Every company will hire best and right candidates to take charge of key positions in its operation in a hiring process through the steps of application, testing, interviewing, reference checks and health exams. Each of these steps is usually rigorous to screen out applicants who do not fit into the core values of the organization. Moreover, they may have cost implication that exceeds the value at times especially when those invited for interview fail to meet the criteria to be selected for positions advertised leading to a repeat of the process in most cases.
Majority of big companies have perfected the process to such an extent that unqualified persons do not find themselves in the hiring process because of the standard screening criteria. Most start-ups find it difficult to carry out this process successfully leading to their failures most of the time. In other words, human capacity rather than funding has been considered a key factor in the failure of most start-ups. A statistics of all the small businesses started in 2014 showed that 80% made it to the second year, 70% made it to the third year, 62% made it to the fourth year, and 56% made it to the fifth year. The ten causes of these SMEs’ failure include no market need (42%), ran out of cash (29%), bad team (23%), outcompeted (19%), pricing/cost issues (18%), user unfriendly product (17%), product without a business model (17%), poor marketing (14%), ignore customers (14%), and product mistimed (13%) (Mansfield, 2019). Unimaginably, a recent research in 2019 by Small Biz showed that 90% of start-ups fail. (Failory, 2019).
This made Thinking House Consulting to have a new way of thinking that will solve startup failures from a perspective that involves identification of employees with entrepreneurial traits hired into successful companies. In other words, we advocate that the hiring process should be intentional from the beginning in identifying those who desire to start their own businesses among those to be employed. This will prevent these people from leaving companies they are working for because they wanted to start their businesses.
A top applicant being considered for employment in a company is assessed during the hiring process by asking questions that relate to entrepreneurship. We called this an “impact hiring” with the intention of the company to invest in the idea of the employee or create a business to be registered separately as an entity and run by the employee. This is awesome. The employee has access to every resource such as funding, human capital hiring, and support from the company he works for. He does not have to go through the stress of seeking for funding for his Startup or recruit incompetent people who will collapse the company.
This made Tokunbo Adekanla, an innovation consultant at Thinking House Consulting, to say that impact hiring is the future of entrepreneurship by stating that most of the products developed by companies are not meant to go into extinction and forgotten since circular economy has not been fully implemented. Rather, the products should be developed into stand-alone businesses that will be registered and handed over to an employee with entrepreneurial DNA to manage and innovatively improved upon. By so doing, the employee has access to the business experience, knowledge base and finances of the main company which will limit the struggling of the startup.
Therefore, we advocate “impact hiring” as the solution to startup failures across the globe for better wealth creation, business sustenance and improved national economy.
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Thinking House Consulting is a startup consulting firm based in Ibadan. We can be reached by email email@example.com or firstname.lastname@example.org.
Mansfield, M. (2019). Startup Statistics: The numbers you need to Know. Small Business Trends. Retrieved from https://smallbiztrends.com/2019/03/startup-statistics-small-business.html
Failory. (2019). The Ultimate Startup Failure rate Report. Retrieved from https://www.failory.com/blog/startup-failure-rate