Former Business Owners & Jobs — Not an Easy Road

As most of you know, close to half of new businesses fail in the first five years of existence. So, a lot of those business owners end up looking for jobs.

A study from Rutgers recently published in Personnel Psychology found that upon returning to the job market, a lot of those former business owners could face a hiring bias.

To most it’s a big surprise.

The study created fake resumes and presented them to 219 human resource recruiters in healthcare, software development, high-tech manufacturing and other businesses. The resumes were identical except for one qualification. Some of those fictional applicants were the owners of failed businesses.

Lead researcher Jie (Jasmine) Feng, Associate Professor of Human Resource Management at the Rutgers School of Management and Labor Relations said they presented the hiring people with three resumes and a job description and asked them for their hiring recommendation.

She said most were less-likely to recommend the former business owner than the others even though they all had equal qualifications for the job. “This difference is statistically significant across various firms and industries, suggesting a systematic bias against hiring former entrepreneurs,” Feng noted. “If you’re an entrepreneur, you raise more red flags.”

Feng’s colleague Danni Wang of the Rutgers Business School explained why these hiring professionals didn’t want to hire a former business owner. It’s because those people are used to being their own bosses.

“Entrepreneurs behave differently,” Wang said. “They value autonomy. They are used to making decisions on their own and taking risks. Some recruiters view that as a red flag. After all, large corporations like to minimize risks.”

Feng did note there are three exceptions from the hiring group. Women, recruiters who are new to the company and hiring professionals with experience owning their own businesses. 

“Women are more open to applicants with a different identity or a different set of experiences,” Feng said. “Newer recruiters are less constrained by organizational norms and more willing to consider an unconventional candidate. Former entrepreneurs can relate to those who have followed a similar path.”

Source link: Carrier Management — https://bit.ly/4ea31rE

About PIA Western Alliance

The Professional Insurance Agents Western Alliance is a membership organization promoting and enhancing the success of independent agencies seeking to grow, learn and be heard within the industry.


PIA WESTERN ALLIANCE VALUES OUR STERLING PARTNERS

More Industry News