Startup companies are quick to fire unproductive employees, according to a report by the Wall Street Journal.
According to a recent survey of the Bureau of Labor Statistics, about 25 percent of startup employees are fired even before the new company reaches its first year of founding. The statistics surveyed employment changes that occurred between March 2012 and March 2013.
However, data on job losses at companies that have been in business more than 18 years reflected lower results. The survey found that only 6.6 percent of employees are retrenched from work.
"We've gotten into this world of 'fail fast,'" John Greathouse, professor of entrepreneurship at the Unviersity of California, Santa Barbara, told WS. "But I think when it comes to hiring it's a little different. People's lives are at stake."
Startup firing behavior is in part attributed to the "lean startup" model developed by Eric Ries's book of the same name published in 2011. The model encourages startup owners to focus on moving forward by repeatedly releasing improved products, while eliminating those that don't serve customer needs.
For example, Yammer, a social network acquired by Microsoft Corp last year fired almost 30 percent of its engineering staff during its four years of operation, according to technology chief Adam Pisoni.
"Smart people can waste months building infrastructure that scales, only to find that that doesn't matter because the market doesn't care about the product," Steve Roberson, of job-search engine StartUpHire, who has co-founded three companies, told WSJ.
However, not all those who get fired were incompetent. According to Sasan LaMotte of exaqueo, a consulting firm that helps startups hire employees, startup founders can also be the source of the problem.
"Big thinkers focused on developing products are sometimes rookie managers with little or no experience staffing a company," LaMotte said. "These leaders often don't understand what qualities they should seek in employees, or they hire friends or acquaintances instead."
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