How Do Layoffs Differ Between Small and Large Companies?
Get Ahead by LinkedIn News
We talk about leveling up, about geting ahead in your career and about excelling where you are right now.
You’ve likely seen the news of mega company layoffs and social media posts from their former employees looking for new employment. These professionals have a built-in “launch-pad” of sorts — but what about employees of smaller companies? While mega companies are often able to offer generous severance packages to deal with the economic landscape, smaller businesses may be faced with tougher, more impactful decisions.
By Helen Harris
You’ve likely heard about the mass layoffs at well-known tech and “mega” companies, such as Twitter, Amazon, Stripe and Meta. Employees of these companies and other substantial businesses were laid off by the hundreds and thousands, jolting the workforce.
Teegan Bartos, 2022 Top Job Search Expert to Follow on LinkedIn, career coach and resume writer, provided the following data in a recent post:
These are some of the most qualified, skilled individuals in the country who were propelled into the job market. And while any layoff is a discouraging “fork in the road,” you can’t help but question if these individuals have a slight advantage over those who have and are being laid off from the lesser-known, smaller businesses.
Layoffs at Mega Companies vs. Smaller Companies
One obvious difference to start is size. And with size usually comes money, which can fund the layoff severance packages.
“The bigger the company, the bigger the resources,” said Jon Hyman, attorney for employers and craft breweries. “And the bigger the resources, the more there is available to fund a pool of severance for laid-off employees. The Fortune 500 companies have billions of dollars in revenue to fund severance, and smaller companies [typically don’t have that type of money.]”
Hyman continues to reference the WARN Act and states that employees of larger companies may have the “advantage” of receiving a 60 calendar-day advance notification of planned closings and mass layoffs (for companies with more than 100 employees per the act).
Elena Sabry, career and job search coach, mentor and personal brand strategist states that usually, large companies will offer a severance package for laid-off employees. And she also says that sometimes, these companies may even work with recruiting agencies that offer outplacement services to manage layoffs or redundancies, as well as offer laid-off employees coaching and career consulting training and workshops.
“I’m a member of The National Resume Writers Association, and the majority of my colleagues are extremely busy at this moment, as many job seekers prefer to work directly with career consultants, coaches, resume writers and career professionals,” said Sabry.
As to if these individuals are ultimately better off for working at a larger company when seeking a job again, Sabry does state that undoubtedly, if you worked for industry leaders and big brands, it is a big plus to attract people to your profile. And it’s also a big bonus if these professionals have recommendations from ex-colleagues, bosses, happy clients and partners from their previous work.
But ultimately, Sabry stresses that personal motivation is the engine of the job search or career change.
“It’s like a degree from a prestigious university does not guarantee career success,” said Sabry. “You can have the best [career] coach or resume, but if you don’t apply, don’t network or cannot convince the interviewer that you are the right candidate, it doesn't matter where your last job was.”
So how does the above differ from the hypothetical mom-and-pop insurance company that may have to lay off a handful of employees or even a mid-sized, state-wide company that laid off 10% of its employees?
“When a small company is making the decision to lay people off, they're doing it because there's a pretty pressing economic need to do so,” said Hyman. “And that might mean that there's not a pot of money to pay any severance or any meaningful severance.”
Another main aspect is that employees don’t have a built-in platform of status once they are laid off.
But with the recruiters increasingly looking toward skills and the rise of the “skills economy” versus where someone went to school, clubs they were in, or where they previously worked — this should not present a substantial issue.
Benefits of Working for Large and Small Companies During Times of Mass Layoffs
While employees of large companies who have been laid off do seem to be getting more visibility than those from smaller companies, that doesn’t mean that working for a smaller company is all bad. There are benefits to consider in working for both sizes, and to show this point, Paychex surveyed over 991 employed Americans about their preferences regarding big and small employers and then analyzed their flow between each. Here are just some of the results:
Individualized visibility:
Personal impact at business:
Supervisor relationships:
Workplace culture:
Management structure:
Recommended by LinkedIn
Job security:
Opportunity for advancement:
Benefits:
As you can see from the above data, both companies of substantial size and those of smaller size have advantages when it comes to times of economic hardship.
For instance, regarding the topic of job security, Paychex states that over 40% of professionals thought they would have better job security with a large employer. But it's also worth noting that 26% of employees thought smaller meant more secure.
“The intimate and personal environment that comes with small businesses often leads to a sense of family among employers and employees, making it more difficult for job cuts to occur,” reported Paychex.
Other categories of impact related to smaller business include “personal impact at business,” “supervisor relationships,” and “workplace culture,” as these all likely factor into an employee’s sense of job security.
Hyman backs this notion, stating that, in general, it’s a much more of an impactful decision for the operations of a smaller employer to have to let go of 10% of a 100-person operation versus 10% of a 70,000 person workforce.
This is not to say that all layoffs are not serious, difficult and without consequence to all involved — but rather that when it’s a smaller operation, the ground rattles a bit harder.
But even on shaky ground, these companies are still doing well among those surveyed. The Paychex report found people are over three times more likely to have a high level of confidence in small businesses (companies with 500 employees or less) compared to big businesses.
“The number of employees is an obvious indicator of a business’s size, but it also says a lot about the work environment. Larger corporations with thousands of employees tend to be more structured and team-driven, while smaller businesses can be more intimate and personable. Employees recognized these differences and thought small employers would provide a better experience with individualized visibility, personal impact on business, and supervisor and co-worker relationships. Alternatively, the majority of employees thought large employers were better suited to provide benefits, employee resources, and personal salary or income,” the report states.
Ways Employees at Any-Size Company Can Prepare
Getting a generous severance package, great work experience, recommendations and connections from your most-recent job is the best-case scenario; however, Bartos reports that some companies are pressuring their employees to voluntarily resign and/or retire early with less-than-desirable severance packages.
Here are some points she lays out, whether you are at a large or small company, and you are faced with the question of if you should voluntarily resign:
Despite not having international recognition on your LinkedIn profile or resume, you can bring other attributes to the job-search and interview table if you’ve been laid off from a smaller company.
But if you have not been laid off and are still working for a smaller company — and feeling a bit uneasy — Sabry states the best thing you can do is to stick with it and show the employer that they can rely on you.
“Keep an eye on your industry: Know what’s going on, what’s hot, who is hiring, what skills are in demand and know your worth.”
She also makes a critical point: Don’t rely on your company because everything can change overnight. While you may feel safe at the moment, you need to have an action plan in case something does happen.
“This layoff period proved once again that during a crisis, the best investment is in yourself, as every job is temporary,” said Sabry. “That is why I would recommend working on your brand and personal marketing: Improve your marketable skills, get necessary online training, start networking and showcase your expertise and work. And the best way to do it is through LinkedIn where employers and opportunities are.”
Hyman also states that most companies should want to provide a “soft landing” for employees if layoffs do occur — from a risk and liability standpoint.
“Severance comes with a release agreement for employees to sign, and that gives the lawyer and the company some certainty that the company is not going to get sued,” said Hyman.
But regardless of the size of the company, a layoff is a serious decision and employers do and should handle the process with care.
And once companies tell the affected employees, they should also notify the remaining staff about the layoffs and tell them what it means for them and if it affects any job or responsibility changes.
“The most important thing is to treat your employees with dignity and provide as much support as you can,” said Ian Clark, head of the Americas at Frank Recruitment Group, in the Patriot. “Nothing is more degrading to someone who’s worked hard for your business than simply being handed the paperwork and shown the door, so sit down with them in person, express your appreciation, and offer any resources that might make the transition easier.”
Top Takeaways
How Do Layoffs Differ Between Small and Large Companies?