April 25 , 2019

Aggressive Talent Poaching in Bathrooms and Parking Lots

Ever since the unsolicited offer by Microsoft to buy Yahoo, recruiters have been literally “circling” Yahoo in a manner that would have to be labeled as aggressive even by Silicon Valley standards. The tactics vary from the relatively tame practice of “cold calling” into Yahoo in order to find nervous employees to the more aggressive “trolling” by recruiters outside Yahoo’s parking lot and in local spots where Yahoo employees hang out.

Even though Microsoft hopes to gain a significant amount of Yahoo’s talent through acquisition, a number of groups at Microsoft are not waiting. Already on the Internet you can find copies of emails sent by Microsoft recruiters to known top talent at Yahoo, offering them an opportunity to explore a Microsoft career in this time of uncertainty. Those interested in reading one such email can check out this blog posting.

 

However, the most aggressive approach has to be a firm that has aggressively posted “we are hiring” posters in the entrance way and in the bathrooms of the building that they share with Yahoo’s famous San Francisco “Brickhouse” innovation site. I call it “bathroom recruiting” and by the way, I’ve heard that it has already yielded results. The firms that are actively attempting to poach talent away from Yahoo range from the very small startup Cake Financial to the recruiting machine Google, which recently successfully hired away a key Yahoo executive, Steve Souders, their Chief Performance Yahoo.

The Majority of Hires Are Poached

If “bathroom recruiting” shocks you, it’s only because most aggressive recruiting approaches are kept secret in order to maintain a firm’s competitive advantage. If you think that poaching (the direct targeting of current employees from another firm) is rare, you would be totally wrong. I estimate that nearly 75% of key hires in major firms are directly recruited away from other talent competitors, and that nearly 100% of CEOs (that are external hires) are poached.

Sometimes the person is lured away from their current firm not by a corporate recruiter but instead by an intermediary (a third-party recruiter or agency), but the net result is the same. One firm gains a new employee and another firm loses a current employee as a result of a recruiter paid directly or indirectly by the corporation. Even the practice of recruiting away individuals is being superseded by a more aggressive approach, known as “lift outs.” In a lift out, an entire team is poached all at once (Yahoo once lost an entire team to the software firm Nuance). Some firms now even keep score of their poaching activities. They calculate what I call their “giveaway/take away ratio,” which tells the firm whether they successfully recruit away more individuals from their competitors than competitors successfully poach away from them.

Poaching is Becoming a Global Phenomenon

Because of the almost continual poaching between giants like Microsoft, Google, and Yahoo, many individuals think that the United States is at the epicenter of worldwide poaching, but that wouldn’t be true. China, closely followed by India, would win the award hands down.

The widespread economic growth in China has made the demand for managers with experience working and managing in China stratospheric. In my many visits to China, I have learned about how firms literally “bid” for experienced managers with amounts of money that would double a manager’s present salary.

India is no slacker either in the fight for top talent. I once met a CEO in Bangalore who was willing to open a plant across the street from Nokia in Finland just to increase the likelihood of directly recruiting away their engineers.

In Europe, the mobile phone firm Vodafone recently poached one of Microsoft’s top executives to head up its new Internet services division. In Canada, EA once placed a billboard in the vicinity of a competitor in order to incite them to switch employers.

Since the late 1990s, U.S. firms that are perceived to be in trouble or those that are being threatened with a merger have been subject to aggressive “across the street” recruiting efforts. It happened to PeopleSoft right before the Oracle merger. One Chicago-area hospital recruiter confided in me that their hospital unabashedly placed a recruiting van with a large canvas sign outside of a competing hospital that was having labor trouble.

But Isn’t Poaching Illegal, Immoral, or a Cause of Global Warming?

Whenever anyone brings up the topic of poaching, there are invariably squeals from the timid or the un-informed claiming that it’s illegal, immoral, unfair, unethical, etc. It’s funny that much of the talk comes from third-party recruiters who get a majority of their recruits from among the actively employed population.

Even some corporate recruiting managers somehow think that it’s better (or less dirty) to “poach” employees from another company by using an intermediary, as if somehow using a third-party recruiter and poaching the talent circuitously is more ethical.

Such an argument is just silly. If you pay a recruiter (whether it’s someone on your payroll or a vendor) to entice someone to leave their current firm to go to your firm, you have poached an employee. Hiring someone else to do the deed indirectly still means that your firm has gained an employee and another firm has lost one.

Incidentally, poaching away employees is not illegal because employees are not “owned.” (Ownership by one human of another has been illegal since the Civil War). Today, nearly all states and all corporations embrace “at will” employment, meaning that at anytime, either party may sever the relationship with or without cause.

Poaching May Spur Competition

Some HR professionals or managers are reluctant to poach because they are afraid that other firms will retaliate. Unfortunately, if you act this way your fears are misguided and you are probably hurting your firm with your timid approach. Using this fear of retaliation logic, the products division of your firm wouldn’t offer new products that competed directly with a competitor’s product because that large competitor might retaliate and squash your firm’s new product! In the same light, your sales people wouldn’t compete head-to-head for the same customers out of fear of retaliation.

Competition is everywhere. Business people expect competition everywhere; only HR people see “ethical issues” that just are not raised in other business functions. I have difficulty understanding HR professionals who keep saying they want to be business partners. It seems that when they are given a chance to actually compete like a business-person, they fail to act like real “business people” do every day, and that is to compete in the marketplace.

Executives and senior managers actually enjoy competition. If you have the best jobs in the best recruiters, you really have nothing to fear because you’ll win more than you lose. It’s a recruiter’s job to provide their current team with the best possible talent, so it’s time to stop being a pacifist.

Recruiting great talent is always a fight (some call it the “war for talent” for good reason) and if you want the very best well-trained candidates, you really have no other option other than to poach from your competitors.

The other option, hiring exclusively from “non-competitors,” invariably means hiring candidates without experience in your industry, candidates from outside the region with high relocation costs, or those candidates without any relevant experience. Hiring unemployed people with out-of-date training or individuals from other industries means extra costs to the firm because of their slow start up and their long learning curve.

Poaching objectors should also understand that, whether you like it or not, large competitors in any industry are continually targeting the employees of smaller firms and those in trouble. Large firms in every industry invariably look at smaller firms as their “farm teams,” so if no one is attempting to steal your employees, either you have a great blocking strategy or you may have some pretty undesirable employees! Any company that has good employees needs to constantly battle to keep them. It’s just part of business.

HR’s Dirty Little Secret

Refusing to poach may actually be illegal. One of HR’s dirty little secrets is that senior executives routinely make “pacts” where they agree not to poach each other’s employees. On the surface this might seem okay, but the reason these “gentlemen’s agreements” are always unwritten is because they probably violate the restraint of trade principle.

By agreeing not to compete, they are essentially hurting their current employees by restricting their freedom of movement. Under the U.S. Constitution and U.S. law, employees are free to leave and go to any employer that they wish. When a firm agrees not to hire a competitor’s current employees, essentially what the firm is doing is legally limiting the freedom of its current employees.

Some unscrupulous firms attempt to “scare” their current employees and further restrict their freedom of joining a competitor by forcing them to sign odious non-compete agreements which are almost always unenforceable unless significant trade secrets are involved. Because no one can successfully hire them away, the current employer has an increased opportunity to poorly treat and underpay these individuals. Yes, competition forces employers to treat their employees better. A lack of competition allows employees to be abused because they have few options within the same industry or city.

As an employee, you might think that you didn’t get an interview at a competing firm because of some weaknesses in your work experience. Unbeknownst to most, the real reason they get no response are these secret, hideous, under-the-table non-compete hiring agreements.

The Benefits of Hiring Away Your Competitor’s Talent

If you’re unsure about whether you should poach, consider the many benefits that come from taking the best employees away from another firm. First, because they are currently working, they’re probably well-trained, up-to-date, and above-average employees. When you hire individuals from another firm, you get with the employee an understanding of your competitors’ processes, tools, and approaches.

Effective poaching will probably also force the competitor to focus more of their efforts on employee retention, which will in turn limit resources available to any recruiting effort that they might undertake against you.

Final Thoughts

Despite the inevitable whining that comes whenever anyone suggests that poaching is a positive thing, it exists and is getting more aggressive. You can either bemoan the point or accept it as part of the ongoing, continuous war for talent.

If you find yourself battling for talent, maybe it’s time to realize that in a war, you have to use aggressive tactics in order to win. Instead of blaming other firms for your current employees choosing to go elsewhere, instead look in the mirror, and blame yourself for not providing them with a superior opportunity. If you consider poaching to be war-like, so be it.

If Google, Yahoo, and Microsoft can practice it out in the open on a regular basis, I would instead label it as a standard business practice in the 21st century world of global recruiting. Any of you who think poaching away talent from Yahoo when it’s down on its luck is poor form needs to realize that it is being targeted not just because it’s weak, but instead because its human resource function and its managers did a world-class job in attracting some of the most desirable talent on the planet.

You see, it is extraordinary success that draws poachers, not weakness!

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.

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