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5 key differences between small and large organisations

Published 5th December 2013 by IIP Scotland

At Investors in People we work with organisations of all sizes and sectors.  Recognising that each organisation has their own unique needs is key to what we do.  It is also important however to recognise other factors that come into play. 

As such, we thought it interesting to examine some of the differences between large and small organisations.  Here is our list of the top 5 and why.

Politics

Due to the myriad layers of management and the generally long standing age of larger organisations, politics tends to play a lesser role within them than within their smaller counterparts.  In small organisations, particularly start ups, the owner of the organisation may have long standing personal relationships with other employees or owners.  Husband and wife teams are also common. For a person coming into an organisation such as this, as I did some years ago, it can be challenging to nurture the right relationships without alienating others who also have direct influence over leaders.

Structure

Without question, one of the clear differences that define smaller and large organisations is the bureaucratic nature of the larger business allied with a more hierarchical structure.  Due to the amount of personnel within a large company, they are inherently more hierarchical.  This can result in teams working in silos, or without an overarching understanding of the nature of the business.  However it also allows for employees to specialise in their job profile, as anything that falls out with their remit will invariably come under the remit of someone else.  By contrast in a smaller company, due to the flatter nature of the management team, it is easier to interact with decision makers as they will probably sit only a few feet away.

Furthermore, it is also easier to make swift and reactive decisions, often in response to customer requests that can give small businesses an edge over their larger cousins.  Due to their often cautious nature, the larger business will often delegate decisions to committees or sub-committees, and although they will have more time and resource to consider a response, will also take much longer.  Where large companies do have an advantage is in their resource capabilities.  With more employees, revenue streams and amenities at their disposal, it is much easier for them to direct these to a particular issue, product or location.

Finally, the environment within the two different types can also be very different.  The structure in large businesses tends to be epitomised by policy manuals, HR inductions, job descriptions, handbooks and endless reams of meetings.  In smaller businesses this tends to be far more ad-hoc with employees having more freedom to do as they see right.

Employees

The melting pot that makes up the employee list of any organisation is always interesting, but it can differ in look between large and small companies.  In smaller ones there tends to be a more diverse workforce with young and old, single, married and divorced, and all with differing aspirations.  In many large organisations, the workforce can begin to take the shape of the company itself; that is with many adopting the culture of the company. Dissenters can then be pushed out, leaving an almost standardised and regulated employee.  There is also a strong argument that large businesses tend to attract those who are looking for job security, while the smaller ones appeal to those who wish to work across a number of different areas, or are looking for growth, change or risk taking.

Salary

One aspect that few people disagree with is that in larger companies the salary tends to be higher.  This aspect is recognised by smaller employers however, and many combat this by adding in perks such as private healthcare or gym memberships to make their benefits packages more substantive.

Culture

Perhaps one of the most marked differences between the two types of organisation is that of culture.  For new start ups, every decision taken can be a dangerous one, and so they tend to be less risk averse than larger well established companies.  For big business, making a small percentage increase on an existing widget when they already have a turnover of £500m can make all the difference, and they have therefore tended to shy away from risky decisions. Instead they prefer being more conservative and catering for their already existing customers by improving what is already there.   Many large businesses are now trying to find a way of maintaining the small business mentality irrespective of their size.  They recognise that elements such as long term planning as opposed to short term stability combined with an element of risk taking will benefit them in the medium to long term.

In the final analysis, while examining the differences can be both interesting and informative, every organisation must be taken on its own merit.  While many large companies will illustrate some of the attributes shown to them above, so will many smaller companies, and vice-versa.  While this sort of enquiry can give us guidance on what an organisation may look like on the inside, ultimately it is no more than that.

So there you have our shortlist of what some of the key differentials between large and small organisations can look like.  Do large and small companies really mirror each other in their structures, culture etc or is this just a concept that has been perpetuated by the internet and management speak?

If indeed they do have differences, have the ones identified above outlined them in enough detail, or are there more subtle aspects that mark them apart?  Either way, we’d be delighted to field your comments and questions below.  We look forward to hearing from you!