Entrepreneurs often do things that most people wouldn’t think of. That means giving up your business and becoming a regular office worker.
For people with the founder gene, formal work is anathema, and they find the uncertainty of entrepreneurship equally liberating and exhilarating. But sometimes the lack of stability, both financially and emotionally, becomes unbearable. Life gets a little easier when you have a steady paycheck and no longer have the constant fear that your startup will go bankrupt. However, when former entrepreneurs want to return to the workplace, they often face unfair prejudice. Recruiters don’t know how to evaluate candidates with unconventional work histories and are balked at unusual resumes. Not to mention, they face stereotypes of being impulsive and selfish.
“It’s really important for them to be able to explain the elephant in the room,” says Debi Kriesman, CEO of Raven Road Project, a recruiting firm. “There’s a feeling that people who have been doing entrepreneurial things for a long time are a bit of a maverick and don’t want to fit into a limited structure or be a small piece of the puzzle.”
According to a study by London Business School, former entrepreneurs are 35% less likely to get a job interview. This tendency is commonly referred to as the “entrepreneurial penalty.”
Another recent study from Rutgers University’s School of Management and Labor Relations found that former entrepreneurs are less likely to be hired because they are less likely to be hired, or because they face bias throughout the hiring process. The purpose of this study is to understand why this is the case. The researchers asked recruiters to evaluate mock resumes with the same level of education and experience as candidates who had worked at traditional companies, startups, or both. The study found that 60% of recruiters had a less favorable reaction to mock resumes from former entrepreneurs.
So while the stereotype of a mercurial, borderline sociopathic founder in the mold of Steve Jobs or Elon Musk may exist (and perhaps even hold some truth), this study It points to the fact that companies tend to unfairly punish entrepreneurs. One reason for this may be that they simply aren’t set up to evaluate candidates from unconventional backgrounds.
One of the researchers, Jasmine Feng, a professor at Rutgers University, said that from a recruiter’s perspective, it’s difficult to verify an entrepreneur’s experience.
“Basically, you’re relying mostly on self-reported information,” she added. “This makes it very difficult for recruiters to understand whether their qualifications, experience, and job responsibilities are on par with those of traditional applicants.”
Nyssa Dube, an aspiring content creator who put aside her entrepreneurial dreams for a traditional career path in education, regularly explains parts of her resume to skeptical recruiters. He says he had to. “I didn’t know what parts of her own experience were relevant and what parts weren’t,” she says. “I also had to explain why I was dropping everything to get her job.”
Even if you run a successful startup, candidates may not be able to escape the pain of start-up penalties. A Harvard Business Review study found that software engineering candidates with founder experience and whose startups were successful were 33% less likely to be offered an interview than those whose companies failed. I did. Much of this may be because recruiters are concerned that once-successful founders will become locked into their way of doing things because they once had great success doing it their way. there is.
“If they are arrogant in their thinking, potentially inflexible, or arbitrary in their approach, that may not be as appealing to recruiters in general,” says Kriesman. To tell.
The most successful founders are often best suited for executive-level roles, she added. They can bring that experience to the C-suite, as Everfi’s former co-founder and CEO John Chapman did. Chapman said there is “no question” that the success of Everfi, which he sold for $750 million in 2022, helped land him his current job as CEO of esports company PlayVS. “If I hadn’t had that kind of success, it wouldn’t necessarily have played out the way it did for me,” he says.
Companies aspire to a culture of “entrepreneurship”
Entrepreneurs, on the other hand, can make a valuable addition to the traditional workplace of ordinary people. In recent years, many companies have sought to reshape their culture to foster more innovation. To that end, companies are actively seeking to recruit employees with traits that founders tend to possess, such as thinking outside the box, being innovative, and embracing uncertainty. This is especially true in the current business environment, where the situation is highly volatile. The rise of AI, an uncertain interest rate environment, and the looming presidential election are all making for a particularly tumultuous time for businesses, and former entrepreneurs are well-placed to navigate this time.
Companies are “really struggling to understand the concept of what’s new and what’s next,” Kriesman said. “When you hire someone with an entrepreneurial background, it brings calm because they’ve been living in chaos for so long.”
Chapman recalls his experience starting Everfi as marked by several seat-of-the-pants moments. “In the startup phase, you always have to solve things on the fly,” he said. “And make decisions quickly, without really knowing if you’re right or wrong.”
Cressman suggests having candidates go through different scenarios during interviews to weed out good hires from entrepreneurs who are frustrated by ultimately becoming a cog in a larger machine. There is. She gives examples of the red tape you might encounter and suggests asking how to get the proper approvals.
Cressman also advises hiring managers to determine if the candidate will be a long-term success. Research shows that former entrepreneurs have higher turnover rates than other employees. “Skill sets are certainly important, but sometimes mindset takes precedence,” she said.
The Rutgers study also found that certain types of recruiters are less likely to be biased against entrepreneurs. Perhaps not surprisingly, recruiters with their own entrepreneurial experience are the most willing to hire former founders. The study also found that hiring managers who have been with the company for a shorter period of time and women respond more favorably to candidates who are former entrepreneurs. Feng said that while new recruiters were less familiar with the company’s institutional mindset, women were generally less likely to stereotype founders and instead looked at mock resumes. It is said that the evaluation was simply based on the listed qualifications.
Dealing with the reality that entrepreneurs may have a harder time getting a job than others is just one example of the adversity faced by those who choose that career path, Fenn says. “People who want to be entrepreneurs need to realize that it’s not always going to be rosy,” she says. “This can be a very bumpy road. It can put you back into the traditional workforce, and you need to be aware of some of the career risks associated with this reality.”
For Dube, it was how bumpy the road was that ultimately led her to choose a more traditional, but more stable, career option. “Every part of that experience felt like I was just trying to make ends meet and make ends meet.”
