October 17 , 2017

Hire to Hurt: the Boldest Recruiting Strategy of Them All

The recruiting function is unique among business functions because almost no one in recruiting can actually name even a handful of the different strategies that are available to the chief recruiting leader. But this article is not about the complete list of recruiting strategies, but instead it is about which strategy from among the 20+ possibilities is the boldest and most aggressive recruiting strategy.

The “Hire to Hurt” strategy (or H2H for short) is the most aggressive for a variety of reasons. The first is that the name alone sends chills through the risk adverse in recruiting. The name of the strategy is also clearly indicative of its chief goal, which is to “identify key talent and then directly hire them away to the point where your H2H hiring actually hurts the competitor’s business results.”

It’s a two-for-one deal. Not only does your firm get top quality talent but simultaneously your top competitors’ lose key talent. As one CEO put it, “I really like that strategy; our ship rises while their ship sinks” (Incidentally, the No. 2 most aggressive recruiting strategy is “make other firms your farm team”.)

Join the Team, Because Every Other Business Function Already Tries to Hurt the Competitors

Recruiting needs to wake up and smell the gunpowder because almost every other business function already directly attacks competitor firms. For example:

  • Sales – a majority of a B2B salesperson’s time is generally spent targeting competitor’s customers in the hope that they will shift over to your own company’s products or services. Even retail salespeople are taught to continually convince customers from other firms to shift over to buying from yours.
  • Advertising – advertising leaders frequently run “attack ads” specifically to hurt the product image of their direct competitors.
  • Pricing – it is a routine practice to suddenly lower the price of your product in order to draw away customers from your competitor’s product.
  • Real estate – corporate retail real estate buyers routinely purchase ideally located properties simply so that they will not be available to a competitor firm.
  • Product development – it is a common practice in product development to quickly add product features in order to mimic or exceed the product features of your competitor’s new product models. Services are also added in order to catch up with or to hurt your competitors.

Uber is the Benchmark Firm for “Hire to Hurt” Recruiting

In order to maintain a competitive recruiting advantage, most firms obviously don’t publicly announce that they are raiding competitive firms for their talent. But that secrecy doesn’t mean that dozens of firms aren’t currently using this practice.

Uber, the car service, for example proudly revealed that its version of the hire to hurt strategy recruited over 50 drivers in just two large cities over a six-month period. It had its recruiters simply schedule Lyft cars, and once underway, the recruiter would directly begin their recruiting sales pitch to the “captive” Lyft driver. To further incent the hiring of competitor drivers, it also in essence put a “bounty” on recruiting drivers from their competitors. It did this by doubling the standard reward for recruiting a driver who currently works at Lyft and then doubling the bonus again for recruiting away “a Lyft mentor” (the experienced drivers who help train new drivers).

Lyft vigorously complained about the recruiting process, which is further verification that the process was actually “hurting” the competitor. Despite the complaints, there were no legal consequences because employees are not owned by any company and they are free to leave at any time. And despite what the uninformed might think, hurting the competitor isn’t illegal, unethical, or even immoral … it’s merely part of the competitive game.

More Benefits Associated With the “Hire To Hurt” Recruiting Strategy

If you’re still not convinced, here is a list of additional benefits that can occur to a firm that successfully implements a “hire to hurt” recruiting strategy.

  • You get fresh ideas, best practices, and new perspectives (Note: it’s okay to recruit away employees, but you can’t take or use intellectual property).
  • Your competitor’s ability to execute is now limited.
  • Recruiting one key talent away from a firm may turn into a “magnet hire” who may eventually result in a stream of recruits coming from that firm.
  • Customers may notice the exodus from one firm to another and consciously or unconsciously follow the talent to your firm.
  • Your competitors will lose a great deal of management time and money because the managers at your competitors have to recruit replacements and the replacements will probably perform at least initially at a significantly lower level. But because the poaching is continuous, managers will also have to spend a great deal of time protecting and retaining their remaining top performers from poaching. Taken together, these two factors will reduce the amount of free time that managers have to spend on product development or other worthwhile business tasks.

A Wall Street Example

An example may illustrate the point. While I was working with a large Wall Street investment bank, one executive loudly boasted that they had just hired away a key investment banker from their direct competitor. The package they gave the newly recruited banker was worth $5 million. A HR exec pondered out loud: what could they possibly do for us that would be worth $5 million? The response was quick and to the point … I am not certain yet what they will do for us … but one thing is for sure… they won’t be making the competitor $50 million, like they did the previous year. Everyone in the room nodded in understanding!

Refusing to Poach Away From Direct Competitors Is Illegal

In case you didn’t know it, refusing to poach from your competitor’s is clearly illegal under federal law, because the reduced competition for talent in essence artificially lowers employee wages and restrains trade. And of course your competitors will likely try to raid you, but be aware that that competition for talent actually makes firms and their managers stronger. If you don’t force your managers to compete in the marketplace, this insulates them. Being isolated from competition allows your managers (and HR processes) to grow weak. In the short term, having weak managers hurts productivity and in the long term, it eventually leads to an even higher rate of turnover at your firm than you would have in a normal competitive job market.

Consider Targeting These High-impact Positions and Individuals

If you expect to maximize the amount of “hurt,” you certainly cannot randomly select your hiring targets. And although every firm is different, you should focus on targeting individuals who are hard to replace, those who are innovators, those that now hold or will soon hold leadership positions and those that have “future skills” that will be extremely valuable in one year to 18 months. You should also realize that whoever you target, the ones that the managers at your competitors fight the hardest to keep are the ones that you really want. Some of the H2H targets that I recommend include:

  1. Sales managers (target the top at each of your primary competitors)
  2. Sales professionals (target the top at each of your primary competitors)
  3. Product development managers (target those from the most innovative firms)
  4. Any individual with a high business impact
  5. A product innovator and “idea person” at any competitor
  6. The “CEO in waiting” (i.e. the successor to the CEO)
  7. The general manager of your competitor’s most profitable business unit
  8. Customer service managers from firms with high customer service ratings
  9. Top performers in all revenue-generating positions
  10. Individuals on the firm’s succession plan
  11. Brand managers at firms that have recently built or improved their brand
  12. Director of advertising at competitors that excel at advertising
  13. Supply chain managers from the most efficient competitors
  14. Market research managers at competitors that excel at market research
  15. Logistics managers, especially the best from transportation companies that lose money when their fleet is slowed
  16. The chief technologist (or those scheduled to succeed) at industry leading firms
  17. Leading social media expert in your industry
  18. The heads of their “critical best practice” functions (marketing, advertising, design, supply chain, etc.)
  19. The leading foreign tax specialist, especially in global organizations
  20. Partner relationship manager from firms that excel at building and maintaining relationships with key suppliers, vendors and partners
  21. Recruiter (target those who are proactive and have successfully poached your high-impact employees)
  22. Succession planning leader (target those who have the best track record in the industry for successfully slotting and developing leaders)
  23. Chief compensation analyst from major competitors (because they can identify all of the top performers and key leaders)
  24. Top safety/maintenance managers (especially in heavy manufacturing/chemical production industries)
  25. The mentor/friend/family member of any top performer who is currently at your direct competitor who may “bring” the top performer with them (immediately after they are hired)

Final Thoughts

There are two basic categories of recruiting. Ninety-five percent of recruiters fall into the first category, which I call “Hire To Help” because the goal is to recruit and hire individuals who can help your firm, regardless of where they come from. The remaining small portion of recruiters fall into the second category, which is the “Hire To Hurt” category. You are once again simultaneously helping your own firm, but in this case you are also purposely damaging both the talent bench strength and the business results at your competitors.

This second H2H approach has as much as double the business impact but it also has its drawbacks. First of all, because you are directly raiding a competitor, you must have highly competitive and well-trained recruiters (hopefully with executive search backgrounds) because they are fighting for top talent that the managers at your competitor will fight fiercely to retain.

Next you need superior metric-driven recruiting tools and approaches (none of which can be designed for recruiting “actives”). This is because your recruiting targets are 100 percent fully employed individuals who are “not-looking” for a job (i.e. passives), which means that they have to be talked into even considering a new job. And finally your recruiting leaders will need to “grow a pair” because a majority of the ones who I encounter do not view recruiting as a fierce “winner-take-all” competition.

About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.