Moving to a Small Company
Can Lead to Big Rewards

(courtesy of The Wall Street Journal)

Leaving behind a brand-name firm is a growing alternative for professionals.

After learning his job at Bristol-Myers Squibb Co. was being eliminated late last year, Jeff Macdonald launched a job search that led to him away from big pharma—and their big names. He's now one of about 160 employees at a small biotech firm.

With the U.S. economy under duress, a growing number of experienced workers may find themselves moving from large companies toward smaller professional firms. In recent weeks, several large employers announced plans to trim their work forces — among them Bank of America Corp., Yahoo! Inc. and Nortel Networks Corp.— while small companies hungry for top-talent are happy to take in corporate exiles.

There is a significant upside for professionals moving from a big pond to a smaller one. Senior managers at small and midsize firms often find opportunities to take on more responsibility, earn greater recognition for successes, gain ample exposure to new practice areas and have a more direct impact on a company's bottom line.

To be sure, small firms seeking to attract big fish still have to prove they're a stable alternative that offers competitive pay, but for some, the tradeoff is worth it.

More Impact

Before joining Internet company LinkedIn Corp. in July, Patrick Crane was one of five marketing vice presidents at Yahoo. He's now the sole vice president of marketing at LinkedIn, which has roughly 220 workers.

"At Yahoo I shook [CEO Jerry Yang's] hand twice and had maybe less than five conversations with him in four years," he says. "Now I meet with our CEO [at LinkedIn] several times a day."

That close proximity to upper management often leads to quicker action. Mr. Macdonald, the former Bristol-Myers worker, says he has the power to get things done more expeditiously at his new employer, Acorda Therapeutics Inc. in Hawthorne, N.Y. "There's less bureaucracy," he says. "Decisions are made without having to go through a number of layers of approval."

Being able to influence a company's bottom line is what led Scott Ruthfield to join Inc. in April as vice president of engineering and technology. "Everybody plays a core role, so if you do a good job, you are directly contributing to way the business is going to succeed," says the former Inc. manager.

That can also mean more ready recognition. "Every success you have in a small business is magnified by a hundred," says Dean Medley, senior vice president of recruiting at Medical Methods Inc., a staffing firm in Jacksonville, Fla., with 50 employees. "When you land a new account, it's a huge deal."

Small-company converts also mention the room to gain experience in new practice areas—or to return to the heart of a business—as another plus. "You get divorced from the nuts and bolts of operating a business when you work for large companies," says Mike Barnes, a newly hired logistics executive at Halton Co., a provider of construction equipment in Portland, Ore. Mr. Barnes says the depth of involvement he has at his new firm has another upside: A level of job satisfaction he says he hasn't felt in a long time. Mr. Barnes also says his peers at Halton are less competitive than his former colleagues at larger firms. "People aren't climbing over each other attempting to reach the next level," he says.

[Big to Small]
Build connections. Small companies most frequently recruit new workers though employee referrals and networking, says Gary Rich, president of Rich Leadership, an executive-advisory firm in Pound Ridge, N.Y.
Reach out to recruiters. Despite their hefty fees, more small employers are investing in executive search firm's services to access the market's recent influx of big-company talent, says Andrew Knox, a senior client partner at recruiter Korn/Ferry International. Get in touch with recruiters you know or seek out referrals to search professionals to offer yourself as a candidate.
Do company research. Get to know a prospective employer's products, competitors and goals, says Mr. Rich. "That's the meat and bones of small companies, and it's often interview rhetoric in larger ones," he says.
Be specific. Offer examples of ways you can help a prospective small employer, advises Tom Bonney, managing director and founder of CMF Associates LLC, a management-consulting firm. "People from large companies tend to rely on their brand. They do a lot of name-dropping," he says.
Be humble. A big-company ego can derail your success at a small firm, says Jeff Butler, CEO and chairman of American Education Corp., a 74-person software provider. Last year the Oklahoma City-based company recruited a vice president of sales from a large publishing company. This person was loath to handle certain administrative tasks or change work styles, recalls Mr. Butler. The executive lasted just four months.

That doesn't mean there aren't drawbacks to going small. For one, blunders are magnified. "When you have a setback, it's extremely painful," says Mr. Medley, who joined Medical Methods in 2004 after being laid off from Bank of America Corp.

Small businesses often have fewer support systems than large firms. "You might not have a legal team looking at everything you do," notes Mr. Rich. "There may not be a [human-resources] department." Office perks like free coffee and catered meetings might also be absent, he adds.

Recruiting Challenges

Bringing in brand-name talent can be a challenge for small companies, though. Some senior-level job hunters eschew such firms because they're typically perceived to offer less stability, says Jim Bethmann, global sector leader at Heidrick & Struggles International Inc., an executive-search firm.

Tighter budgets mean smaller companies sometimes can't afford to pay salaries equal to those of big firms, says Roy Cohen, an outplacement counselor whose clients hail from such Wall Street firms as Goldman Sachs, Merrill Lynch and Bear Sterns. Case in point: This year, chief financial officers at companies with $500 million or more in sales are projected to earn between $257,500 and $370,500 in average annual base pay, according to a 2008 report from staffing firm Robert Half International Inc. CFOs at firms with up to $50 million in sales are expected to receive between $91,000 and $122,250.

But Mr. Cohen also notes that many small employers provide alluring trade-offs such as shorter workweeks, less travel and work-life balance incentives including telecommuting arrangements and flexible schedules.

Employees who trek long distances to get to work at Rising Medical Solutions Inc.'s offices in Chicago and Milwaukee, for example, are given laptop computers with wireless Internet access, says Jason Beans, chief executive officer of the 115-person management-consulting firm. "They can leave at 4 (p.m.) and do work on the train," he says, adding that he plans to recruit about a dozen senior professionals this year, along with 40 others.

To be sure, some small employers eager to take advantage of the wider big-company labor pool say they're willing to compensate new hires more competitively. "If we want super stars, we have to be able to pay appropriate salaries," says Robyn Marcotte, senior vice president of talent at ePrize LLC, an interactive-promotions company. The Detroit-based 350-person firm wants to add 30 senior-level employees and 20 others by the end of next month, she says.

And, niche firms that compete with brand-names are more likely to offer salaries that are similar to big companies—and, perhaps, other ownership incentives. Tom Ryan, founder and co-chief executive officer or ICR LLC, a small financial-communications consulting firm, says he offers consultants a base salary he calls "competitive, even by Wall Street standards." Consultants also earn a percentage of their billings, "so there's no income cap," he adds. A performance-based pay model is critical for enticing top talent, notes Mr. Ryan. "Historically it's been difficult to get the right people," he explains. "You've had an incredible bull market since the tail end of the Internet bubble and the commissions these people generated have been really good." The Westport, Conn.-based firm, which services more than 200 publicly traded businesses, employs roughly 100 people and plans to add 10 more consultants this year.

Mr. Ryan's plans to bulk up may be a sign of the times for small and midsize professional firms. A recent survey of 500 firms with annual revenue ranging from $100,000 to $25 million (with average revenue between $5 and $9 million) shows that 57% plan to add workers this year, reports The Alternative Board, a small-business advisory board based in Denver.

"This is definitely a great opportunity for us to recruit talent from big companies," says Kaity Benedicto, human-resources director at Travelzoo Inc., an online media company with roughly 150 employees. "We've noticed more individuals are willing to talk to us now than ever." The New York-based firm plans to grow its staff by 40% this year, mainly with senior-level technology hires.