1 Different types of employer
Employers come in many shapes and sizes; that much is fairly obvious. We all probably know someone who runs a one-person business locally – a shop or a trade perhaps. Most of us have used such people for various reasons: buying a newspaper, fixing the plumbing, doing some rewiring or even walking the dog!
At the other extreme are huge corporations such as Walmart, Volkswagen, and Amazon, which employ millions of people between them across the world (Statista, 2020). It would be surprising if these organisations used the same recruitment methods as a small local plumber. In between these extremes there are many different types of employer, so how do you begin to try to understand this range?
One way, which you have begun to explore already, is by size. Businesses with fewer than 250 employees are commonly referred to as small and medium enterprises (SMEs), while those with fewer than 10 employees are known as microbusinesses. Businesses with more than 250 employees are defined as large.
Activity 1 Different types of employer
Spend just five minutes thinking about the range of employers you know about. Try to think of three examples for each category in Table 1.
| Microbusinesses (fewer than 10 employees) | SMEs (10–249 employees) | Large businesses (more than 250 employees) |
|---|---|---|
Comment
This activity might seem quite straightforward to begin with, as most of us would have little difficulty thinking of examples in the first column (from local knowledge and experience) and the last column (from knowledge of the world around us). However, the middle column probably presents more of a challenge.
Interestingly, it is precisely this middle column that accounts for the majority of employers in the UK and for most employment opportunities. The Federation of Small Businesses reported recently that 99.3 per cent of all UK private sector businesses at the start of 2020 were small businesses and that employment in SMEs represented about 60 per cent of all private sector employment in the UK. These employers operate across many industries and services (Federation of Small Businesses, 2021).
Size is not the only way in which different types of employer can be distinguished, however. They can also be looked at in terms of how they are structured, and their broad remit and responsibilities. In this way, it is possible to divide them into the following categories:
- public sector
- private sector
- third sector or not-for-profit.
Activity 2 asks you to think about the differences between these categories in more detail.
Activity 2 Public, private and third sectors
Table 2 includes an example from each of the three categories. Try to complete the final box, indicating what you think distinguishes this organisation in terms of its category.
| Category | Example | What distinguishes it? |
|---|---|---|
| Public sector | NHS | |
| Private sector | Tesco | |
| Third sector | Oxfam |
Comment
| Category | Example | What distinguishes it? |
|---|---|---|
| Public sector | NHS | Funded through public finances |
| Private sector | Tesco | Controlled privately by shareholders |
| Third sector | Oxfam | Relies on volunteers and is responsible to trustees |
You might have put something slightly different in the final box, but the essential differences between the categories are as follows:
- public sector – financed from the public purse and accountable to central or local government
- private sector – largely financed privately, run for profit and accountable to share holders
- third sector – run to help the community and not for profit, often relying on volunteers and sometimes has charitable status.
The two ways in which employers are categorised, by size and by sector, cut across each other. Each category in Table 3 – public, private and third sector – contains examples that are both very large and very small. The NHS, for example, is one of the biggest employers in the world, employing around 1.2 million people according to (NHS Digital, 2021). This is more than the combined workforces of Volkswagen and Tesco!
Some private sector employers, however, are very small and employ few people. Third sector organisations can be modest in size, too (for example a small charity serving a particular local community), or large and worldwide – think of Oxfam, which has over 7,500 employees across the globe (Oxfam, 2021).
Having distinguished between organisations by their size, structure and remit, you will now move on to thinking about how these differences can help to characterise organisations, and how this might affect you.