A recent survey published by Gallup showed that when employee engagement is broken down by company size, the smallest companies have the most engaged employees—and it wasn’t even close.
42% of employees working at small companies of ten and fewer reported that they were engaged at work, a huge increase over the 27% to 30% of engaged people at larger companies.
Unfortunately, only 9% of the U.S. employees work in small companies compared with the 44% of people who work at companies with over 1,000 employees —and that’s why we’ve seen a massive push from even the largest enterprises into organizing in small, self-contained teams.
Here are three fascinating illustrations of why employees in small companies are more engaged at work and what that means for you and your company.
We’re All Social Loafers
In the 1970s, a team of researchers from UMass Amherst confirmed an intriguing social psychology phenomenon known as “social loafing.” They had different-sized teams pull on a rope, but unbeknownst to the entire group, some of the rope-pullers were only pretending to pull. What happened was that individuals on larger-sized teams pulled with less effort than their colleagues on smaller teams, even though the larger teams actually had the same number of people functionally pulling as on smaller teams.
Even when you think you’re on larger teams, you don’t try as hard.
Jeff Bezos’s Two-Pizza Rule for Autonomy and Empowerment
Teams should be no greater than the number of people who can be fed by two pizzas, according to Jeff Bezos, founder and CEO of Amazon.com.
Bezos found that when teams get bigger than 10 people, they become subject to groupthink, the psychological phenomenon where group members favor consensus and minimization of conflict over critical and independent decision-making. Groupthink kills your initiative to engage actively in thinking through problems yourself, drawing your own conclusions, and voicing those opinions.
Falling for the Team Scaling Fallacy
A group of business school professors analyzed what they called “the team scaling fallacy,” or the recurrent misbelief in the ability of larger teams to get stuff done more quickly. They asked two-person teams and four-person teams to assemble the same Lego figure. Two-person teams took 36 minutes on average, while four-person teams took a whopping 52 minutes to finish assembling.
Worse yet, we become more overconfident as our team size increases. The study showed that large teams consistently underestimate the friction that additional team members add to communication overhead and other process losses. Larger teams were nearly twice as overoptimistic about the time it would take to complete the Lego figure, a huge margin of overconfidence compared with smaller teams.
The mere expansion of people in a company means there’s a precarious potential for people to experience less motivation, diminished decision-making capabilities, more miscalculation, and overconfidence. While most businesses revolve around growing bigger and bigger, it turns out they should look to what small companies do best to help prevent employees from checking out.