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Quiet Quitting in SMEs: How Size Influences Management

Feb 4, 2024

In our recent article, we discovered quiet quitting—a trend where employees only do what's required and no more, especially prevalent among Gen Z. This raises an intriguing question for our next discussion: How does the size of a company, particularly small and medium-sized businesses, impact this trend? We found that a significant portion of employees worldwide are engaging in quietly quitting, with Gen Z employees particularly preferring not to exceed a 40-hour workweek. This shift in work attitudes suggests that smaller businesses need to rethink how they engage with their employees. In this article, we delve into how a business's size can influence quiet quitting and provide actionable insights for small business owners aiming to adapt to these workplace changes.

 

Want to learn about how quiet quitting differs among generations? Check out our article here

 

Interview with Irwan

Turning our focus towards the impact of company size on employee behavior, we bring in insights from Irwan Hermawan. As the CEO of Markathing, a prominent marketing communications agency in Jakarta, Indonesia, and the owner of four successful steakhouse chain restaurants, Irwan brings a unique perspective to the table. His academic achievements as a First-Honor master’s graduate in marketing and communications from Melbourne University further enrich his understanding of workplace dynamics. In our conversation, Irwan highlights two critical aspects that fundamentally influence quiet quitting: generational differences and the size of the company. While our previous discussion illuminated the unique behaviors of Gen Z and the need for adjusted management styles, Irwan's experiences suggest that the size of a company plays a significant role in shaping employee behavior at a fundamental level.

Quiet quitting based on company size: Strange and yet interesting

Irwan’s insights suggest that quiet quitting was mainly a big company problem. Yet, surveys show that in smaller firms (1-50 employees), 85% see themselves as quiet quitters, versus 76% in larger ones (501+ employees). This surprising fact suggests quiet quitting affects businesses of all sizes, challenging the idea that it's less common in SMEs due to their close-knit nature and direct management.

The real picture is complex. While data might suggest a higher incidence of quiet quitting in smaller firms, this actually highlights the critical impact of internal variables such as management style, company culture, and team cohesion in SMEs. These elements can profoundly affect employee engagement and the prevalence of quiet quitting.

Understanding Differences Between SMEs and Large Corporations

Irwan highlights that SMEs benefit from a more immediate impact of leadership qualities like open communication and empathy, fostering a positive work environment quickly. In contrast, larger corporations face challenges in maintaining the same level of influence due to their complex structures, making employee engagement and the spread of corporate culture more gradual.


  1. Employee Engagement:

  • SMEs often see higher direct engagement due to smaller teams where individual contributions are easily recognized and valued, fostering a closer connection to company goal.

  • Large Corporations use structured programs to engage a vast number of employees, facing the challenge of making each employee feel valued on a personal level.

 

  1. Management Style and Communication:

  • SMEs usually have a more informal and flexible management style with open lines of communication, enhancing transparency and accessibility.

  • Large Corporations involve more hierarchical layers and formal communication, which can sometimes create a distance between management and staff.

 

  1. Culture Establishment:

  • SMEs can quickly adapt their culture based on the vision of founders or executives, allowing for rapid changes and a unified culture.

  • Large Corporations have more entrenched cultures that are harder to change and may consist of various subcultures due to size and diversity.

 

  1. Resource Allocation:

  • SMEs work with limited resources, often leading employees to take on multiple roles, which can be both a challenge and an opportunity for broadened skill sets.

  • Large Corporations offer specialized roles due to their extensive resources, fostering deep expertise but potentially creating silos.

 

  1. Innovation and Adaptability:

  • SMEs are typically more agile, able to pivot quickly in response to changes or challenges, giving them an edge in fast-moving sectors.

  • Large Corporations might move slower due to their size but have the capacity for significant investments in long-term innovation.

Implications

While SMEs theoretically have advantages in fostering employee satisfaction through close-knit teams and clear communication, the issue of quiet quitting appears more pronounced. This paradox suggests that while SMEs are positioned to engage employees effectively, the very nature of their intimate and direct working environment could inadvertently contribute to quiet quitting. It underscores the need for SMEs to critically evaluate their management styles and operational practices to mitigate this trend, emphasizing the importance of nurturing a supportive, transparent, and responsive workplace culture.

 

Let’s factor GenZ into the equation

Addressing quiet quitting in SMEs requires a keen focus on GenZ, the generation at the heart of this trend. With studies indicating that up to 85% of employees worldwide might be quietly stepping back in their roles, and a significant portion of them being GenZ—who value a strict 40-hour workweek for work-life balance—it's crucial for SMEs to adapt. This generation seeks meaningful work within supportive environments, emphasizing the need for SMEs to foster a culture that aligns with these values. By tailoring strategies to meet GenZ's preferences, SMEs can effectively combat quiet quitting, ensuring a more engaged and satisfied workforce.

For more information, please check out our article here

Leadership: A skill to develop

In SMEs, while there's a natural proximity between leadership and employees that can serve to prevent quiet quitting, certain leadership pitfalls can negate these advantages, leading to employee dissatisfaction and operational failures. Here’s how not to run your business:

 

  1. Poor Communication: Avoid assuming employees understand your vision without clear communication. A lack of open dialogue about expectations, updates, and feedback can leave employees feeling disconnected from the company's goals, fostering an environment ripe for quiet quitting.


  1. Neglecting Employee Recognition: Failing to regularly acknowledge and reward hard work can diminish motivation. When employees feel their contributions are unnoticed, they're more likely to minimize their effort and engagement, contributing to the quiet quitting phenomenon.

 

  1. Avoiding Conflict Resolution: Ignoring or not addressing conflicts adequately can lead to unresolved tensions and a toxic work environment. This not only affects immediate team dynamics but can also drive long-term disengagement among employees.

 

  1. Lack of Support: SMEs might not have extensive support systems like larger corporations, but completely overlooking the implementation of support for mental health and work-life balance can lead employees to seek coping mechanisms, like quiet quitting, to manage stress and burnout.

 

  1. No Growth Opportunities: Not providing clear pathways for professional development can stifle your team's ambition and growth. A leadership that does not invest in its employees' futures is likely to witness a drop in engagement and an uptick in quiet quitting as employees seek fulfillment elsewhere.

 

  1. Unrealistic Expectations: Setting goals that far exceed your team's current capabilities without offering adequate support or training can lead to frustration and feelings of inadequacy. Over time, this can erode confidence and engagement, with employees pulling back as a defense mechanism against these unrealistic demands.

 

For SMEs, recognizing and addressing these leadership shortcomings is crucial to maintaining a motivated, engaged workforce. The intimate setting of smaller enterprises does provide a unique opportunity to closely connect with each employee, but missteps in leadership can quickly erode this advantage. By understanding these pitfalls and actively working to avoid them, SMEs can foster a positive work environment where quiet quitting is less likely to take root.

Recommendations and opportunities for SMEs

Exploring the potential opportunities for SMEs in employee management, given their distinct differences from large corporations, reveals several key areas where SMEs can leverage their unique position to foster a more engaging, productive, and satisfied workforce.

 

Enhanced Employee Engagement and Personal Connections

SMEs, with their direct and personal engagement model, can foster a strong sense of belonging and purpose among employees. This intimate setting allows for more visible recognition of individual contributions, directly tying employees' efforts to the company's success. This visibility not only motivates employees but also creates a strong alignment with the company’s goals.

 

Agile Management and Communication

The flexibility and informality in SME management styles offer a unique opportunity for agile decision-making and communication. This approach fosters a transparent and inclusive culture where employees feel valued and heard. The ability for quick feedback loops and direct communication with leadership can enhance job satisfaction and engagement.

 

Culture as a Competitive Advantage

SMEs have the agility to quickly adapt and evolve their culture, making it a significant lever for attracting and retaining talent. This adaptability allows SMEs to innovate in their employee value proposition, offering a work environment that is responsive to employee needs and market trends. By leveraging their closeness with employees, SMEs can create a cohesive and dynamic culture that resonates with current and prospective employees.

Strategic Resource Allocation for Growth and Development

With typically fewer resources than larger corporations, SMEs are in a position to be more strategic and thoughtful in how they allocate resources towards employee development and engagement initiatives. This constraint can lead to innovative approaches to skill development, cross-functional roles, and career progression paths that offer employees a broad range of experiences and growth opportunities

 

Agility in Innovation and Adaptability

The inherent agility of SMEs allows them to quickly adopt new technologies, methodologies, and work practices that can enhance employee satisfaction and productivity. This adaptability is a critical factor in staying competitive in attracting and retaining top talent, especially in industries where the pace of change is rapid

Case Study: Key Insights from Irwan's Approach:

The case study of Irwan's leadership approach at his SME highlights several impactful strategies for preventing quiet quitting, particularly among GenZ employees. These strategies underscore the significance of creating a supportive and flexible work environment, fostering open communication, and providing financial incentives linked to the company's success.

 

  1. Creating a Safe Space for Feedback: Irwan's initiative to encourage employees to voice their concerns and dissatisfaction privately is an excellent example of fostering an environment where feedback is not only welcomed but is seen as essential for growth. This approach ensures that employees' issues, such as adapting to the workspace or managing workload, are addressed promptly, enhancing their sense of belonging.

 

  1. Fostering a Relaxed and Free Culture: Recognizing the preferences of GenZ employees for flexibility and autonomy, Irwan's policy allows employees to take leave as needed, provided their tasks are on track. Moreover, by clarifying that employees are only responsible for their designated tasks during work hours, Irwan promotes a culture where employees enjoy freedom and flexibility, contributing to higher job satisfaction and loyalty.

 

  1. Encouraging Financial Investment in the Company: By offering shares and selling stock to employees, Irwan gives them a financial stake in the company's success. This strategy not only incentivizes employees to contribute to the company's growth but also fosters a sense of ownership over their work. Seeing the tangible financial benefits of their efforts can significantly enhance motivation and reduce the likelihood of quiet quitting.

 

Irwan's case study exemplifies how SMEs can leverage their unique position to cultivate a work environment that resonates with the values and expectations of their workforce, particularly the younger generation. By prioritizing open communication, flexible work policies, and financial incentives that align with company success, SMEs can effectively engage their employees, fostering a committed and motivated workforce poised for growth and success.

Conclusion

Concluding our exploration into the nuanced world of quiet quitting in SMEs, we've uncovered pivotal insights. From our dialogue with Irwan Hermawan, it's clear that leadership directly influences employee engagement, with good leadership acting as a bulwark against quiet quitting. Our investigation reveals that despite SMEs' close-knit environments potentially fostering better employee relations, challenges such as communication gaps and lack of leadership skills can inadvertently lead to employee disengagement. However, SMEs possess unique advantages—flexibility, direct communication, and a strong sense of community—that, if leveraged wisely, can cultivate a vibrant workplace culture resilient to the trends of quiet quitting. It's imperative for SME leaders to embrace continuous learning and adaptability, ensuring their management style evolves to meet the dynamic needs of their workforce, particularly the Gen Z cohort, who value transparency, flexibility, and meaningful work.

 

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