take a job in a small, publicly held company, should you expect to
earn less than at a large, public company? The surprising answer is
no. Compensation survey data shows that a person working in a
company with, say, $50 million in annual revenue should be making
the same amount as a person doing the same job in a company with
$500 million in revenues. "The overall job market, not the size of
the company, determines the value of the job," said Erisa Ojimba,
compensation consultant at Salary.com.
Executives' pay may be the exception, she said, because of
the mix of executives' pay in small companies. "It's whatever you
can negotiate." For example, a CEO and founder is likely to make
considerably less in base pay, since he or she will own a relatively
large share of the company.
despite the pay parity there are significant differences between
working at a large company and working at a small company. The
choice between the two paths basically comes down to the tradeoffs
between risk and reward.
Advantages include direct impact
offer many advantages to their employees. For example, in a small
company, all the employees know each other, including the CEO. This
can instill a strong sense of togetherness and purpose among
employees not found in large companies.
Employees of small businesses have varied duties and are
responsible for all phases of their work. Thus, a small-company
employee often has more control over his or her work and can
contribute more to the company's strategy.
if an employee decides something needs to get changed, the employee
will know exactly whom to speak to so that the changes can be
the typical CEO at a large corporation, small-company CEOs tend
to be approachable and available to all employees. This can be particularly
helpful if you have an issue or need assistance and it can make
you feel like an important part of the company team.
Risks and responsibilities are known up front
are a few disadvantages to working in a small business as well. If
it's a startup, almost anything can happen, including running low on
cash or even failing. Most entrepreneurs and startup veterans can
tell stories of the electricity being turned off just hours before a
key meeting with investors; or of senior executives collating large
mailings because they couldn't afford to pay temps to stuff
envelopes. In an interview with a small company it's acceptable to
ask about the company's financial position and path toward
small companies cannot afford to offer the same benefits as larger
companies, because benefits cost more per employee when you have
fewer employees to enroll. In addition, some startups and young
companies are skittish about offering benefits that are complex to
initiate and difficult to undo if the company should fail.
Retirement plans are a good example. So although the total
compensation package should be approximately the same as at a larger
company, the mixture of cash compensation, benefits, and stock
options might be too risky for some employees. Stock options can be
a decent, if risky, substitute for a 401(k) plan, but they are a
poor substitute for health insurance.
companies are exempt from some federal labor regulations that govern
larger companies. For instance, companies with fewer than 20
employees do not need to comply with the Age Discrimination in
Employment Act and companies with fewer than 50 employees do not
have to provide leave for family emergencies. There are, of course,
practical reasons for these exemptions. Compliance with these
federal mandates can place an onerous burden on a small company and
in many cases compliance could severely impact the company's
profitability or even ability to survive.
disadvantage is that small companies often provide less training;
structured training programs are rare. For this reason, small
companies sometimes focus on hiring more skilled workers who can
operate better without training or support. During the interview
process, find out not just who your boss would be, but also whether
there are likely to be any informal mentors at the
if you manage people or functions in a small company, you are more
likely to be overridden by the CEO. CEOs of small companies
sometimes operate like owners and keep their fingers in everything.
And of course, they are owners, holding sometimes more than half of
the outstanding shares in the company. This tendency to be
ultra-hands-on is sometimes called "founder's syndrome." If you are
thinking of working in a small company, make sure you ask about the
CEO's style during your interviews.
issue is that some big companies undervalue small business
experience - a point worth considering if you want to work at a
large company later in your career. Many small companies provide
excellent opportunities, and some can boost your resume because of
the scope of your responsibilities and the ability to measure your
contributions more directly.
Questions to ask at an interview with a small
is your pay philosophy? Do you compensate employees at or near
is the company's financial position? How many months of cash does
the company have? Is it turning a profit? If not, when is it
expected to do so?
benefits does the company offer? What benefits does the company
intend to add over the next year?
there any kind of formal training? If not, how do people in the
company learn new skills? Does the company expect to add training
to its benefits package as it grows?
is the CEO's style? Does the company culture feature "founder's
best small companies don't stay small
Some of America's best companies were recently small companies:
America Online, Dell, Home Depot, and Google to name a few. Clearly,
working for one with a successful growth strategy can be highly
rewarding, especially if you get equity. Small companies offer the
potential of a job that can grow as the company grows and the chance
to be part of building a business.
Johanna Schlegel, Editor-in-Chief, and Dwight Ueda, Salary.com