Challenger: Big Firms Could Be Hiring Leaders

June 26, 2003 ( - Large US companies may well lead the nation's job recovery, even though small businesses have traditionally been first to pull out of a recession through hiring sprees.

Outplacement firm Challenger, Gray & Christmas’ quarterly survey of discharged managers and executives reveals that following the last recession in 1990 and 1991, many job seekers were hired by small firms. In fact, by 1992 and 1993, 71% of rehired managers and executives went to small businesses, and al most all of the new jobs created in the early 1990s were at small firms with fewer than 500 workers, according to the Small Business Administration.

However, in the quarter ending March 31, 2003, small businesses were responsible for hiring just 54% of job seekers. Even now, with some signs that the economy may begin to rebound later this year, small businesses are still reluctant to hire, according to Challenger.

Challenger said that n
ew economic realities might give big business the upper hand this time around. A dominating factor in the hiring process is the ability of large firms to spend money to secure the best talent. That may include the cost of relocation, offering transplacement services for a trailing spouse, a hiring bonus, and a competitive salary.

Smaller firms are more likely to have been hurt by the long recession. “Large, diversified companies are able to shift production or services around to compensate for heavy losses in one area,” Challenger said in a statement. “Most small businesses do not have this luxury, so they must simply batten down the hatches and wait it out.”

Challenger also pointed out that large companies, which are allowed only a 50% deduction for capital spending in recent tax reform legislation, may be willing to take the risk of purchasing new equipment now in order to realize the tax benefits. Doing so will create more demand for workers to operate and manage the new assets, he said.