Why do MNCs shy away from hiring employees of smaller companies?

Perception rules everywhere, even when freshers at the beginning of their careers join small, unknown companies, multinationals or large companies shy away from hiring them.

Working in a small company—is it a stigma? How prevalent is this prejudice?

If it does actually prevail, then it is apparent that bigger brands look more closely at the candidates’ former employer’s brand value than their role there. Candidates suffer a double whammy when their former companies happen to be not only small but unknown to the recruiter.

Understandably, everyone does not have beginner’s luck! How many bag prestigious jobs the moment they pass out of college? The truth is that more people end up joining smaller companies and that is not the end of their problems. There are difficult times ahead if they have passed out of ordinary institutes— bottom 30 per cent of ranking.

Rajendra Mehta, CHRO, DHL says, “In my mind, it is a bias that recruiters carry. Also, they demonstrate a bias for premier business institutes and specific industries. For instance, FMCG is perceived as the more mature sector and wants to hire people who have worked there.”

 

“ larger companies are sensitising the culture to assimilate LGBT community within their organisations. They are continuously tweaking their policies and making provisions in matters, such as women’s rights and sexual harassment cases. However, small companies are still very rigid and not ready to change”

Mehta adds, “Sometimes recruiters face pressure to expedite hiring because of an immediate requirement. In this case too, recruiters operate with a biased mindset just to take a fast route and reduce efforts.”

Similar mindset is seen when we look at social-media profiles of senior professionals. Many of them, at the peak of their careers, eliminate the names of the first few companies that they have worked for, just because they are small and unknown names. They also tend to drop the details of colleges/institutes attended, if the same have a low ranking. This establishes that people do carry a bias against unknown brands, be it organisations or institutes.

However, the bias can be contextual as there are some exceptions, for instance, finance and technology functions. Small companies provide great accounting experience to their employees. MNCs will be open to hiring them at junior levels because of the specialised skillsets and knowledge that they possess.

Even in the technology space, small companies produce very sound technical experts who have an exhaustive knowledge of one technology. MNCs looking for employees in that area of expertise will be interested in hiring them. “Having worked with a technology guru one-on-one, the person can be in demand because of the direct learning and expertise she/he receives,” explains Srikanth Karra, CHRO, Mphasis.

The point to note is that in this case, the person is leveraging the brand value of the expert (guru) under whom he works and not the company.

But when employees are expected to play a dynamic role and the culture criterion is important, then MNCs will prefer to ignore employees who have only worked in smaller companies. For instance, the HR function in a big MNC requires the employees to have experience of handling HR at a large scale.

Apparently, MNCs have very elaborate processes and a highly sensitive culture. A vast cultural gap exists between the companies operating at the two ends of the spectrum. Karra points out,“LGBT for instance—the larger companies are sensitising the culture to assimilate them within their organisations. They are continuously tweaking their policies and making provisions in matters, such as women’s rights and sexual harassment cases. However, small companies are still very rigid and not ready to change.”

Moreover, employees from smaller companies are rarely considered for senior managerial positions in MNCs. This is because there are plenty of processes, networks and complexities involved. Moreover, no organisations have the time and bandwidth to train people at that level.

“I personally believe not hiring people from small companies is an unfair practice. Those who actually possess the ability lose out on the best of opportunities because of these biases. While companies do talk about fairness at their end, where is it really?”

“While we will train the junior level, we need trained people for the senior level! These days you are expected to be productive in 20 days, or maximum 30 days. Ten years back, you could take six months to settle down but not today,” opines Karra.

“I personally believe not hiring people from small companies is an unfair practice. Those who actually possess the ability lose out on the best of opportunities because of these biases. While companies do talk about fairness at their end, where is it really?” questions Mehta.

People do take the easy route by looking at just a few organisations and sectors for hiring. It’s time to change that. The companies in the recruitment space urgently need to realign their processes to curb this unfair practice. All the stakeholders in this process need to be educated to change their mindset and make this process fair and sound. In the initial shortlisting, there should be a conscious effort to choose candidates from multiple sectors and backgrounds.

“This matter should be a part of the ‘fairness-check-list’ in each organisation and the same needs to be acted upon. I think, there is a need for a major shift in mindset and that should be unanimously enforced by all stakeholders,” concludes Mehta.