Despite most organizations striving to be as innovative as possible, there is an inherent reluctance to hire entrepreneurs. This fear was encapsulated by research from the University of Maryland, which showed that so strong is the bias “against” founders that they’re 30% less likely to be offered the job than non-founders.

The researchers found that the only time this bias didn’t exist was when the recruiters themselves had some entrepreneurial experience. This is because the so-called similarity bias is strong in recruitment, and we’re more likely to hire people who are similar to us in various ways.

Obviously, with relatively few recruiters having an entrepreneurial background, this works against founders, with recruiters fearing that the entrepreneurial itch will kick in sooner or later and the candidate will head off to continue their entrepreneurial journey with a new venture.

Missing out

Research from the University of South Wales reminds us, however, that this bias against people with entrepreneurial experience means that employers are missing out on an invaluable pool of talent. The researchers explain that up to 70% of startups fail globally, with the Covid pandemic increasing this failure rate considerably.

This has had the knock-on effect of placing a large number of former entrepreneurs back into the labor market. At the same time, organizations around the world are complaining of a skills shortage, especially in technical disciplines. Logic would suggest, therefore, that the entrepreneurial talent pool would be one that companies rapaciously fish in.

That generally isn’t the case, and the researchers wanted to understand whether this hesitancy is justified or not. They found that an entrepreneurial background isn’t just cause for concern in and of itself, but that the proximity of one’s entrepreneurialism to one’s current role is. In other words, if the candidate was an entrepreneur in their last role that’s very different from if they were an entrepreneur several roles ago.

Recovery matters

At the heart of the matter is the amount of “recovery” time between these hypothetical candidates. After analyzing data from Household, Income, and Labour Dynamics in Australia (HILDA) between 2001 and 2020 to explore people’s records in the labor market, including their intention to quit and examples of actually doing so, the researchers found that timing was key.

Those candidates who were entrepreneurs prior to their current role were less likely to quit to start up another venture than their peers who were involved with startups further into the past. This is important, as it’s easy to fall into the trap of assuming that just time itself is what matters, when the reality is that it’s the number of subsequent salaried roles one has since their entrepreneurial adventures that make the difference.

Surprisingly, the study found that when guys had been entrepreneurs just before their current job, they were more likely to lose interest in starting another business or leaving their current job. But this wasn’t the case for women. On the flip side, men with entrepreneurial experience in the job right before their current one were more likely to think about starting a business or changing jobs. Again, no such pattern was seen for women.

Making it work

Does this mean that hiring entrepreneurs is fine and dandy providing they’ve had one or two salaried roles in between? Yes and no. The Maryland research provides some pointers for things recruiters should consider when thinking about hiring a former entrepreneur:

• What’s the culture like? Startups tend to have a particular way of working that can be highly attractive to those who work there. Even if corporate leaders “say” they have an innovative and entrepreneurial culture there are obviously degrees to which this may manifest itself in reality.
• What is the profile of your recruiters? If you want to hire more entrepreneurial people but your recruiters don’t come from an entrepreneurial background then it’s unlikely to happen. It’s important to consider the kind of people who are making recruitment decisions in your firm so that they represent the cross-section of candidates applying.
• Are skills aligned? Startup founders often need to be versatile and handle various tasks, whereas positions in large corporations are often specialized. This mismatch makes it challenging for recruiters to align the skillsets of founder candidates with specific corporate roles. Think about the kind of work founders could perform and how you can best utilize the clear skills they do have. Indeed, utilizing these skills fully is also likely to make them less likely to get the itch and move to start another business again.

Hiring founders can be hugely beneficial but it’s also not without risks. This is inevitable with any new hire though, so hopefully the tips that have emerged from these studies will help you do it the right way and help ensure you’re not leaving great talent on the shelf.