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Entrepreneurship penalty hampers diverse recruitment efforts

Entrepreneurship penalty hampers diverse recruitment efforts


An existing bias in recruitment processes often affects former entrepreneurs seeking employment within larger corporations. This prejudice stems from the notion that ex-business owners may struggle to adjust to the hierarchy of larger firms or might not commit fully to their new roles.

This bias ultimately hampers the recruitment of diverse, innovative talent. As such, it’s essential to value the unique skills these individuals bring to the table. It’s also crucial for employers to foster inclusivity in their recruitment processes, as this could encourage diversification and innovation within the workforce.

The study reveals that former business owners were 35% less likely to be invited for a job interview due to their unusual careers and the perceived impulsivity attributed to entrepreneurs. The so-called “entrepreneurship penalty” affects especially those trying to transition back into the traditional workforce.

Employers might view them as being too autonomous, unaccustomed to corporate hierarchies or possibly inclined to start a new business in the short term.

Entrepreneurship bias limits diverse hiring

Some recruitment managers may also be cautious about their unconventional career paths, preferring candidates with linear, industry-specific experience. This bias poses a significant hurdle for ex-business owners attempting to step back into conventional employment.

Highlighting the unique experiences of ex-entrepreneurs on their resumes could alleviate this bias, says Debi Creasman, CEO of Raven Road Partners. The research focused on determining whether this bias arises due to perceptions of these individuals being underqualified or if it’s the result of inherent biases within the hiring process itself.

The study indicates that corporate recruiters show 60% less interest in resumes of former business owners, possibly due to difficulty in evaluating self-reported experiences and unconventional work records. According to Professor Jasmine Feng, this suggests a need for entrepreneurs to strategically emphasize their past experiences and skills applicable in a traditional corporate landscape.

Interestingly, even successful entrepreneurs are faced with this bias; software engineers who’ve launched successful companies are 33% less likely to be invited for an interview than those whose startups failed. Successful founders are often viewed as inflexible and more suited to high-level positions which may limit their opportunities in the job market, Creasman suggests.

Despite the prejudice, some former entrepreneurs like Jon Chapman, former CEO and co-founder of Everfi, have found their entrepreneurial background to be advantageous in pursuing executive roles. Against popular belief, his entrepreneurial background was not a barrier but a stepping stone towards securing leadership roles, thus defying the stereotype.

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