Many people take an entrepreneurial path in their career and strive to build a successful business. However, not all aspiring entrepreneurs are able to build long-term businesses.
Nearly half of new businesses close within five years of launching. Financial and structural issues usually hinder the chances of long-term success.
Failed entrepreneurs will pursue regular 9-to-5 jobs to get back on track. However, it turns out that the past experiences of these former executives could be detrimental to them and slow their recovery.
A recently published study led by Rutgers University reveals bias against former entrepreneurs in the hiring process.
For the study, researchers created completely made-up resumes for observation by more than 200 experienced corporate recruiters.
These were recruiters from a variety of fields, including healthcare, software development, and manufacturing. All the resumes included the same qualifications they had, but the researchers sent out some resumes that included a fictional character who had previously run their own company.
The researchers gave them job descriptions and three resumes to find out what recruiters would recommend. Rutgers asked who should be offered a fake job offer based on his resume.
The survey results collected showed that recruiters highly prefer to give jobs to candidates who need to gain experience running their own business. This trend has materialized even though their resumes do not include any of the same entrepreneurial expertise as the former entrepreneurs.
Jie Feng, a professor at Rutgers University’s School of Business and Labor Relations, oversaw the project and conducted research both before and after the COVID-19 pandemic. The results were almost the same in both cases.
Referring to the revelation that former entrepreneurs are seen as different from those who have never started a business, Feng said: “This difference is statistically significant across a variety of companies and industries, suggesting a systematic bias against hiring former entrepreneurs. coming out.”
Danin Wang, an associate professor at Rutgers Business School, believes that the hiring bias against former executives exists because former executives have a contrasting mindset in the workplace compared to non-entrepreneurs. There is.
Companies with entrepreneurial experience can be a threat, as many companies want to avoid risky strategies. These people are used to making decisions and taking risks on their own without interference from anyone.
However, research shows that former entrepreneurs may be in luck if their resumes are viewed by recruiters who are new to their organizations or who are former executives.
Mr. Feng explained the reason as follows: “Women are more tolerant of applicants with different identities and different experiences. New recruiters are less bound by organizational norms and more likely to consider unconventional candidates. Former Entrepreneur I can empathize with people who have gone through a similar path. ”
Researchers recommend that companies prioritize better talent on their hiring teams to counter bias against former entrepreneurs in the hiring process. It also suggests providing specialized training to help recruiters better understand the disadvantages placed on entrepreneurs and why that alone does not contribute to recommendations.
When a former executive takes a 9-to-5 job, they can earn a lower salary than their co-workers. This is called the “entrepreneurship penalty.”
