SMBs often hire from their close circles, such as relatives and friends (in addition to having family members work in the business).
They may also bring in workers from their native towns or villages where they have strong social connections.
This approach helps bridge trust gaps that come with unfamiliar/unmonitored workers. It also creates a social cost that discourages negative behaviours like theft, slacking, shirking etc.
Additionally, workers hired through close connections have higher utilization and can be versatile as well. During lean business hours and days, they often take on other tasks, including running errands for the business owner and their families.
Moreover, hiring from familiar networks is usually cheaper compared to hiring from the open market.
In contrast, large businesses don’t enjoy these advantages. Moreover, they face stricter labour laws, compliance and working hours requirements. To reduce these overheads, many resort to contract staffing. However, this approach to keeping focus on the business comes at an additional cost.
