United States

Company size: A major factor in middle market back to work strategies

INSIGHT ARTICLE  | 

As the country continues a choppy reopening in the midst of the COVID-19 pandemic, middle market companies are developing and implementing strategies to safely return to the workplace. RSM US Middle Market Business Index data from the third quarter shows some significant differences in the back-to-work approaches between lower middle market companies and their upper middle market counterparts.

Smaller middle market companies lagged behind larger midsize businesses in transitioning people to remote work. In fact, 24% of companies polled with between $10 million-$50 million in revenue had no employees working remotely, compared to less than 5% of respondents with between $50 million-$1 billion in revenue. While in some instances this may have hindered the productivity of smaller companies during lockdown periods, the cohort may have the leg up in returning to the workplace.

“Getting back into the office creates a lot of issues for companies, particularly around HR,” said RSM Principal Jay Schulman. “Smaller companies can adapt and accommodate these issues with more agility than larger companies.”

While companies are taking several steps to reintroduce employees to the workplace, a major issue remains out of their control. “Schools opening remotely remains the biggest pain point in the middle market, with many parents unable to go back to an office because their kids are attending school from home,” said Schulman.

 

Whenever employees can return to work, companies in the lower middle market appear to be taking many steps to maintain social distancing in the workplace. MMBI data shows that smaller companies are much more likely to limit group gatherings, prohibit nonessential vendors and deliveries, prohibit handshaking, establish minimum spacing and offer continued remote working as an option. 

Implementing strategies to ensure the safety of the workplace comes at a cost that was impossible to account for in a yearly budget. However, survey data shows that larger middle market companies are more likely to avoid incurring those costs than smaller companies. 

Nearly half (47%) of larger middle market respondents plan to pass most of these costs on to clients or customers while 13% will pass on all costs. In stark contrast, only 14% of smaller middle market organizations will pass on most safety-related costs, while only 6% will pass on all of them.  

With the pandemic, the entire supply chain is being disrupted, and the specific allocation of increased costs has yet to be universally determined. 

“The workplace requirements are continuing to change and companies are unsure where to make long-term investments to get their employees back into the office,” commented Schulman. “Trying to figure out whether these costs can be passed on to customers has yet to be fully vetted.”

These are unprecedented times for organizations in all industries. Each industry will have to work within their unique parameters to get their employees back to work.   

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