Rapid Startup Growth Increases Gender Bias in Hiring: Report

• Notably, as revealed in a study, rapid startups drive hiring bias
• This puts immense pressure on the founder to take mental shortcuts
• The study shows that scaling reduces the probability of hiring women, particularly in managerial positions

Highlights of a recent research study from the Stockholm School of Economics (Sweden) demonstrate that rapid growth among startups can put founders under pressure to make hiring decisions that can lead them to use biased methods which will disadvantage female candidates.

Specifically, the research finds that ‘scaling’ the rapid hiring of new employees of an established startup leads to increased levels of pressure for founders to use ‘mental shortcuts’ when making decisions about who should be hired and promoted.

It also finds that the use of these ‘mental shortcuts’ can activate gender-related stereotypes that have an impact on hiring and promoting candidates to managerial roles.

Based on data about 31,264 new company startups in Sweden from 2004 to 2018, such as those led by men, this study finds that scaling reduces the chances of hiring women by approximately 18 per cent and reduces the likelihood of women being appointed to managerial roles by approximately 22 per cent.

Furthermore, even in a context where there are equal employment opportunities for all genders, these patterns persist.

Founders of companies who have educational qualifications in human resource management are more successful at countering the impact of such biases.

In startups led by these founders the odds of hiring female employees increase by over 30 per cent, and the likelihood of female candidates being promoted to managerial roles increase by 14 per cent.

This research indicates that effective structures around hiring and having prior experience in HR can reduce gender disparities and increase the diversity of the applicants from which startups choose their employees.