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How to Employ the Formerly Incarcerated to Help Grow Your Business Welcome second-chancers back into the workforce with these tips and tricks.

By Carol Roth

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Opinions expressed by Entrepreneur contributors are their own.

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There are a few realities that business owners face today. One is that with a tightening labor market, it is harder to find employees. Second is that organizations that have social missions, along with a great product and/or service, are more attractive to many prospective employees and customers.

With that, I came across an emerging trend that sits squarely between these realities. More businesses are hiring "second-chancers"– that is, those who have been incarcerated and are now are back in the workforce.

While some businesses may view those with a criminal record as a big risk, experts have showcased some of the great outcomes. To learn more about this movement and some best practices for your business if you want to hire a second-chancer, I spoke with second-chancers advocate and chief investment strategist of Fifth Third Bank, Jeffrey Korzenik, over email.

How did you get involved with "second-chancers" -- bringing those with criminal records back into the workforce -- as a cause?

Korzenik: As the son and grandson of immigrants, I always think of America as the land of second chances, and it always struck me as tragic and wrong that so many of our fellow citizens have been denied the opportunity to rebuild their lives. As the father of sons who attended diverse Chicago Public schools, I was also sensitized to differences in backgrounds that meant stupid mistakes of youth could have outsized consequences. But, it really took two things to come together before I tackled this in a formal way: meetings with several organizations that provide employment for ex-offenders and, second, a consistent refrain about the lack of available workforce from our business-owner customers.

Related: How Secondhand Clothing Gave This Woman a Second Chance

Why do you think it is important?

Our biggest fear for the economy is that we essentially run out of labor. To gauge the importance, look at the numbers: over 2 million incarcerated, 4.8 million currently on parole or probation, 19 million with a felony conviction on their record, 70 million with some kind of past interaction with the law. Put those numbers against the reality that, above and beyond natural demographic growth and immigration, to sustain our expansion we need an additional 1.25 million workers each year, you have to recognize that the number of people who are likely out of the workforce, unemployed or underemployed because of this taint is enormous and economically consequential.

We are wasting enormous resources, either through the opportunity loss of full labor market participation or through direct costs like the $80 billion spent each year on incarceration. A job alone may not be sufficient to reduce recidivism, but it is necessary for most ex-offenders. Current estimates for long-term recidivism rates run from approximately 60 percent to over 75 percent, so we have been failing in this regard both on an economic and a societal basis.

Why do small businesses/entrepreneurs benefit by bringing on second-chancers?

There's shockingly little hard data on this, but those employers who have focused on hiring second-chancers in a disciplined way consistently report that these workers are extremely dedicated and have lower turnover than the average worker. This can seem counterintuitive, but the effort and commitment it takes to rebuild your life after having made a serious mistake is actually a very positive reflection on the character of that individual.

I think the proof is in the pudding; Edwins Restaurant and Leadership Institute in Cleveland provides a great example. They have a culinary training program for those formerly incarcerated. After three-and-a-half years of operation, this program has restaurants lining up for their graduates, with one of the region's best restaurants, Fire, hiring up to six Edwins graduates. One glance at the Zagat's review of this restaurant tells you that they have the highest standards for their employees.

Incidentally, the Edwins training program has over 200 graduates and tracks a recidivism rate of one percent. If done the right way, re-entry works.

Related: How These Franchisees Turned to Overlooked Talent to Grow Their Business

What are some best practices that entrepreneurs should follow when considering a second-chancer?

Employers need to recognize that the optimal process for hiring and supporting second-chancers is different. Here are some things to consider:

  • Employee sourcing. The hard fact is that not every ex-offender is ready. Employers need to partner with nonprofits that already have a relationship with candidates and know who is ready. In Cincinnati, Nehemiah Industries, in the consumer products manufacturing and packaging space, built its workforce by partnering with the City Gospel Mission. In Chicago, the Harris Theater is partnering with the nonprofit Cara organization to find suitable applicants for some of the staff positions. (Disclosure: Korzenik is a trustee of the Harris Theater.)
  • Skilled employees. Some nonprofits provide specific training and credentialing that target industry needs. The Safer Foundation in Chicago has been one of the most successful pioneers in this area. Employers should realize that second-chancers can be candidates even for fairly skilled jobs.
  • Employee support. People who come out of prison don't initially leave the socio-economic environment that put them there in the first place. Employers can partner with nonprofits that provide ongoing support. This may take the form of a nonprofit organization like 70x7 Life Recovery in Holland, Mich., which works with a number of Western Michigan employers. Employers should keep this kind of support in context -- it is simply an extension of EAP programs already provided by many businesses.
    Food manufacturer Butterball in Grand Rapids, Mich., was one of a half dozen companies that partnered to share the services of a private social worker that worked onsite, a model now being replicated by the Beacon of Hope Business Alliance in Cincinnati.
  • Supervisor sensitivity. Managers of second-chancers should understand the day-to-day challenges faced by people from a stressed socio-economic background. Cascade Engineering, a 1,600-person employer with seven locations in the U.S. and Europe, requires their supervisors to participate in a "poverty simulation" game. The example I give of the importance of this training is to have supervisors who understand and can provide solutions when an employee calls in to say, "My car broke down, and it's a $300 repair, so I guess I can't work anymore." Without training, not every manager could appreciate that many employees may not have $300 in the bank or a credit card or a second car. The best employers understand that they need to provide some workarounds for these kinds of issues.

Are there any pitfalls to avoid increasing the probability of success when hiring second-chancers?

The primary pitfall, to my mind, would be the failure to recognize the need to partner with nonprofits for sourcing or support. Obviously, lots of employers do that and still succeed, but the chances of success are much lower.

Is there anything else you want to add?

Employers have to be open-minded. I had an employer of restaurant workers tell me he wouldn't consider anyone with a felony; in some states, a past failure to pay child support might have resulted in a felony conviction. I also know of a young woman (under age 21) charged with a felony for having two fake IDs to buy a drink at a bar. Neither of these acts may make these people admirable, but should mistakes like these made in youth really have lifetime consequences?

Carol Roth

Entrepreneur, TV host and small business expert

Carol Roth is the creator of the Future File™ legacy planning system, a “recovering” investment banker, business advisor, entrepreneur and best-selling author. She is also a reality TV show judge, media contributor and host of Microsoft’s Office Small Business Academy. A small business expert, Roth has worked with companies of all sizes on everything from strategy to content creation and marketing to raising capital. She’s been a public company director and invests in mid-stage companies, as well.

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