Small and medium-sized enterprises (SMEs) employ over 44 per cent of Australia’s workforce, and this number is only expected to grow.

Nearly 50 per cent of millennials consider SMEs the ideal companies to work for, so what can recruiters and candidates take from this? Here are 5 possible reasons why larger Australian and international companies are losing talent to SMEs.

1: Better company culture

Once, large companies typically offered employees comfortable bonus packages, benefits, and salaries. Now, though, as corporations such as Australia’s 4 leading banks are cutting bonuses and freezing salaries, these incentives are gone. Instead, candidates are looking for companies for the best office culture – not the highest salary.

2: Improved learning opportunities

Since an SME employs significantly less staff than a large corporate, junior employees can quickly earn more responsibility. They’re more likely to have direct contact with senior management, so there’s increased opportunity for meaningful learning and practical experience. What’s more, in SMEs, there’s often scope for faster career progression than people can find in larger companies.

3: Enhanced flexibility

With less hierarchy in an SME, it’s easier for employees to run their ideas past senior management and test their pitches, suggestions, and general work strategies. SME employees don’t just get more responsibility – they get more freedom to grow and learn from their experiences, too.

4: Alignment in values

Research shows that purpose-driven organizations are attracting the best talent, and this trend is expected to continue. Whether it’s health, education, NGOs or not-for-profit companies, prospective employees are increasingly opting for purpose-driven sectors. Put simply, potential employees want to know their values align with their employers’ ethos. And, evidence suggests that people are finding this value alignment with smaller companies rather than large corporations.

5: Exposure to niche sectors and innovation

Startups are driving innovation in niche sectors and making major creative strides. Working for SMEs, employees arguably benefit from a better insight into market segments than their colleagues in larger companies. And, since today’s junior-level employees are tomorrow’s leaders, it’s unsurprising that they want to be part of companies where they can play a significant role in creative and innovative change.

Conclusion

There’s no one factor driving employees to look outside the large corporate culture and explore SMEs. It’s a combination of multiple reasons, and as the number of SME’s in Australia continues to grow, it’s unlikely the trend is changing anytime soon.