Position vacant: Entrepreneurs need not apply

This piece was first published on July 8, 2008.

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 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-reviewed 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.

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