What Size Company is Right for You?
What Size Company is Right for You?
Frankly, deciding what size company is right is not a black-and-white decision.
It depends on what kind of environment in which you thrive and what your current priorities are.
I’ll share the most significant adjustments I’ve noticed as I have coached several clients in career transition between large and small companies and what the advantages and disadvantages could be for each one.
But remember—what seems like a benefit for you may be a deal breaker for someone else.
Of course, every company is unique. So while some things are more likely to be true at larger or smaller companies, it’s always worth doing specific research on a company you’re interested in to see if these general trends apply to your job search.
Sizing them up
Just how big is a Big Company?
Within the Fortune 500, a group of America’s largest companies (based on revenue), the average headcount is about 60,000, but the number of employees ranges from about a thousand to a couple million.
Big companies don’t have to be publicly traded. Some of the largest firms in America, like PriceWaterhouseCoopers, Publix, and Hearst are privately owned.
Advantages of the Big Company
In a Big Company you can count on formal processes and support. They have a full-time human resource staff whose job it is to support hiring, onboarding, benefits, conflict resolution, complaints, and career reviews.
Stable revenue helps Big Companies ride out tough times. Large companies have entrenched cash cows that generate a lot of revenue.
Google’s advertising revenue came to about $135 billion in 2019, for instance, and Procter & Gamble made $71 billion selling Tide, Charmin, and its portfolio of home and personal care goods in 2020.
Unlike a startup with a limited runway or a small company with inconsistent cash flows, large companies don’t have to worry as much about running out of funding, collecting on accounts receivable, or pivoting their business model due to a bad quarter.
Large companies can afford to invest in research and development (R&D), and new initiatives. Case in point, it costs pharmaceutical companies $2.6 billion to develop a new drug and bring it to market ($2.9 billion if you include post-approval R&D). Big companies can afford to do it and won’t go broke if it fails.
How the name of the Big Company can work in your favor
Big, established companies are more likely to have name recognition. This helps if you’re trying to get a meeting or negotiate a deal.
Whether a Big Company is 150+ years old or relatively new, it doesn’t happen overnight. These organizations snowball, accumulating employees, offices, technology, processes, expertise, market share, and momentum.
Depending on your point of view, momentum can be safe and supportive or bureaucratic and restrictive.
Disadvantages of the Big Company
Big companies tend to offer less flexibility. Policies on salaries, corporate expenses, raises, vacation, and remote work are likely to be set at the company or division level. If your company is based in Chicago, but you’re in California, your compensation package may be representative of the company’s local options and market rates, not yours.
Some of this is related to fairness and saving money: Offer everyone the same thing and nobody can cry foul.
Big organizations suffer from a lack of shared context with multiple offices, product lines, or functional areas, as well as cultural and language barriers. Keeping everyone on the same page can be quite difficult.
Every Big Company has a closet full of legacy skeletons.
It might be outdated billing systems, mainframes, manual processes, or corporate policies that haven’t been updated in 15 years. Unfortunately, momentum goes hand in hand with inertia. Legacy systems remain in place because they’re critical, they’re expensive to re-build, and replacement is perceived to be too risky.
When a company does get around to overhauling a legacy system, it’s almost always a multiyear effort with significant compromises. It’s difficult to rebuild something when your entire business depends on it. As a result, not everything you work on will be new, revolutionary, or high-tech. And you’ll most likely spend a lot of your time using one of these legacy products or processes—or possibility even be relied upon to keep it on life support.
Inertia can negatively affect employee creativity and innovation. Big companies can be plagued by a “that’s not how we do things here” mindset.
Your new idea may be tossed aside just because it represents a different or unproven approach. Not every team and company operate this way, but it can be difficult to tell from the outside.
One question you can ask during the interview process is, “Can you give me an example of a time when someone on the team suggested a new idea and how it was implemented?” Otherwise, once you receive an offer, do your research and try to talk to past and present employees.
Career and Compensation: how might these differ when comparing a Big Company with a small one?
Career progression and compensation look a little different depending on the size of the company. Don’t forget that your career is more than your past jobs, titles, and paychecks—it’s the summation of what you’ve learned and achieved. So whatever type of company you work for, you should do so because it helps you grow, not just because it pays the bills.
Advantages of the Big Company
Large companies are a great place to start your career as a new grad. You won’t be the first person to do this job, nor will you be the last. You’ll have access to a wealth of institutional knowledge, training, mentors who have been in your shoes, and structured support to help you succeed.
For the first year, your job is to learn, not to execute.
You may spend your time in training classes, talking to more experienced colleagues and working on small, but increasingly difficult tasks. In contrast, most smaller companies don’t have any structured learning or planned career progression. The exact situation will vary by company, of course, so ask questions before you accept an offer if this kind of structure is important to you.
Who will be managing you?
You’re more likely to have a manager who has experience managing and has been in your shoes before. Early on, startups and small companies hire for execution, not management skills. Startups, in particular, prioritize hires who can start contributing immediately, without extensive training or support.
Why? Until it reaches profitability, a startup has an expiration date and must conserve capital. In some cases, that means they simply don’t have the time to nurture junior talent.
What opportunities will I have for promotion?
Big companies tend to offer clearer paths to promotion. With a more established company and a large workforce, there are often more structured paths to advancement and more levels to advance through. As you accumulate experience and responsibility, you can move up, and you’ll have a sense of what’s required to get to each level.
At Caterpillar, for example, it is always assumed that newly-graduated engineers will evolve into fully capable engineers and eventually senior engineers.
In small or flat organizations, and especially at startups, promotions are often driven by attrition or other factors outside your control, rather than achievement. In other words, it depends on what the company needs right now, and whether you happen to be in the right place at the right time.
The corporate ladder doesn’t just go up, it also goes sideways, such as engineering to product management, operations to marketing, or finance to strategy. This enables you to apply your skills and experience in a new direction.
It can be easier to make a lateral move at a big company because ultimately, all employees are replaceable and your team will have processes to backfill your role. You will be missed, but not so much they won’t let you go. In a smaller organization, you might be “too important to lose,” and unable to fully transition out of your old responsibilities.
Big companies offer extensive benefits beyond healthcare. You’ll likely have access to more insurance options, legal services, purchasing discounts, a pension or 401(k) match, and more.
Disadvantages of the Big Company
Career advancement in Big Companies also involves more bureaucracy and competition. It can be hard to identify top performers in a large workforce, where the difference between good and great might be a few dollars in sales or lines of code. Sometimes, promotions come down to tenure or something as transactional as getting an advanced degree or certification, and you simply can’t get around those requirements.
Unfortunately, not everyone is going to make it to the manager or VP level. That’s the nature of corporate hierarchies. A bigger team means there will be more competition for that corner office.
Big companies have a clear idea of how much your role is worth. That can be a pro, in the sense that you may not have to argue to earn within market rate. But it also means big companies aren’t likely to budge too much on compensation. Unless you’re an executive, you should expect a modest negotiation range—in my experience, probably not more than 15%.
We’ve come a long way from IBM’s short sleeve shirt and black-tie dress code, as well as casual Friday.
Advantages of the Big-Company Environment
For better or worse, startup culture has gone mainstream. Many big companies have begun offering lax dress codes, “unlimited” vacation, standing desks, modern tools (Slack! Gmail! MacBook’s!), free snacks, and other classic startup perks.
At a large company, you can find your community. Many companies with large workforces have the resources to support multiple affinity groups for Black, LBGTQ, Latinx, and other communities as well as folks who have shared interests or hobbies or play certain sports, which means you can find your community within the larger workforce. These groups are usually run by employees and not the company itself.
Big companies can be friendly, but they are not family. As employees, you and your coworkers have a mandate to work together and deliver value to shareholders and customers. You do not have an obligation to love each other unconditionally, hang out off-hours, or make your identity about work.
At Smaller companies you have that “family” feel, and you may want to hang out with your co-workers after hours.
Disadvantages of the Big-Company Environment
You may have to expand or shift your schedule. Big companies often have multiple offices and distributed teams working across time zones. You could work with folks on the West Coast as well as in India. They’re often up early, and you will most likely work past 6 PM so you can communicate in a timely manner, instead of waiting a whole day to get a response.
If you want to move really fast and have a high tolerance for risk and uncertainty, a small company or startup might be the right fit for you. On the other hand, if you’re more risk averse, less financially secure, or want more guidance as you start your career, a larger company may support you better.
Whatever your personal and career goals are right now, think about which environment will help you reach them and go into your job search with open eyes and an open mind.
Still not sure what you should be looking for? Reach out to me, and we can design a strategy that will suit you to a T.