With the news today heavily focused on the reaction to Gov. Sarah Palin's address at the Republican National Convention last night and watching the growth and direction of hurricanes Hanna and Ike, a story of perhaps more far-reaching importance has been all but overshadowed.

This piece on Yahoo! today certainly caught my eye, particularly as it concerns the latest unemployment data.  Applications for unemployment insurance rose by 15,000 over the previous week, the AP writes.

But this article also talks about the lower-than-expected performance among the major retail chain stores, including Wal-Mart, as back-to-school season wraps up.

It truly seems to be a "perfect storm," as one of the sources in the story states, with tough times at home resulting in families spending less, which cuts into retailers' profits and forces them to curtial spending, which in turn lowers the stocks of the major publicly traded companies that are used as benchmarks of how the economy is doing.

Still, I am encouraged when it comes to the small business sector, made up largely of privately held firms.  As we reported in our September Ideas newsletter today, the diversity of industries represented in an economic survey we sent our honored companies is a selling point when you consider that over half of these firms told us that the credit crunch and other effects of our lagging economy are having little to no effect on their business.

How is this possible?  As I mentioned, industry does not seem to be the defining factor: The old line (manufacturing, banking) and the new line (high tech, marketing) were equally represented.

Instead, along with small size that allows a definite nimbleness in tough times, it's their employee engagement best practices that have enabled them to act almost like Teflon against the most common problems that plague their larger, publicly held peers.

What these enterprises have most in common is that they don't just write "Employees are our greatest asset" on annual reports and the occasional memo – they live and breathe this value daily, networking with like-minded firms whenever they can to search for ever more effective ways to engage their workers, treating them like owners even when stock options are not involved. 

More than academicians, they are the incubators of new and exciting employee engagment and team building strategies aimed at ensuring that new employees mesh with a firm's established values (to keep turnover in check), as well as empowering "A" players, helping "B" players become all stars and, quickly when needed, "culling the herd" of those who are not on board.  (I happen to think the big boys' lack of action around this, especially, contributes to far poorer performance by comparison.)

This, then, begs the question: Is being big in these troubled economic times a liability?  Our Chairman, Ken Lehman, seems to think so – check out this video where he makes this claim.

What are your thoughts on the work environments and employee engagement activities among smaller firms vs. larger ones?

Photo credit: solarnavigator.net