NEW RESEARCH | 6 out of 10 scaleup employees burn out

Scaling up a new venture is often seen as desirable and a sign of success. But research now establishes that employees pay for ‘success’ with their well-being.

Even at the EU level, there are policies designed to get more new businesses to grow quickly. And no wonder – society is benefiting from new services, products and technologies as fast-growing companies create jobs as well.

– Entrepreneurs increase their profits and the government collects more taxes, so many people benefit from the scaling process. But no one talks about how the employees experience it, even though they are the ones doing the work, says Mohamed Genedy, Jönköping International Business School.

In his doctoral thesis, he studied, among other things, how scaling in new ventures affects the well-being and job satisfaction of employees. The study is based on data from almost 11 000 employees in new Swedish ventures.

– In scale-ups, we see that 6 out of 10 employees burn out. In new ventures that do not scale up, that figure is just under 4 out of 10. And age has nothing to do with the risk of burnout, the average age is about the same in both types of companies – 42.5 and 43 years respectively.

“The social costs are not mentioned”

Mohamed Genedy is critical of the fact that entrepreneurship research and society at large rarely highlight the social costs of entrepreneurship.

– We talk about the economic costs and benefits of scale-ups, but the social costs are not mentioned. Employees are greatly affected by the methods used by entrepreneurs.

– Employee burnout costs people’s well-being and is expensive for businesses and society. Around 40% of employees in scaleup companies become so seriously burned out that they have a long road back to work, says Mohamed Genedy.

Good planning is the key

When a company scales up its operations, there are often organizational and work changes. For example, they need to manage an increased volume of sales, invoicing, purchasing and production. This creates a lot of stress for employees as it involves a lot of uncertainty and a high workload.

– Instead, if companies plan for a scaling process, they have time to hire new employees and onboard them properly. But this is difficult to do in a short time. So the responsibility falls on the existing employees who have to work significantly more or find time to onboard and help the new employees. This equation is often devastating, says Mohamed Genedy.

Managers not as vulnerable

Employees who hold managerial positions in scale-up companies are not as vulnerable as others, the study shows.

– They decide the pace of work, how to prioritize tasks and when to carry them out. So it is mainly the employees who have a lower degree of autonomy and control over their daily tasks who are at risk, says Mohamed Genedy.

– We also see that employees who have previous experience in scale-up companies are not as vulnerable as those without that experience, says Mohamed Genedy.

Contact mohamed.genedy@ju.se

More about the thesis
Mohamed Genedy recently defended his doctoral thesis Beyond the bright side: Investigating dark aspects of independent entrepreneurship, family entrepreneurship, and corporate entrepreneurship at Jönköping International Business School. The study on burnout in scaleup companies is part of the thesis. He has also studied the early career paths of siblings within the family business as well as whether external investors/owners with certain innovation preferences have an impact on the businesses.