Should you work for a big company or a small company? It’s a question often asked by young professionals. There are benefits and drawbacks to both and the development of your career can differ based on whether you work for one or the other.
In this post, we are going to do a deep dive comparison between the two. I’ll go over 9 areas you should consider when deciding between a big company or a small company. Then, I’ll give you my personal opinion.
The 9 Areas to Consider When Comparing a Big Company Vs a Small Company
I’ve been lucky enough to work for two Fortune 500 companies with tens of thousands of employees, as well as work for three smaller firms with anywhere from five to 15 employees.
After experiencing both, there are 9 main areas to consider when comparing the two and deciding what best fits your career.
Those 9 areas are…
- Company stability
- Career advancement
- Pay raises
- Bonuses and profit sharing
- Responsibilities and breadth of exposure
- Impact of your role
- Training and mentoring
- Recognition of firm
Let’s dive into these 9 areas
1. Company Stability
Big companies are typically more stable. They have many stakeholders that keep things on track. This can include management, a board of directors, and shareholders. Additionally, big companies usually have greater access to capital if it’s needed to keep the business running.
If you want more job security, this stability can be an attractive trait.
Small companies tend to be less stable, especially if the company is a startup. Thus, your job security and long-term career may not be as secure as you’d like.
2. Career Advancement
Big companies can have hundreds or thousands of positions within them.
In theory, that means there are many opportunities available for you to advance your career and climb the corporate ladder.
In reality, you’ll find that it can be more difficult to be promoted at larger companies. There is a lot of infrastructure and bureaucracy in place that you would have to overcome as an employee.
If you are seeking a promotion, that decision would have to go through several potential approvals. Your boss would have to approve the decision. Their boss might have to give the green light. And human resources (HR) might have a say as well.
At a smaller company, it’s easier to get promoted. Aside from not having a rigid infrastructure and approval process, it’s easier because you make more of a direct impact at smaller companies. You contribute more and your face and name may be known by every single employee.
In addition, your boss may have the direct authority to promote you. They don’t have to ask anyone else.
3. Pay Raises
Just like with promotions, there are many obstacles that make pay raises more difficult to get in a big company.
There are more employees to spread money across, which can make it hard to ask to be paid more. Approvals for a raise will have to go through your boss, their bosses, HR, and maybe even the finance team to make sure the budget can handle a raise.
Also, big companies usually have specified ranges of salary they can award for certain positions.
For example, if you are a Senior Financial Analyst, a company may only be able to offer you a salary between $90,000 and $100,000. They can’t give you an amount above that level. Ultimately, this puts a ceiling on what you can earn.
At small companies, you are more likely to be paid in proportion to the value you bring. You’ll find that smaller companies have more of a meritocracy, meaning that the output and work you produce is more likely to be awarded with pay raises and promotions.
If you are contributing and helping the company, your pay can keep rising. If your worth to the company is $500,000, it wouldn’t be unreasonable to ask to be paid $200,000. The company would still be $300,000 ahead than if they didn’t have you working for them.
4. Bonuses and Profit Sharing
Bonuses tend to be smaller at big companies. There are two reasons for this:
- The bonus pool of money that a company has to give out each year is spread across a larger number of employees.
- Larger companies don’t grow as fast as smaller companies, on average. As a result, the piece of the pie that you get from your bonus won’t be as large as a successful company experiencing more growth.
At many companies, the bonus offered is a fixed percentage of salary.
For example, if you are a Senior Financial Analyst, your employee offer contract might state that if you are awarded a bonus, it will be 10% of your annual salary.
This is a little bit of a letdown because if bonuses are given out, you may have worked your butt off while others were lazy. Both of you would receive the same bonus percentage, which is unfair.
At small companies, bonuses tend to be higher. The bonus pool is spread across a smaller number of employees. Also, smaller companies grow faster, which means you get to partake in all that growth via bonuses and even stock options.
Bonuses at smaller companies are more likely to be given out on discretion than a fixed percentage. This means that if you work hard all year and your boss sees that, they may reward you with a healthy bonus for all the effort you delivered.
5. Responsibilities and Breadth of Exposure
Responsibilities and breadth of exposure can vary widely between the two types of companies.
At a big company, you have a narrow and specialized role. You are a small piece within a big machine (the company).
When I worked for MGM Resorts, I was on the Investor Relations team and all I did was investor relations work.
One benefit of this specialization is that you can become in expert in your particular field. One downside is that you may pigeonhole yourself into one niche. Had I stayed at MGM on the investor relations team, it’s possible that I could have pigeonholed myself into investor relations work only. That’d make if more difficult for me to find a new role in a different industry.
With a small company, you “wear many hats,” which means that you’ll have more responsibilities and get to experience a greater breadth of exposure. You might work on financial analysis, business development, customer service, investor relations, and legal work.
While you won’t be an expert at everything, you can become really good at a lot of things. This is valuable because you are learning ang gaining experience in a variety of disciplines. You’ll become a “Swiss army knife” employee that is versatile and can tackle any task.
An added bonus of the many duties you can have at a small company is that work will never be boring for you. You aren’t doing the exact same things day after day. Wearing many hats will provide a lot of variety to your work days.
6. Impact of Role
When you work for larger companies, you are a small fish in a big pond.
That makes it difficult to stand out and make a name for yourself, which may make you feel like you aren’t making an impact.
It’s also hard to innovate in big companies because of the hoops you would have to jump through. Your ideas would have to be approved by your boss, their boss, and even the board of directors. Even if your idea was eventually implemented, this process can take several months.
At a smaller company, you have more of a direct impact on the business. You are more free to innovate and have your ideas heard and implemented.
It’s also easier to accumulate accomplishments that you can add to your resume. You can say, “I did a, b, and c, which directly lead to x, y, and z.” At a larger company, it’s harder to show how your work and effort translated into impact on the company.
7. Training and Mentoring
With years of existence and thousands of employees, the training at large companies is efficient and comprehensive. They have entire teams devoted to training and have processes in place that has gone through many iterations.
For example, investment banks send their new recruits to a location for 2-3 weeks of training to get the geared up for their role.
As for mentorship, the opportunity for mentorship is there at large companies, but it’s less likely. Imagine that you want to be mentored by the CFO of a large company.
That CFO might have 10 teams under them filled with employees they have to oversee. The odds of you working with them are slim. At many companies, most people have never even seen the CEO of the company in person.
Smaller companies typically don’t have a formal training program in place. They either expect you to be trained before you join or they expect you to be self-directed enough to train yourself on the job.
However, the opportunity for quality mentorship is much higher at small companies. If a company has 10 people, the chances of you being able to work with and learn from the CEO and CFO and extremely high.
Being able to interact with these intelligent and accomplished individuals is like striking gold!
8. Recognition of Firm
Recognition of the firm simply means how popular and known the firm or company you work for is.
Big companies are likelier to have well-known and recognizable names. These names can look great on your resume for future opportunities in your career.
If you worked for Goldman Sachs and a recruiter sees that on your resume or LinkedIn, they may make assumptions about your experience level. They know Goldman is hard to get into and produces top talent.
On the other hand, small companies could have well-known names, but most of them do not. This can make it harder to have successful applications for new jobs and grad school. You have to put extra effort to communicate who your company is, what they do, and what you did there.
Large companies have the advantage of economies of scale that allow them to offer plentiful employee benefits such as healthcare, higher education benefits, loan repayment, and discounts with other companies they may partner with.
Smaller companies can have great benefits too, but it’s not as likely. Sometimes, the company may be so small and so young that they don’t even provide you with benefits such as healthcare. You have to pay for coverage on your own.
Benefits can be a deal breaker for people, especially those with families. Healthcare coverage for your family can be extremely valuable.
My Recommendation on Working with a Big Company or Small Company
I’ll give you my recommendation based on personal experience. I’m not saying this is the right plan for everyone, but giving you insight into my thought process may help you with yours.
Firstly, if you can, intern and/or work for small and large companies so you can see what you like. The best way to determine a choice between the two is to experience them both; multiple times if possible.
If you are at the start of your career, I believe you should start at a big company for a year or two, then move to a smaller company. Why?
When you start at a big company, you…
- Get the training that a large company offers
- Get the big name of the company that you can put on your resume to make it attractive for future positions
- Learn how to operate within a large organization
- Witness the corporate politics and hierarchy
- Have the opportunity to network with hundreds or thousands of other employees.
Once you eventually move to a smaller company, you can implement all that you have learned to make more of a direct impact. You can also seek direct mentorship from the accomplished individuals that run the small company.
Ultimately, starting at a large company offers a beneficial stepping stone that you can use to launch your career.