Management: Thinking Small

While unemployment grows among the unskilled and semiskilled. U.S. business cannot seem to get enough of one prized employee: the executive. This week, months before graduation, executive recruiters are swarming over U.S. campuses in their spring recruitment drive for trainees. The big. nationwide companies dominate the scene. Despite the blandishments of big companies, however, an increasing number of both young and seasoned executives are choosing smaller firms (those not among the top 500 U.S. corporations) as the best place to pursue their careers.

Smaller companies now attract a respectable 15% of the graduates of Harvard Business School, a traditional training ground for big business, and 40% of those from Southern Methodist. A recent poll showed that 65% of the students at Stanford Business School preferred to enter smaller businesses. Says Stanford Business Dean Ernest C. Arbuckle: “There has been a great growth of interest in the smaller companies in the past five years.”

Opportunities & Options. The big firms, of course, still catch far more men than the smaller ones. They have more jobs to offer, as well as old-name prestige, big money—up to $625 a month for a beginning engineer—and the security that attaches to a well-diversified company. But such giants as Jersey Standard admit that some executives frequently feel a sense of frustration in the big corporation. The chief lure of small companies is greater responsibility in a hurry. Says Boston’s Norman Krim. who swapped a Raytheon vice-presidency for the presidency of a discount house called Radio Shack: “You can move fast in a small outfit, but in a big company you have to wait for six or eight people up ahead of you.” Promotions are swifter in small companies because competition is weaker; ideas also move to the top faster because fewer committees stand in the way.

“No one in a large company can avoid becoming specialized,” says onetime Ford Executive William Porch, now vice president of Detroit’s Fenestra Inc., a maker of building products. In small companies, which usually cannot afford a broad spectrum of specialists, young executives often work simultaneously in marketing, advertising and accounting, sometimes carry out complex negotiations involving labor contracts, mergers and loans. Small companies promote the idea of sharing an expanding future, and are more apt to offer their executives stock options. Some are also beginning to pay higher salaries than many larger companies.

Formula for Success. In the growing competition for executive talent, large companies are trying to recover the nimbleness of the small company. Standard Oil of California has set up a department to scout out promising young executives who might otherwise get lost in the company, shifting them among departments to show them fresh challenges and hints of better things to come. General Electric, a company that has broken itself into smaller divisions, sends promising younger executives back to college for advanced degrees. These steps should in time help smaller companies, too. since some of their best executives were first trained by big companies. At a recent meeting in New Jersey, eight small-company presidents framed a formula for success: “Hard work, persistence, luck, patience—and learn everything you can from General Motors.”