We Shop Small. Should We Work Small, Too?

Today’s post comes to us from Brandon Bielich, managing editor of the UKG Workforce Institute.? ?

From local coffee shops to street vendors, small businesses provide communities with unique charm, character, and, more practically, a great variety of personally crafted goods and services. You may already shop small for various reasons, but have you ever considered working small?? ?

Well, the latest study from the UKG Workforce Institute — out this week in honor of National Small Business Week, sponsored by the U.S. Small Business Administration — finds nearly three-quarters of employed Americans (74%) say that, if all things were equal (e.g., compensation, benefits, hours, etc.), they would rather work for a smaller business than a larger business. (In our study, we define “smaller” as an organization with fewer than 500 employees.)? ?

Moreover, over half of employed Americans (56%) believe that people tend to start their job searches by applying to smaller businesses, which further suggests people think small first when it comes to career building.? ?

Here’s where it gets tricky, though: 67% percent of employed Americans also believe it is harder for smaller businesses to hire talent than larger businesses — and our monthly UKG Workforce Activity Report data support this premise. And nearly 4 out of 5 U.S. workers (78%) think larger businesses can offer higher wages than smaller businesses. Although pay can be a deciding factor for a lot of people, it’s not the only part that matters when selecting an employer.? ?

So, which sized business makes for the “better” employee experience? Our study reveals the answer isn’t so simple and can depend on numerous factors.? ?

Perceived Advantages of Small Businesses? ?

If you’ve shopped at a small business recently and enjoyed the experience, think of what stood out to you. Maybe you loved that the store is conveniently located minutes from your home, and you stopped in during your commute. Maybe you interacted with a familiar associate, who even knew you by name, and greeted you with a smile. Maybe you appreciated the owner’s attention to detail when they listened to your needs, confirmed your request, and delivered the right item or a custom product with tailored specifications.? ?

These distinct differences for small businesses shine through in our study results, too. According to the UKG research:?

• Thirty-eight percent of employed Americans think overall job satisfaction is better at smaller businesses, compared with just 17% who say it is better at larger ones;?
• Nearly half of employed Americans (46%) believe that transparent and consistent communication from leaders is better at smaller businesses; and?
• Thirty-six percent of employed Americans believe there is greater schedule flexibility at smaller businesses.?

Not only that, but 36% of employed Americans also believe that the quality of managers is better at smaller businesses than larger ones. As you might recall from the UKG Workforce Institute’s recent “Great Managers = Great Workplaces” study, managers’ actions matter. In that study, 73% of employees said their managers’ support, encouragement, and/or leadership directly motivates them to go above and beyond in the workplace.? ?

In small businesses (and large businesses alike), how managers treat their employees often directly correlates with how employees treat their customers. In a great workplace, happy employees make for happy customers. The associate who greets you with a smile is most likely themselves greeted daily by a pleasant manager. Likewise, a less-than-pleasant encounter with an associate could be a byproduct of their less-than-ideal interaction with management.? ?

Perceived Advantages of Larger Businesses? ?

For all that’s good at small businesses, there are still several not-so-positive perceptions that small-businesses need to overcome to stand out in today’s tight labor market.? ? For example, our study found that just:?

• 25% of employed Americans think payroll accuracy is better at smaller businesses;?
• 21% of employed Americans believe adherence to labor laws and regulations is better at smaller businesses; and?
• 20% of employed Americans perceive smaller businesses are better at onboarding.?

Even when thinking about the oft-panned performance review process, just 27% of employed Americans say that smaller businesses are better at them than larger businesses. Your personal feelings about performance reviews notwithstanding, these HR practices are all critical to running a successful business of any size.? ?

We can have a spirited debate on whether these assumptions are fair or not. However, if small businesses want to compete with larger businesses — for talent, for customers, and for overall success — then there’s one key place these organizations can focus on to see positive outcomes: workplace culture.? ?

Culture Can Be the Key Differentiator? ?

There’s great news for small businesses on the culture front. Our study found that nearly half of employed Americans (45%) think company culture is better at smaller businesses than larger businesses.? ?

While it’s true that having a great workplace culture benefits organizations of all sizes — and all organizations can foster a for all culture if they focus on caring for their people — because of their very size, small businesses have a distinct opportunity to foster a tight-knit, family-like feel. This gets more and more challenging (though not impossible, especially with the right HR technology) as you scale your organization.? ?

Think back to the scenario above, and your delight when the sales associate greeted you by name. Just like it’s easier and more natural for associates to know their customers personally in a local community, it’s easier for employees at small businesses to get to know their coworkers as people. Over time, this helps build camaraderie, trust, and more open communication, which all help create a better workplace culture.? ?

Getting to know 15 coworkers seems like a much less daunting task, if not a more enjoyable experience, than attempting to know 1,500 coworkers personally in a larger organization. Just think: Your LinkedIn profile might boast 1,500 professional connections, but how many of those people do you actually know personally and interact with on a daily or weekly basis?? ?

Even beyond the workplace, it’s more likely for colleagues at small businesses to see one another in the community at various events or frequenting other local businesses, which helps to form friendships that translate to better experiences at work (if you’ve ever been asked on a survey whether you “have a best friend at work,” you’ll understand the positive impacts of these relationships).? ?

Small or Large?? ?

So, which-sized organization does business “better”? Small or large? The answer is ultimately up to you, no matter your role at the organization and no matter the organization’s size.? ?

As an employee, it really depends on what matters for you in an employer. Both small and large businesses have their advantages, and both can provide fulfilling career opportunities. When it’s time to apply for your next role, maybe you’ll consider working small or maybe you’ll look to a larger organization.? ? And if you’re a small-business leader reading this article and looking for more ways to attract and hire employees, check out the UKG Small Business HR & Payroll Resource Center for best practices, guidance, and tools for making the most informed decisions about the right solutions for your organization and your people.

On behalf of the UKG Workforce Institute, Happy National Small Business Week to you, and a special thank you to all the small businesses out there making huge impacts in our local communities!? ? ?

Methodology: This survey was conducted online within the United States by The Harris Poll on behalf of the UKG Workforce Institute from April 9 to April 11, 2024, among 1,150 employed adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 3.5 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact [email protected].?