Dangers of hiring ex-entrepreneurs

Wednesday, 22 August 2012 00:01 -     - {{hitsCtrl.values.hits}}

It’s a question that has flitted through the minds of many an employer. The man sitting opposite the recruiting table had been an entrepreneur, a-would be businessman who had tried his hand at a venture. The venture had not succeeded. Why? Was it because the man was a poor performer?

As thinking is a complex process, it would take a few seconds for the would-be employer to run a gamut of scenarios, all of them leadingEntrepreneurs are those with the energy, spirit and enthusiasm to embark on ventures and this quality emerges in whatever they engage thereafter. Thus corporates actually need those with entrepreneurial tendencies to negative thoughts about the prospective candidate, whether he came armed with professional credentials or whether he had also worked in organisations prior to embarking on business.

Employers may perceive the failed entrepreneur even as a mild threat. Could this individual, who had once run an organisation however small, made decisions, employed staff, knew the workings of the balance sheet and profit and loss statement, banking transactions and even income tax implications, fit in as an employee?

Would he become overpowered by the restrictions of employment, or would he overpower others with an authoritative manner carried over from his tenure as an employer? Anyway, why should the firm hire one who failed, for whatever reason? The reasons are many, and the lack of understanding displayed by employers is often very disturbing.

The very characteristics employers may fear – a candidate’s desire for autonomy, risk taking and the propensity to lead may actually be those the company needs since they are directed to goal orientation and achievement.

Businesses fail

Businesses have been known to fail. Approximately 50% of all business started may fail. The world’s top businessmen have faced failure at one time or the other but they had an inborn trait – perseverance and tenacity. The reasons for the lack of success may be nothing to do with failure at all.

I found that there may be many other reasons; external forces such as changes in the country’s economy and policies that draw upon cash reserves, or lack of a cash cushion. They could face stiff competition from giant competitors. There may be too much family management.

Certain individuals start up businesses for resale and opt to return to regular employment after a while whilst still others try their hand at operating from afar, relying on others who may not quite deliver. Thus one cannot lay the blame squarely on the shoulders of the corporate entrepreneur now trying to fit into regular employment.


Most entrepreneurs initially work without rewards, investing and reinvesting everything back into a business to purchase equipment, supplies, etc. Very soon, they become adept at sales, marketing, purchasing, contract negotiations and modifications, business development, customer relationship management and many of the tedious and manual tasks that accompany a business. They necessarily wear many hats, being the one and only employee of the new venture. They learn – things no academies or formal education centres could teach.

Those with entrepreneurial tendencies have already learned a lot during the course of reaching adulthood through experiences in the external environment and such experiences shape their attitudes on doing what has to be done, experimenting with ideas, learning from mistakes and seeking alternate ideas. They learn to deliver what is promised and never to promise what cannot be delivered which leads to an unwritten code of conduct all businessmen have – ethics and integrity.

Entrepreneurs are those with the energy, spirit and enthusiasm to embark on ventures and this quality emerges in whatever they engage thereafter. Thus corporates actually need those with entrepreneurial tendencies. They bring vitality to the firm by being innovative, having a pioneering spirit and showing ability to take mild risks when required if it were to contribute to the financial performances and strategies of the firm.

Such corporate entrepreneurs are good not only at creating new business ventures but also at innovating activities such new products, services, technologies, administrative techniques within established firms based on perhaps combining skills, acquiring new skills and harnessing individual initiative to extend firm’s activities in areas unrelated or marginally related to the current domain of competence.

They tend to have strong leadership abilities and are able to articulate a vision, gain the agreement of their ideas and create congruence between the vision, self-interests, and team spirit. They have a natural talent for negotiation and are good at accomplishing a goal.

It would therefore be folly for an employer to pursue an individual with only technical competence as there is no guarantee of good judgment and intelligence to analyse and solve problem areas. There cannot be a guarantee that a person with academic and professional credentials actually has leadership qualities, confidence, positive attitude, high level of energy, creativeness, honesty, integrity emotional stability, and fairness? Organisations need people with flexibility, good interpersonal behaviour, an open mind and a known propensity to take personal responsibilities.

Innovative individuals

Those who were once entrepreneurs are innovative individuals who could recognise opportunities and marshal resources to achieve their goals. They are invariably people who are creative and open to change.

The very fact that they were once independent businessmen trying to achieve a goal would confirm their desire to study the economies and continuously evolving technologies around them, even if the business had been a small time operation. Thus they have understood that change is in order if they were to advance themselves, their places of business, their employees and the societies in which they live.

Furthermore, individuals who at any time embarked on their own business possess an intense level of strong determination and willingness to work hard. Unlike others, they have the capacity to work for long hours sometimes with no regard to even the normal amounts of sleep.

Through their hard work and intense desire to complete a task or solve a problem they are able to attain excellence naturally. They possess a competitive streak whether they appear quietly confident individuals or are openly brimming with confidence. Such individuals would be quite frank about a disbelief in fate, rather, they would prefer to find routes to a goal, be innovative and motivate people to act utilising their interpersonal skills.

Whether they were born entrepreneurs or acquired such qualities is another matter! Employers who realise this are quick to capitalise on it since they recognise that such individuals have an edge over others and bring huge worth to the organisation.

Not a threat

Corporate entrepreneurs are not a threat to their businesses, nor are they likely to disturb the internal and external workings of the entity as suspected. They would only be able to respond more quickly to difficult situations since they were once thrown into such situations themselves.

They would be able to solve problems, take decisions or call in the experts and somehow adjust themselves to changing business environments in keeping with the company’s vision since their mental ability as past entrepreneurs would have made them ready for challenges.

Past entrepreneurs would also have had much interaction with customers, employees, suppliers, creditors and governmental authorities thus they would be able to effectively communicate with such people.

Having had independent authority at one time, an employer’s fear that they might want to work in an environment free from interference may be groundless if the employee is under guided freedom, thus drawing the best out of them and allowing their leadership abilities to emerge. Employers would need to assess whether such individuals would be a culture fit, though. For example, they would not be the ideal choice for a tightly controlled, highly process driven organisation.

I believe that rather than taking a dismissive view of those who were once in business and now seeking employment, employers should look for the attributes that the candidate had proved to possess that are always a cut above those who may have excellence in credentials but who may not be “street smart”.

In fact I would promote entrepreneurship as the next evolution of management style in the corporate world. I would advise employers to take a good look at their organisation to identify the areas where the entrepreneurial angle might make a healthy difference.

(The writer is MD/Principal Consultant of Executive Search Ltd./Appointments of International Management Specialists (AIMS), a well-known headhunting guru who is a pioneer in the field of executive search and headhunting with over three decades of experience in the business.)

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