Position vacant: Entrepreneurs need not apply

When she was studying for a double degree in business and marketing, Eliza Dawes worked as a self-employed personal trainer. She liked it, so after graduating, she kept growing her business.

But then her priorities changed. “After three years, I decided I wanted to use my brain,” she told SmartCompany.

Over two months, Dawes applied for more than 60 different roles in marketing and business development. She didn’t get a single interview.

“Despite having relevant tertiary qualifications, experience with my own business, and great references, I wasn’t successful,” she says.

Stories like Dawes’ are easily found. SmartCompany spoke to several entrepreneurs who made, or tried to make, the leap to working for someone else.

All of them say they had great difficulty doing so.

One, who preferred to remain anonymous, says she fruitlessly applied for over 45 jobs in a bid to find a part-time permanent job.

“I honestly think I would have gone better off telling people I’d been travelling overseas rather than spending three years as founder of a not-for-profit sustainability organisation,” she says.

Another, Paul Hensel, is a self-employed electrical engineer currently searching for a job with an established company. He says in his experience most HR professionals, especially those in large businesses, turn their nose up at freelancers and entrepreneurs.

“Somebody with a ‘regular’ career is just easier to categorise for them, compared to someone who has worked independently,” he says.

One of the few stories of success SmartCompany heard was from Alina Berdichevsky, who after running a successful executive coaching practice for eight years was eventually hired in a role she loves after six months of hunting. She was hired by “an old friend and mentor who trusted her gut and took a chance on me”.

“Upon approaching my 30s I needed a change. I thought that with the successes and accolades I have achieved in my practice for myself and with my clients… looking for work would be a cinch,” Berdichevsky says.

“And of course it wasn’t.

“No company wanted to take a risk on me. I was too overqualified for entry-level roles and didn’t have the hierarchical industry experience for more senior roles.”

Not an exclusively-Aussie cringe

The cringe about hiring the formerly self-employed is far from unique to Australia.

A paper to be presented next month, at the Academy of Management annual conference, though not yet vetted in a peer-approved journal, details an experiment conducted in late 2012 by five European academics.

The researchers, from the University of Vienna, Munich School of Management and Erasmus University Rotterdam, emailed CVs in response to job advertisements for human resource roles in the UK.

They sent two CVs, both with identical work histories apart from the past three years. On one CV, the applicant had a stereotypical corporate career, working in the human resource departments of established companies. In the other, the applicant had an identical early career, but three years ago, branched out and started a human resources outsourcing firm with three employees reporting to him.

In total, less than 1% of the applicants who were self-employed got a positive response to their resume and cover letter, while 6% of the regular employees did.

“Our results leave little room to doubt that entrepreneurs experience adverse treatment in the observed part of the UK labour market,” the authors write.

Even when entrepreneurs are hired, the paper notes, previous studies have shown they are paid less than non-entrepreneurs with similar skills.

What are large companies thinking?

SmartCompany spoke to several recruiters to figure out why this was the case.

Elizabeth Kingston, of recruitment firm Kingston Human Capital, outlined some of the common misconceptions those in large corporations can have of entrepreneurs.

She says there’s a common perception that entrepreneurs “couldn’t cut it” in the corporate world – that they turned to self-employment because they failed.

Some doubt whether someone who was self-employed is able to follow protocol and procedures in business. And recruiters can be uncertain about how an entrepreneur will react to being boxed into a role, no longer having control over the wider business.

Brendon Booth, of pb Human Capital, added that there’s a stigma that people who run their own business “find it harder to play with others”.

But John Caldwell, the CEO of retail recruitment firm RWR Group, says that while cultural concerns are an issue for some businesses, the biggest stumbling block for the formally self-employed is far more practical in nature.

“Returning to a workforce or an industry after a few years away is likely to be a problem for someone whether they’ve been running their own business in that time or not,” he says.

“In business these days, just three minutes out of chosen field is a long time.”

Recruiters, Caldwell says, make an entirely understandable and predictable choice in preferring specialists over generalists for a given position.

“Most recruitment agencies have a fill vacancy rate of around 30% – which means they only fill one in three of the roles they’re asked to fill. We’re desperately looking for qualified people that match the roles.

“Most of the time with entrepreneurs, we’re getting people who have exposure to a role within their business, but aren’t a specialist in that field. They’re just not as relevant to what a business needs.”

It’s something Dawes also raised, when asked to speculate on why she wasn’t able to find a job.

“For me, being a business owner, I wore so many different hats. One day I was a receptionist, another I did legal work, a third I was an accountant. It was hard for me to say, yes, I’ve worked in marketing for four years, when I did a bit of everything.”

Faced with her inability to secure work in marketing or business, Dawes started another business combining personal training, nutrition and life coaching, which is going well. She told SmartCompany she’s happy where she is.

“But if I ever did want to work in a business, well, I’m not confident my skills would be recognised… I wonder if I will ever be able to make that transition.”

This is part one of a two-part series. Read part two (Escaping the entrepreneurial stigma: How the self-employed can return to the belly of the beast) tomorrow.