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The Advantages of Working for Private vs. Public Firms

by Linda Ray, studioD

For many American workers, the type of company they work for plays little role in their day-to-day activities. They still must perform to an expected set of standards, whether it’s increasing sales or providing superior customer service. Others, however, notice the difference when it comes to pay, benefits, company culture and the complexity in the chain of command.

Cultural Differences

Public companies always have stockholders to please – sometimes at any cost. Private companies, on the other hand, can focus on retention and making the workplace more pleasant for employees. On ''Fortune’s'' 2013 best companies to work for list, the top five were privately held, primarily due to the company culture. Without having to constantly worry about tweaking earnings to please stockholders, companies can offer incentives such as fun-filled employee lounges and fewer layoffs when the bottom line is in jeopardy.

Pay Discrepancies

Employees working for private companies may enjoy a more relaxed culture with less fear of stockholder interference, but at the same time they don’t have the option of earning big bonuses when they hit certain stock plateaus. Many talented employees flock to publicly-held companies for the signing bonuses they’re offered. Compensation plans for publicly-held companies are typically more generous and include opportunities for future gains not possible in privately-held business models.

Reporting Complexities

When managers work for a privately-held company, they usually know to whom they must report. They have a direct line to the boss in many cases and are given more autonomy for making decisions based on the responsibility given to them when they were hired. Managers in publicly-held companies have boards of directors to report to and often have difficulty getting a quick response when they need it. Chains of command aren’t always clear and often change, leaving managers adrift and unsure of their next moves. Private companies are more agile and can respond to market trends quicker. At the same time, managers working for private firms owned by multiple equity partners also experience thwarted direct access to the decision makers.

Opportunities for Growth Differ

Public companies are designed to grow. It’s one of the main reasons that businesses sell stock – to get capital to expand. With expansions come increased opportunities for employee growth. Private companies, on the other hand, often are satisfied to remain small and experience slower growth that they can pay for as they go. At the same time, they also retain the ability to keep trade secretes since they don’t have the same regulatory reporting rules to follow.

About the Author

Linda Ray is an award-winning journalist with more than 20 years reporting experience. She's covered business for newspapers and magazines, including the "Greenville News," "Success Magazine" and "American City Business Journals." Ray holds a journalism degree and teaches writing, career development and an FDIC course called "Money Smart."

Photo Credits

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