Why Working at a Large Company Isn’t All It’s Cracked Up to Be

Large companies seemingly dominate recruiting because they can offer things smaller firms cannot. But behind that veil are realities that job seekers should be aware of.
large company

One summer while I was in college, my dad broke his foot, forcing him into a cast and one of those weird one-leg roller crutches.

As a result, he couldn’t drive. So either my mom or I had to drive him to work each day for a couple of weeks. My dad worked for a large company with a giant corporate headquarters located in Chicago’s suburbs.

Driving up to the main building required you to wind through wavy roads saddled with plush, expansive greenery. In the end, you pulled up to a towering, glass-walled entrance. It was a beautiful building, with an equally beautiful, top-of-the-line office space, fitted with amenities every worker likely dreams of.

By and large, my dad spent most of his career working for large companies. As a kid, big employers also employed most of my friends’ parents. This was what I thought working was. You went to college, learned a professional trade, and went to work for a large corporation. It was a privileged upbringing. You might switch jobs a few times, but, for the most part, it would be between big companies.

After all, big companies are big, the thinking went, because they are successful. As a result, people who worked for big companies tended to make more money and go on to have a more long-term, fulfilling career and life. And for a long time, economic studies confirmed this idea. For most of the past century, economists have noted that similar workers at large companies earned a significant premium over their counterparts who worked for smaller firms — a premium sometimes as much as 50 percent higher.

Today, big companies still dominate. On a macro level, most of the stock market’s gains in recent years have come thanks to a handful of large companies like Facebook, Amazon, Alphabet and Microsoft. And those companies, thanks to their success, have in turn been able to hire and retain top talent at the most specialized positions that are driving their success. They do this with office spaces and amenities that are otherworldly, the promise of world-changing work and the glitz of high pay and elevated status. For workers with the most in-demand skills and desire to acquire these things in their work, this is a great match.

Or is it? Is working for a large company really as great as it seems?

Consider that pay for people who work at large firms isn’t what it used to be — at least for some workers. As Stanford University economist Nicholas Bloom and his co-authors recently found in an analysis profiled in The Wall Street Journal, the nearly 50 percent pay premium large-company workers used to experience has shriveled down to a mere 20 percent as of 2013.

According to the study, it is mostly lower-paid workers, or those without college degrees, at large firms being hit. “The bottom 50 percent of workers by pay received almost no premium for working at large companies in 2013, while the premium remained steady for college graduates,” The Wall Street Journal reported. Top earners at large companies are earning more, and low-earners are earning less or their jobs are being outsourced or eliminated entirely. Fewer and fewer workers are enjoying the career provided by large companies, at least in terms of those earning lower compensation. In a way, it’s becoming harder and harder to work from the bottom to the top at large companies. Most companies are only looking to recruit from the top of other firms.

Pay isn’t the only reason working for a large company might not be for everyone. Large companies, due to their size, face challenges smaller ones don’t. This creates a different kind of work environment for employees. Even for highly skilled, talented employees, their influence might not carry very far in a large firm than it would at a small one. How employees are managed and the relationships they’re able to build might be limited at a larger company, where layers of management bureaucracy, steadfast culture norms (even the bad ones) and decades of entrenched processes and procedures stand in the way of change.

Full disclosure: I’ve only worked for a large company in a limited capacity, so take my perspective for whatever you think it’s worth. Most of my career has been spent working in smaller organizations; Human Capital Media, Talent Economy’s parent firm, has fewer than 50 employees.

Still, this column isn’t just me brewing in my own small-company bias. I could as easily write about how working for a small company has its cons for entirely different reasons. I digress.

Ultimately, people need to think through these elements when making their career choices. For many people, working for, say, Alphabet or Facebook or Procter & Gamble or General Electric is exactly what they’re looking for. They want to work on big problems with smart people in a large, highly established organization. They want the pay and status and lifestyle that come with it.

But for many people, working for a large company may not be what they think it is. Entrepreneurial-minded people might find the experience frustrating and limiting. They might feel as if, in the end, the juice of receiving higher pay isn’t worth the squeeze of the work and related stress that goes into it. For some, pay is important, but it isn’t everything. And once their pay reaches a certain threshold diminishing returns come, leading them to move their value proposition somewhere else.

This idea is only gaining more steam, as the modern economy propelled by technological innovation enables more people to break free of large companies and launch businesses of their own, or create smaller companies with limited overhead expense.

Most important, working for smaller firms enables a different kind of flexibility and work-life balance, things that are increasingly important when it comes to solving big workforce problems like the gender pay gap and progressive parental leave for working families.

Big companies will almost always dominate the spotlight — for good reasons. But all big companies started out small, and working in one of those firms, even before they become big, remains a fulfilling and worthwhile experience for many workers.

Frank Kalman is Talent Economy’s managing editor. To comment, email editor@talenteconomy.io.