Small businesses: For women, they’re a different kind of workplace

It’s a familiar story: Women as a group are underrepresented in leadership positions.

We’ve been surveying U.S. workers each month since 2021, and the data has been consistent.¹Each month we survey a stratified, random panel sample of 2,500 U.S. workers. We’ve been collecting this data since December of 2021. This analysis is built on 100,000 worker responses. Nine percent of women report holding a role in upper management, compared to 17 percent of men. This gender disparity holds regardless of industry, age group, tenure, and work location.

But we found one place where women might have a better chance of getting ahead, where they’re more likely to thrive and feel connected, and where they’re less likely to leave: small businesses.

A path to leadership

About 22 percent of women who responded to our survey work at a small business.²We define small business as employers with fewer than 50 employees. About 20 percent of our monthly survey respondents say they work at a small business. All categories of larger businesses were grouped together for comparison. These women—especially those who stick around for the long term—have a higher likelihood of making it into upper management than women who work at larger employers.

The difference is especially dramatic among women with eight years on the job. At that point, 20 percent of women employed at a small business said they were in upper management. At larger businesses, the share was only 8 percent.

We see two possible explanations for this finding. First, large employers have many layers of leadership, while smaller ones are flatter. Upper management at a small employer might be defined as just two levels of leadership rather than the eight levels that larger companies average.

A second reason could be that the scope of management roles at smaller companies is often broader for economic reasons, in contrast to the deeper but narrower scope of responsibilities of roles at larger companies. Either way, women could gain greater and broader management experience at small companies than large ones.

A deeper sense of connection

Every employee deserves to feel seen, heard, and valued. Across our entire data set, about 28 percent of respondents, men and women, feel strongly connected³The ADP Research Connection XPerience Score measures a person’s feelings of being seen, heard, and valued in the workplace, based on a study of more than 12,000 survey respondents in the United States. Our methodology and definition for connection can be found here: https://www.adpri.org/research/dei-study/. to their organization. And about 28 percent of women in their first year on the job—at any sized business—say the same. But for women at small businesses, that share rises substantially over time and remains greater than 40 percent by their eighth year on the job. At larger employers, the share of women who said they’re strongly connected doesn’t rise to more than 30 percent.

Some small business owners and managers might be more intentional and assertive in their efforts to build connection with workers. But the relatively large share of connected workers also could be a natural advantage of their smaller size, which might make it easier for employees to communicate, build relationships, collaborate, and feel valued.

Either way, women who prize a deeper sense of connection in their workplace might be more likely to find it at a small employer.

A chance to thrive

As we’ve shown in earlier research, some people experience work pressure as positive stress (eustress) while others experience it as negative stress (distress). Based on these reactions to stress, we sort workers into one of three categories: Thriving (mostly positive stress), rattled (a mix of positive and negative stress), and overloaded (mostly negative stress).

Thirty-seven percent of women in their first year on the job report that they’re thriving. This holds for women at both large and small employers. This share holds steady for women who stay at a small business over the long term. At larger employers, however, the share shrinks during the first four years on the job and never fully recovers after that.

Again, small businesses might have an advantage due to their size. Employees at small businesses often juggle multiple roles and responsibilities, which might allow them opportunities to do work they enjoy or gain skills and new experiences. These workers also might have easier access to an on-the-job support network when stressful situations arise.

The freedom to decide how to work

We asked workers if they felt they had the freedom to do their job as they see fit. At every year of tenure, women in small businesses were more likely than others to say they have that freedom.

This gap begins to close between five and eight years of tenure, then widens dramatically. Women who have worked at the same small business for more than eight years were far more likely than those at larger employers to say they have the freedom they need.

Part of this difference might be explained by women’s positions on the organizational hierarchy. Those in upper and middle management were more likely than frontline managers or individual contributors to say they have the freedom they need to do their jobs. And women who work at a small business were much more likely than women at larger employers to be in upper or middle management.

A place to stay

About half of women in their first year on the job have no intention of leaving their jobs, but their paths quickly diverge based on the size of their employer. By year four, 36 percent of women at large employers said they plan to stay at their current jobs, compared to 49 percent of women at small employers. This gap shrinks in later years but never disappears.

Some of this difference might be attributed to the higher likelihood that women at small businesses feel connected and are less likely to report negative stress, sentiments that coincide with a worker’s intent to stay with their organization. This dynamic delivers a positive outcome not only for the women who stick around, but also for their small employers, which can worry less about the cost of turnover and the need to retain valuable institutional knowledge.

The takeaway

For many of the workplace outcomes we measure, the size of the employer doesn’t matter. Women at both small and larger businesses were just as likely to:

• say their pay is fair
• be fully engaged
• report being on the best team they’ve ever been on
• love their work
• trust their teammates and leaders

But for women seeking leadership roles, a stronger sense of connection with coworkers, more freedom, or lower stress, a small employer might be the best place to look.

This doesn’t mean that every small business excels in all these aspects of the workplace, nor does it mean that large businesses can’t excel, too. They only suggest that small businesses, whether through intentional effort or as a natural condition of their environment, might have advantages over larger businesses.

This advantage is something that small business owners might want to acknowledge and celebrate, not only because of its potential impact on retention, but also for the purposes of recruiting women, especially those seeking the type of working environment a small business might be well-suited to provide.