If you are applying for your first job, you would be excited at the prospect of serving an organization to the best of your abilities. But the first question that comes to your mind would be the type of organization you would be working for.
You may have heard of various types of organizations and distinct structure that governs all employees working in it. For example, you may have heard about start-ups and MNCs. Well, these are the two most prevalent organizational structures present in the business landscape.
MNCs are well-established organizations with offices in multiple geographies. In fact, some of your loved ones would already be working in an MNC!
So, what are start-ups?
You may have seen them in much loved web series like the Korean ‘Start-up’ or ‘Shark Tank’ in the US. These shows have budding entrepreneurs with innovative concepts and new companies who focus on thriving in a competitive market.
But what is the difference between the two? Which one would be more suited for your endeavours to start a new job?
Let’s find out!
What are MNCs and start-ups?
Multinational companies are those that are well-established. They may have offices in multiple locations. One or more of their offices will be located in a country different from their home country.
Examples of MNCs operating in India include Microsoft, Google, Sony, and IBM.
On the other hand, start-ups are recently established companies in the nascent stage of operations. Some may be funded by the founder’s own capital (bootstrapped). Others receive funding from venture capitalists (VC funded).
Some of the more popular start-ups in recent times include Paytm, Razorpay, Zerodha, and Cred.
Pros of working in multinational companies
[1] Possible to make more money
One of the benefits of working with a multinational company is that you may make more money. This may be because they pay their employees more. It may also be because they offer a better benefits package than smaller companies.
[2] Lateral opportunities
Another potential bonus of working in multinationals is the number of lateral opportunities. These are available to you in addition to your main job, such as managerial training or handling a small team.
If you’re interested in international business and want to make the most of such opportunities, then MNCs could be for you.
[3] Potential to be promoted
Working for a multinational company means that you will usually be in a position to make your career more challenging. As a result, you are more likely to get promoted. The various levels in the hierarchy of an MNC are a boon for many. It ensures that there are several rungs to climb up the corporate ladder of success.
[4] Operates with standard rules and processes
Working for a multinational company will normally be based on a set of standard rules and processes. You must adhere to them if you work there.
There is no ambiguity about what to do next or whom to report to. There is a set process to escalate issues or whom to coordinate with for project management problems.
There will be a fixed way of doing things. You will need to comply with these SOPs on all projects.
Cons of Multinational Companies
Many people believe that working for a multinational company is the best option for their career growth. But this comes with its own set of professional downsides as well.
[1] Little scope for innovation
Working for a large, multinational company means that everything is a part of the process. You will be working within a framework that other people have set.
If you want to bring in an innovative technique or way of working, it might find little acceptance in an MNC. The innovation that the company is known for is normally going to come from the R&D department rather than the employees.
Innovation comes from thinking outside of the box, but this isn’t something you’ll get much scope to do if you work within a huge multinational corporation.
[2] Promotions may take time
Many people who work for multinational companies often have to wait several years before they get the opportunity to be promoted. This is true even if they’re putting in more than enough effort and are clearly suited to managerial roles.
This scenario can be frustrating if you’re looking to build a visible career quickly. So, if you opted to work in an MNC due to the potential for fast growth, you would find that it is much slower than in a start-up.
You can combat this problem to a certain extent, though. You can make necessary investments in your CV. Also, you can continue upskilling to build your experience.
[3] Increments may be slower than that of start-ups
Working for a multinational company means adhering to a set pay scale. This may mean that your salary increments are significantly slower than if you were part of a start-up.
Smaller companies are more likely to reward their employees with higher salaries and bonuses than multinational corporations.
Pros of working in start-ups
[1] No red tape
In traditional companies, you may have to wait for a long time to see the results of your efforts. In start-ups, you can get feedback quickly. Also, you are likely to be directly involved in decision-making.
Because of this, you would have an incentive to work hard. If someone is not contributing, the company can replace them easily.
The founders are close and available in case of any problems. Thus, knowing daily about the progress motivates you to work even harder and get more done.
[2] Sense of ownership
If you work in start-ups, you have an opportunity to own a part of the company. If the start-up grows, you will be rewarded accordingly through stock options and ESOPs. This gives you a sense of ownership. This aspect is likely to make you more loyal to the company.
[3] Faster promotion than MNC
In a start-up, if you perform well, you can rise to the top quicker than in a traditional organization. If you work hard and show the potential to grow, there will be tremendous opportunities for quick growth within the company.
A job change every 2-3 years will expose you to a larger business landscape. It can be an opportunity to learn new technologies. You get to explore new domains and meet new people. This helps you to scale up professionally and personally.
[4] Incredible learning curve
Start-ups offer an unbounded learning opportunity. They are growing fast and have dynamic energy around them. Thus, they tend to be in a state of constant flux.
Employees of start-ups get exposure to a vast amount of knowledge, techniques, strategies, and other information. This USP is rarely available to employees of a well-established MNC.
You get a chance to keep up with the latest changes in these start-ups. You need to be agile and adapt quickly to new areas that you would have never explored in your previous jobs.
As a result, you attain noteworthy expertise in many different areas. And this advantage is rare in MNCs where the focus is on people who specialize in one specific area.
[5] Flexibility in hierarchy and roles
Start-ups have flat structures without any formal hierarchy. Everyone can talk to anyone in the team with ease.
The open-door management policy ensures that there are no rigid rules and reduced formalities. This encourages an open environment where everyone can contribute freely and reach out directly to the executive leadership.
Everyone is a part of a larger mission. Everyone has a say in what is going on. As the company grows, the structure may become more hierarchical. But even at this later stage, there is a great deal of flexibility due to the organization’s small size.
Cons of working in start-ups
[1] It can be a stressful experience
Start-ups are high risk, high reward. While there is a chance of getting rich, the chances of failing are higher. Working in a start-up can be very stressful. This happens because one never knows whether one will become a millionaire or end up with nothing.
Stress levels are high because employees have to deal with uncertainty and responsibilities. This means that it may not be great for job-hoppers or those with a family. Employees may lose their jobs in an ill-managed start-up that may not have a clear strategic vision.
If the company fails, employees may have to restart from scratch. They may have to take up another job and work all over again to prove their worth. This risk makes people question whether it’s worth it or not.
[2] Lack of job security
There is also less job security in these smaller companies. This is because they can be easily affected by market fluctuations and technological changes. This shift, in turn, may make them less suitable for the long term.
We have seen many cases of poor or lack of management sinking the entire organization in the start-up mode.
[3] Lack of benefits
In start-ups, the employees do not enjoy the same benefits that they would get in an MNC job.
The employees do not get paid as much, if at all. They are often hired on a contract basis and usually get no formal training for their assigned role.
This lack of training and opportunity makes it difficult for them to be promoted up their career ladder. But this grey area can turn out to be a big career boost to a smart fresher who knows how to navigate the tricky paths of a start-up career.
MNC vs. Start-up – So which one is better?
At the end of the day, you need to take a call depending on these traits
– The degree of risk you can cope with
The start-up ecosystem offers a high-risk, high-reward model. So, while the perks will be better than an MNC, the risks too are high as compared to working in an MNC.
– The amount of innovation and value you bring to the table
If you have proven your mettle as a creator and innovator, then the start-up scene is just for you. You can work without the boundaries, barriers, and hierarchies associated with MNCs.
– Your personal commitments
If you have many dependents, then you may want a stable life offered by a steady MNC salary. Also, you would prefer an MNC if you have commitments like a home loan or education loan.
To conclude
This post tried to give an overview of what it is like working in a start-up or an MNC. Both have their own sets of advantages and challenges. Your personality and priorities will help you decide which of the two is more suitable for you.
All the best for a new career path!
