Shining a light on the mid-market economy

Written by Sharat Raghavan, Director of Data Science at LinkedIn, and Akash Kaura, Staff Data Scientist at LinkedIn

Small and medium-sized businesses (SMBs), which are firms with less than 500 employees, drive a significant portion of the US economy. They represent nearly 45% of all firms, employ 50% of all workers, and are engines for entrepreneurship and innovation.

As a result of their outsized economic importance, there is extensive research on these firms. Comparatively, less attention is directed towards mid-market enterprises (MMEs), or firms between 500-1,000 employees. These firms employ a much greater proportion of the workforce than their share in the economy and are often the first venues where technology is tested at scale. Along with our sponsor HP, our LinkedIn Economic Graph Institute decided to shed light on this sector of the economy in a newly published report. Our findings show that MMEs are not just small versions of large firms, they face unique challenges as they compete in the marketplace.

Managing an increasingly hybrid workforce

Although some firms are instituting strict return-to-office (RTO) policies, most firms must engage a hybrid workforce. Our data shows that while fully remote jobs in the US have fallen from 16% to 8% of LinkedIn paid job postings, hybrid roles now account for 13% of all positions.

MMEs have decreased reliance on remote jobs faster (-40% Y/Y change in the share of remote job postings) than other segments like SMBs or large enterprises. This could be due to a number of factors, including industry characteristics or in-person collaboration requirements. Fully remote positions, however, remain in-demand, attracting nearly 43% of all job applications across companies of all sizes, so moving to more hybrid or fully on-site roles may impact hiring funnels and make finding particular skill sets more difficult.

Evolving skills landscape

In previous research, we looked at the skills required for job postings on our platform with the goal of examining how the skills for jobs are changing. We discovered that a quarter of the skills listed in the average job posting has changed since 2015; and this change is accelerating with the advent of new technologies such as Generative AI. By 2030, almost 68% of the skills needed for a particular job will likely have changed. How firms respond to these changes will determine their competitive position.

With this backdrop in mind, for this specific report, we looked at the pace in which workers at MMEs are adding new skills to their profiles. We found that workers at MMEs have added on average six new skills to their profiles in the past year, an increase in skill development of 27% compared to last year. Popular skills added by members who are employed at MMEs include skills such as Communication, Problem Solving, and Teamwork. In contrast to smaller firms, MMEs can benefit from scale economies and should consider formalizing and adding more structure for learning and development.

Generative AI and the workforce

Generative AI (GAI) has the potential to affect the roles of a large number of employees. Our research suggests that up to 84% of LinkedIn members could have a quarter of their skills affected by GAI. In such an environment, not only do digital skills become increasingly important, but skills that relate to AI literacy may result in productivity improvements. Although we expect that AI technology will infuse in every sector, there will be a differential effect by industry. Firms in Accomodation and Food Services, Technology and Media, and Education will see higher proportions of their workforce affected by GAI.

Professional services firms, such as legal services and IT consultants, are a major fraction of MMEs in the US. We see these firms integrating GAI in various workflows, such as meeting notes and knowledge management. In fact, data from our team has revealed that the top ten occupations with the highest proportion of members developing their AI skills are in creative roles like content creators and marketing managers. How are MMEs adjusting to these changes? One insight is that firms (of all sizes) adding a “Head of AI” role has tripled in the past five years, with those roles growing by 28% in 2023. As employees “bring their own AI to work”, smaller firms may need to take a more active role in determining their holistic AI strategy.

Preparing for the future

MMEs are in an interesting competitive position. On one hand, they have achieved a level of scale which can confer reputational, brand, and efficiency benefits. As an example, employees can actualize career pathways and discover internal mobility opportunities. We actually discovered that MMEs have the highest internal mobility rates when analyzing LinkedIn data, even higher than large enterprises. Conversely, MMEs must also find ways to stay nimble in the midst of smaller competitors and startups. Learning and skill development are avenues that MMEs, and really any size firm, can utilize to strengthen organizational dexterity.

One trend that did surprise us was how members at MMEs are seeing a faster slowdown in internal connections per employee compared to other firms. Disentangling the implications of this trend is not clear, but it could portend that MMEs could be struggling to foster internal collaboration as they grow. 

As the skills for a given role rapidly change, human skills such as communication and teamwork will be differentiating factors. Emphasizing these skills in the shadow of trends such as hybrid workplaces and GAI is undoubtedly challenging, but leaders at MMEs have the opportunity to make investments to strengthen their competitive position.