CEOs are fierce competitors who expect you to win literally every talent battle against top firms.
And because CEOs see everything through an “Us against them” lens. Their desire to win every time extends beyond product competition and into talent. However, to CEO’s, not all talent battles are equal. The ones that CEOs most want to win are the head-to-head battles in which your company competes directly for the same person. The top two most impactful head-to-head talent competitions (on revenue and profit) that major corporations engage in are 1) recruiting the same candidate for a key open position. And 2) retention battles where you fight head-to-head to retain one of your key employees when a major talent competitor is trying to hire them away.
What Is The Most Powerful But Unreported Strategic Talent Competition Metric?
Despite the fact that CEOs view every recruiting and retention battle as a “must-win competition.” Only a handful of corporate recruiting and retention talent leaders formally report this important external competitiveness measure to their CEO (make a note to check later on why your firm doesn’t report it). This metric is called a company’s “Takeaway/Giveaway Ratio.” It is calculated for each separate competitor firm that you compete head-to-head with. It helps your CEO see the “net talent gain” that your talent leaders have provided them with each year.
Fortunately, almost everyone instantly understands what this intuitive Takeaway/Giveaway Ratio means and the tremendous value that it adds to talent management. I began using this metric in the late 90s. Its origin is in the NFL, which uses a similar highly predictive metric, which they call the giveaway/takeaway ratio for the result of the play when a team loses or gains possession of the ball.
A Quick Definition Of The Takeaway/Giveaway Ratio
I have found that this ratio is the most underused strategic corporate talent competitiveness measure. It is one of the few talent metrics that cover the results across two different talent areas, in this case, recruiting and retention.
When you use this ratio, you count the number of individuals that you have hired (taken) away from each direct competitor (in the marketplace of active candidates or during your direct efforts to poach away one of your competitor’s top employees). Then, you directly compare that “number of wins” to your loss numbers which is the number of your key employees that a competitor has successfully hired or poached away from your company in a given year. At the end-of-the-year, you get to the final summary ratio by adding up all of the wins against every individual competitor company. And then, you compare that total win number to the total number of wins that all companies had against you during that year. The final combined ratio will look something like 15 – 11 if it is positive and 11 – 15 if it’s negative.
Example – how you arrive at a 15 – 11 corporate Takeaway/Giveaway Ratio against company X
Takeaway – a Takeaway is when you win a recruiting battle against a competitor company by taking away either an employee or a recruit from a competitor company (by hiring them).
Giveaway – a giveaway is when you lose one of your key employees (a competitor hires them) by winning a proactive poaching attempt by a competitor. You calculate this ratio for an individual competitor company by…
- Counting the # of head-to-head competitions you won against top competitor X – (15)
And when you compare that number to…
- The # of head-to-head competitions that he lost to company X – (11)
Then, you get a year-end ratio of 15 – 11.
Your conclusion from this positive ratio would be… that your company is highly competitive against its top talent competitor. And when your talent leaders report this positive ratio to the CEO, they should be prepared for a strong “well-done” compliment.
Why Is This Takeaway/Giveaway Ratio So Important?
There are, of course, many benefits that you will receive from calculating and applying this ratio. The top 7 benefits are listed below.:
- Everyone will realize that recruiting and retention wins and losses are closely related – the common approach for reporting head-to-head wins and losses is to report recruiting and retention data separately. And that frustrates CEOs, who have always realized that separately reporting recruiting wins is extremely problematic. Successful hiring adds little value to the organization if, at the same time, an equal or greater number of employees are escaping out the back door. During a year where you hired more employees than you lost to turnover. You happily have what is known as a “net talent gain.” And one more important point because recruiting and retention are so interrelated. If you, unfortunately, have an external reputation for high turnover. Recruiting becomes much more difficult, and vice versa. Fortunately, this ratio provides a “big picture view” of your head-to-head results in both of these top two high-impact talent areas in a single,easy-to-understand metric.
- Recruiting and retention competitions are both zero-sum games with a single winner – because all individual recruiting and retention battles are “Zero-sum games.” This means that only one party can win, and all the others must lose. You can’t clearly know whether you are winning (and by how much) unless you objectively track your win/loss record across each company that you have head-to-head competition with. Because in these battles, coming close simply doesn’t impress anyone.
- Reporting a positive ratio will get you noticed and rewarded – because CEO’s themselves are highly competitive. They almost universally admire those that consistently win any head-to-head competition. So reporting your successes in this ratio will certainly get their attention. And they will make your CEO take notice so that they will be more likely to support and fully fund both your existing talent programs and your new innovations.
- This ratio is relatively easy to calculate – because once you develop a system for gathering the data on your number of successful and failed takeaways and giveaways (see the tips in the following section), the final calculation is extremely easy. Because it only involves simple addition.
- Calculating this ratio is an easy first step in transitioning into a data-driven function – everyone knows that there must be more and better metrics in all talent areas. So calculating and reporting this ratio may serve as a first step in your function’s overall transition toward becoming a data-driven function. Especially if you also measure and reward individual managers for having a positive TA/GA ratio each year.
- Identifying when you win and why… will drive continuous improvement – because this ratio will force you to clearly define what is a win and loss in both recruiting and retention. The data that you gather in order to calculate the ratio will help you to identify the factors that directly caused each individual loss or win. And over time, identifying the most impactful “success factors” (i.e., sourcing, assessment, or the individual recruiter) will make it much easier for talent leaders to focus on increasing those success factors in every new talent competition. This data-driven approach may be especially impactful in the areas of diversity recruiting and retention.
- The dollar impact difference between winning and losing talent battles is tremendous – and the last but certainly not the least important benefit of this ratio is that the resulting ratio will likely force many to ask, “What is the dollar value from winning and losing these talent competitions?” So work with the CFO’s and the COO’s office to calculate the average dollar impact from each major talent win and loss. Obviously, in the case when you successfully poach talent away from a competitor. It’s important to understand the net dollar value added to your company, as well as the dollar loss to your competitor. This is because when you win each individual poaching takeaway battle. Not only does your company gain highly valuable, productive, and innovative people. But the company that lost the employee that you poached simultaneously loses the same amount of value. Failing to calculate and include the dollar loss to a competitor company results in undervaluing poaching efforts by your recruiters. And, of course, the same high value is gained by your company when it wins one of its own retention battles for keeping a current key employee.
An example of the often underappreciated value of winning a poaching competition
I was advising at a well-known investment New York banking firm when they announced to a group of HR managers that they had just successfully hired away their competitor’s best salesperson. However, their HR people were less than impressed. And because they already had a great sales manager. They asked this question, “but what will he do for us?” The hiring manager shot back immediately with a powerful quote (that I remember to this day). “I’m not sure, but he won’t be making $50 million a year for our competitor!”
Tips For Gathering Takeaway/Giveaway Data
The only difficult aspect of developing this ratio is identifying when your company is actually in a head-to-head talent competition with a competitor during recruiting and retention. The first key lesson to be learned is don’t get hung up if you don’t initially have perfect data. And be aware that there are at least 16 distinct ways to identify when you are in a head-to-head recruiting competition. I guarantee that each of them has worked.
1) Approaches for identifying when you are in a head-to-head recruiting competition
- Ask each of your finalists where else they are interviewing – make it part of your formal recruiting process to ask every finalist (both regular and college) during the finalist interviews to name the specific firms where they expect to be granted a formal interview. Note when your major competitors appear on the list.
- Ask each new hire during onboarding – after they are hired, these individuals are more likely to be candid about what other firms will be recruiting them. So during onboarding, ask each new hire in a key position what other companies offered them a finalist interview. And if their offers were in any way superior to ours.
- Ask them during the application process – make it part of your application process or initial telephone interview. Ask every applicant to list each of the other top firms that they are applying to.
- Ask the managers of high-value teams – because individual managers have a major stake in both recruiting and retention. They are likely to know and be forthcoming about which companies have been targeting their team members. So, periodically schedule meetings with these managers and ask them to share their insights into who their primary recruiting competition is.
- Ask your recruiters to identify their poaching targets – when your recruiters actively poach individuals from your competitors. Ask your recruiters to make sure that their manager knows about these poaching attempts and whether they succeed or fail.
- Ask your recruiters to help – hold private conversations with your best recruiters. And ask them for their help in identifying additional ways of determining which companies are currently in head-to-head competition with us.
2) Approaches for identifying which major companies are attempting to poach one of our top employees
- Ask them during “stay interviews” – make it part of your regularly scheduled stay interviews (i.e., why do you stay). Ask those that freely admit that they are considering leaving to name the companies that they are considering or the companies where a recruiter has already directly approached them.
- Ask them during exit interviews – make it part of your standard exit interviews to ask each key departing employee to name the company they are going to as well as the companies where they were a finalist at. BTW, you are more likely to get this information during a delayed post-exit interview.
- Check your departed employee’s LinkedIn profile – after a key employee leaves. Or alternatively, over the next month. Check their LinkedIn (or social media) in order to see which company they joined.
- Ask those that have decided to stay – should any of your key employees announce that they have decided to stay. Ask them in private to list what other companies were seriously considering them.
- Ask your key employees to take notes – encourage each of your loyal employees to take notes whenever they are contacted by a direct competitor’s recruiter. And give them a Starbucks card for reporting which company/recruiter is attempting to poach them. And what they are offering.
- Ask during your company’s formal retention efforts – if, as part of your retention effort, you make a list of your “flight risk” employees. Subtly ask each of them during your retention conversations to name the top firms where a recruiter has already contacted them.
- Survey those that attended professional meetings – because so many recruiters are active at trade shows. It pays to ask a sample of your employees that attended a major functional or industry event to list any companies where one of their recruiters or managers directly approached them and discussed opportunities.
- Ask during anonymous surveys – periodically survey a sample of your employees. And ask them to anonymously list the firms that have recently been actively recruiting them or their colleagues.
|If you only do one thing – during your onboarding session for new hires, ask each one that came directly from a top talent competitor. “Why did they decide to leave their former company and join ours?” Then specifically ask them to list the positive points that they discovered about our company. And then use those positive factors to supplement our current employer branding and recruiting narratives. Next, ask each new hire to provide us with any negative information about their former company and what made it a much less desirable place to work. Then summarize this negative information, and give it to your hiring managers and recruiters. And encourage them to use this information to better educate our candidates about the perils of working at their competitor firm.|
Additional Ways To Show That our Recruiting And Retention Is Competitive
In my previous article on “Proving that recruiting offers a competitive advantage,” I highlighted some of the ways that talent leaders can prove to cynical executives that they provide a competitive advantage. In that light, here is a reminder list of the many additional ways that talent leaders can convince cynical executives that our talent functions are highly competitive.
- Show that you get higher Glassdoor.com company ratings – show that your “company ratings” on company comment sites like glassdoor are measurably higher than your competitors. Also, show that your ratings continually improve each year.
- Show that your company appears on “best places to work lists” – merely showing that your company appears on one of the many best places to work lists (i.e., Fortune, LinkedIn, Glassdoor, etc.) will by itself show that you are highly competitive in talent. And it’s even better if you can show that your place on the list is higher than your major talent competitors.
- Show that you consistently improve your performance on your talent results metrics – in some data areas, there is no way to prove that the results of your competitors are improving faster than your competitor. However, showing your executives the percentage of continuous improvement in each of your strategic talent results each year will still have some impact on your executives.
- Show that you succeed at most of your poaching attempts – because directly poaching non-active job seekers is extremely difficult. If you directly target a top competitor’s employees for poaching (most don’t). Showing that you win most of those attempts will go a long way toward convincing your executives that you are highly competitive in recruiting.
- Show that most of your targeted retention efforts are successful – if you maintain a list of employees and key jobs that are considered to be a “flight risk.” And if you design personalized retention plans for each of these individuals. Showing that the percentage that ended up staying was over 70% will impress.
- Show that you have won functional talent awards – in the absence of comparison data. Winning external functional awards in recruiting and retention will by itself impress many of your executives.
Talent leaders are constantly saying that they want to be more strategic. Well, one way to do that is to show that you “think like a CEO.” And you can do that by showing that you are highly competitive, externally focused and that you realize the close interrelationships between external recruiting and internal retention. And one simple but effective way to show that “you are like them” is to calculate and widely report your Takeaway Giveaway Ratio.
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