Enabling Technology

The Middle Market Is Bipolar!

The big littles, little bigs, and why complexity matters more than size.

by Naomi Lee Bloom

We often do things in HR management not because they’re important but because they’re needed and easy to do. A glaring example is the way in which HRM software vendors and outsourcing providers describe their target markets, and the way those same organizations describe themselves.

The presumed similarity in HRM needs across organizations—including the need for HRM outsourcing—is most often defined in employee headcount or revenue ranges. For example, the vast middle market is variously described as between 1,000 and 15,000 FTEs/employees/headcount (often without further definition). There are no clear and consistent, industry-wide ranges, let alone definitions of which heads to count.

For very small (a hundred or fewer) or very large/global organizations (25,000 or more), almost any definition of headcount or revenue ranges can be a good way to group organizations by their HRM similarities. At the low end, very little complexity exists simply because there isn’t enough going on. For large organizations, so much goes on that almost all relevant dimensions of complexity put in an appearance. But size by headcount or revenue is a far less accurate predictor of similarities when dealing with organizations in the middle.

For the mid-market, similarities are more dependent on specific organizational complexity factors than on size, and missing this distinction creates many misunderstandings about customer needs, buying behaviors, risk tolerances, and influences. So, whether you’re an end-user benchmarking against similar organizations or an HRM software or outsourcing vendor targeting buyers for your products or services, market complexity analysis is far more powerful and accurate than assessing headcount or revenue.

Consider two 5,000-employee organizations: one, which I call a “Big Little,” is a landscape maintenance firm covering Lee and Collier counties in Florida (it employs thousands of new-immigrant hourly workers); the other is a “Little Big,” a benefits consultancy admin provider with several thousand mostly salaried
professionals in offices across 18 countries, and the rest of its 5,000 workers, mostly CSRs, in service centers around the world.

These complexity factors and the cross-organizational similarities they reveal can be exploited by end-users for benchmarking, for understanding industry-specific requirements in HRM and the HRM delivery system, for determining which “best” practices can/should be adopted, and for considering which software vendors and/or outsourcing providers are really focused on them. HRM software vendors and HRO providers also can use them to define target market, design software/delivery systems that can work well across the target market, and focus business development and sales activities. When applied to the vast middle market, it becomes very obvious just how bipolar this very large group of organizations is. Using complexity analysis, we can quickly determine which organizations are really big littles and which are little bigs. The vast middle market is indeed bipolar.

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