The advantage smaller firms have in today’s economy
October 3, 2008 by Jim GiulianoPosted in: Behavior, Communication, In this week's e-newsletter, Incentives, Latest News & Views, Money, Pay and benefits, policies
Big companies are stable and strong, right? Yeah, right. As we’ve seen, even the biggest can get crushed under a crashing Dow-Jones. And the fact is, too, smaller companies have an edge on the big guys when it comes to retaining top talent.
Here’s why: Big companies tend to have inflexible rules about compensation, benefits and perks. And often those rules are tied to profit margins — when profits drop, so do comp, bennies and perks. Smart smaller outfits. however, can adjust and mix-and-match benefits and perks to match individual employee needs.
For example: A lot of companies, big and small, are going to face the situation of shrinking raises for employees. The big-company approach to that situation often is, “Sorry, that’s the way it goes.”
But smaller firms can adjust.
- Can’t offer raises this year? Well, then, what if one employee needs to come in late one day a week because of childcare issues? Offering that type of benefit in lieu of a raise can go a long way toward convincing the employee that working for a little guy — even one offering no immediate salary increases — might not be such a bad deal after all.
- Can’t give your top salesperson a bigger slice of commissions? How about letting her family sign on to the company’s cell-phone plan and get a cheaper rate?
- Better still, instead of offering a perk in place of money, ask employees what they’d choose. Sure, you’ll get some wild requests that you’ll have to turn down, but most people have a sense about what’s practical and reasonable — the maintenance worker is unlikely to ask for a company car. Plus, asking them saves you the trouble of trying to dream up the perfect perk for each employee.
The bottom line is that larger firms usually can’t match the flexibility that smaller firms have. So if you’re the HR manager for a smaller company take advantage of what you have.
October 6th, 2008 at 3:27 pm
I have to say, I found this interesting because I always thought the larger companies were more flexible than the smaller ones. Larger companies have more people to back each other up, so it’s usually easier to offer flexible schedules, additional time off, or telecommuting arrangements. They usually have more benefit options too, because they are able to provide more / better benefits since they have more purchasing power. I will be interested to see what others have to contribute to this topic.
October 7th, 2008 at 12:55 pm
I am a co-owner of a smaller company–24 employees– We have always played on our ability to be “flexible” over the big companies… most employees appreciate us working with them and their situation… of course we have to deal with the fact that employees are so afraid one employee is going to get more than they got… I guess that is normal for large or small companies?
I appreciate these ideas the article offered … we implemented a flex schedule this past summer and it’s working great! The employee just has to meet a minimum number of hours per day (the schedule does vary somewhat but most days are 8 hrs min.) … they can come and go as they please as long as the minimum is met… Cut down on me having to approve time off for Dr appointments, etc. Which saved me lots of time and scheduling headaches!!!
Benefit that I had to take away due to abuse and security issues!—We just recently banned the internet for personal use in our office… overtime is gone… employees don’t have anything else to do but their work… Opened my eyes to a lot of goofing off that was going on! I thought I was being nice by allowing them to use it on their breaks… Looks like cell phones will be next–why is it that you give a little and it is always taken to the extreme by the employee… like i can’t see them texting under their desk. What’s so hard about walking away and taking your break?