. This can be a big plus for those who value a close-knit work culture.
Visibility
The personal nature of a small company means you’ll have more visibility with company leaders who can help shape and advance your career. It’s not uncommon for small business employees to be on a first-name basis with the owner and interact with that person and their cohorts regularly.
Flexibility
Small businesses don’t typically have the hard-and-fast policies that you’d find in a corporate environment. Exceptions can be made more easily with things like scheduling and structure. For example, suppose you need to leave work early on the third Tuesday of every month because it’s your day to drive the gymnastics carpool. In that case, you’ll likely have an easier time getting approval for this arrangement in a small company where decisions can be made on a case-by-case basis.
More space for creativity
Small companies are often more agile than their larger counterparts. Change can happen faster, facilitating a greater ability to innovate. Your managers may welcome creative ideas and be more open to trying new things than in a larger, less adaptable organization.
Greater impact
With fewer individuals on staff, each person’s contributions mean more. You may be able to see the impact of your work more directly, which can be rewarding. It’s also easier for individual efforts to be recognized versus when you’re just one member of a large team contributing to a project.
Cons of working for a small company
Limited advancement opportunities
A small depth chart means fewer opportunities to advance in the company’s ranks. There will often be just one management slot in an entire division or department, which means there’s no chance for upward movement until the person in that role leaves. You may be required to do a job search if you want a higher job title.
Fewer resources
Small companies don’t have the structure and programs of a large organization. The human resources department, for example, may consist of just one person or may be non-existent. This can be problematic if you run into an HR issue or seek wide-ranging employee engagement opportunities.
Lack of formal training
Working at a smaller company may require you to learn on the fly and pick things up as you go, unlike a larger company where you might be given lengthier formal job training.
Heavy workloads
With a limited number of employees, no one may be available to lighten the load when work gets busy or deadlines become tight. Long hours and stressful expectations may be more likely, which can lead to burnout.
Potential for dysfunction
It’s sad but true: some of the most dysfunctional companies are those that claim to operate like “one big family.” From office politics to inadequate employee protections, it’s easier for these problems to run rampant in a smaller organization with less oversight.
Uncertain job security
Small companies–and, in turn, their employees’ jobs–can be more vulnerable to change than their larger counterparts. If the owner decides to retire, for example, or the firm loses its largest client, it could mean the company’s end.
Meager benefits
Smaller employers may be unable to offer their larger competitors robust benefits packages. For example, businesses with fewer than 50 employees aren’t required to offer employer-sponsored health insurance.
Pros of working for a large company
Structure
Large companies tend to have established policies and procedures to ensure work is done orderly with predictable outcomes. This can be a preferable work environment for people who thrive on routine.
Career advancement
There are often more opportunities for internal promotion in a large firm, which allows you to advance in your career without the hassle of job searching. You can build upon what you’ve learned from one role to the next, growing your institutional knowledge over time.
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Employee development
Large companies have the resources to offer formal employee development initiatives, such as continued learning programs, educational stipends, and mentoring, to enhance workers’ skills.
Versatility
When you work for a large organization, more paths are available to you than just your current role or department. If you want to gain new skills or try something new, you may have the option of cross-training in a different area, transferring to a different office or even relocating to the other side of the world.
Benefits and perks
Large companies tend to offer more comprehensive benefits than small businesses. This includes benefits that are required by law, like employer-sponsored healthcare, as well as appealing perks like gym memberships, retailer discounts, tuition assistance, and more.
Reputation
A recognizable employer can lend credibility to your work. A certain level of prestige comes with being an accountant who’s worked at Deloitte or a software developer with experience at Google on your resume.
Technical infrastructure
Enterprise-level organizations can deploy cutting-edge technology that streamlines processes and saves time, which can lead to work that’s less tedious and more efficient.
Cons of working for a large company
Increased competition
Although more positions may be available for upward advancement in a larger firm, there’s also more competition for each slot. This can breed a cutthroat environment in which employees are more interested in self-promotion than team success.
Lots of rules
In a corporate environment, things have to be done by the book. If a manager makes an exception for you to work remotely instead of in the office, they’ll be on the hook to make the same exception for everyone. This can result in more rigid policies that are difficult to work around if you need to.
Specialized roles
In large organizations, roles tend to be well-defined with specific job duties. This leaves less room for developing a broad skill set, which could hinder career advancement.
Lack of agility
Established company policies can hinder innovation and slow progress. This can frustrate creative workers who thrive with greater freedom to experiment.
Impersonal nature
When you’re one of thousands of employees, it can feel like you’re just a name on the payroll or a cog in the machine. Top company leaders don’t know you from any other employee, and even your own department head may have very little interaction with you.
Complex relationships
With more people in the company’s hierarchy, there are more relationships to navigate, which is a skill of its own. For example, you might face uncertainty with conflicting directions from different managers or have trouble connecting with other departments when you need to collaborate across teams.
Many differences between small and large companies affect job duties, company culture, and career opportunities. The right size organization for you will depend on your individual preferences, career goals, and personality. Understanding the pros and cons will help you make a more informed decision that ultimately aligns with your professional aspirations.
