Rising Costs Lowers Boom For Small Businesses

January 24, 2001 (PLANSPONSOR.com) - Large company management talent appears to be sitting tight, rather than opting for opportunities at smaller firms, as stock option values continue to slide, according to a new report.

The report by outplacement firm Challenger, Gray & Christmas found that just 57% of managers and executives at large businesses placed accepted new jobs with small firms during the fourth quarter, compared with 72% a year ago.

Benefit Burden?

Challenger also noted that rising costs are placing additional burdens on small employers, including the cost of providing benefits. Last year health care costs rose 8%, and are expected to rise another 11% in 2001.

The trend could be the latest sign of a slowing economy whose growth has been fueled by the dramatic surge in small businesses, according to BNA. Challenger said small businesses employ more than half (52%) of the private workforce and provide 51% of private sector output.

The report suggests that smaller employers are likely to have to settle for those managers with “fewer credentials, less experience, and lower salary expectations.”