With nearly 50% of new businesses failing within their first five years, it’s not uncommon for former entrepreneurs to reenter the workforce. Transitioning from running a business to working a 9-to-5 can be challenging enough, but a recent study from Rutgers University found that entrepreneurs may face an additional obstacle: hiring bias.
In the study, researchers created a series of resumes from fictional candidates with nearly identical qualifications, with some candidates listing experience as former entrepreneurs. The resumes and a job description were distributed to 219 individuals with corporate recruiting experience in various industries.
When asked to make a hiring decision, recruiters were less likely to recommend former business owners, despite their similar qualifications to candidates without entrepreneurial experience.
“This difference is statistically significant across various firms and industries, suggesting a systematic bias against hiring former entrepreneurs,” said lead researcher Jie (Jasmine) Feng, Associate Professor of Human Resource Management at the Rutgers School of Management and Labor Relations, in a press release.
[Read more: What Science Shows About How Entrepreneurs' Brains are Wired]
Why recruiters may be wary of hiring entrepreneurs
The hiring bias against former business owners may stem from the differences between entrepreneurship and the traditional corporate world. For instance, some recruiters are wary of hiring individuals who have been their own boss.
“[Entrepreneurs] value autonomy. They are used to making decisions on their own and taking risks,” explained researcher Danni Wang, Associate Professor of Management and Global Business at Rutgers Business School, in a press release. “Some recruiters view that as a red flag. After all, large corporations like to minimize risks.”
However, the study found three notable exceptions to this pattern:
- Women recruiters tend to be more open to candidates with varied identities and experiences.
- Recruiters who are new to an organization are often less restricted by organizational norms when selecting applicants than more established recruiters.
- Recruiters with entrepreneurial experience are likely to understand the paths and values of former business owners.
While it is important to be honest about your past, it is also crucial to be mindful when crafting your resume and practicing your interview responses.
Jie (Jasmine) Feng, Associate Professor of Human Resource Management at the Rutgers School of Management and Labor Relations
Why entrepreneurs make great employees
While entrepreneurs’ tendency toward autonomy and risk-taking may give recruiters pause, these “risky” traits can be a significant benefit for corporations.
“Research has shown that … entrepreneurial vision and capability can help companies grow new businesses, start new projects, and foster creativity, and help companies during difficult times,” Feng told CO—.
According to Feng, there are a few other traits that make entrepreneurs great corporate employees:
- Resilience: The nature of entrepreneurship requires the willingness to take calculated risks and bounce back from failure, a valuable trait in employees and within organizations.
- Problem-solving skills: Many entrepreneurs wear multiple hats to keep their companies running. This often translates into strong problem-solving skills and out-of-the-box thinking.
- A unique point of view: “[Entrepreneurs] can … bring a fresh perspective to the corporate environment, challenging the status quo and driving continuous improvement,” she explained.
[Read more: What Is 'Grit' and Why Do You Need It as an Entrepreneur?]
How entrepreneurs can increase their odds of getting hired
The Rutgers study offers broader implications for entrepreneurs looking to re-enter the traditional job market — namely, how they should frame the vast skills and experience gained from entrepreneurship.
Since being an entrepreneur isn’t always perceived as desirable in the eyes of recruiters, Feng recommends job seekers de-emphasize the identity of “entrepreneur.” Instead, focusing on the transferable skills and traits relevant to the position can help hiring teams see past the “red flags” and understand a candidate’s genuine value.
“Entrepreneurship is a unique experience, and former entrepreneurs sometimes can't help but subconsciously emphasize their feelings and identity as entrepreneurs during the interview process,” Feng explained. “While it is important to be honest about your past, it is also crucial to be mindful when crafting your resume and practicing your interview responses.”
To do this, she recommends applicants focus on the specific tasks, duties, and responsibilities of their former venture and the skills, abilities, and characteristics they’ve developed along the way.
“Highlighting how your entrepreneurial [skills] can add value to the corporate role you are applying for can improve your chances of being considered for a corporate position,” said Feng.
[Read more: 5 Common Job Interview Formats for Hiring New Employees]
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