Friday, November 16, 2007

Is your "secret sauce" in jeopardy?

Have you ever thought about the risk to your company from the practice known as poaching. This is the practice where firms effectively raid their competitors to hire away their top talent, you know, the folks on your team who know how to make the "secret sauce". The competitive advantage gained by doing so comes from the double-whammy of your company gaining a top notch player, while simultaneously removing a key player from the competition.

There are very distinct concerns and considerations to this as highlighted in John Sullivan's Inc article on poaching.

I want to focus on poaching as a competitive threat to your company for a moment. You have to understand how poaching works and develop a strategy to recognize it and defend against it if you want to be successful in a competitive industry.

First off, all you really need to know about poaching is this: Unless you work in an industry where NO ONE competes with you, it IS a threat to your very livelihood. Every enterprise, from your local motorcycle repair shop to your local school district poaches at some point. Maybe it's the tight labor market; maybe it's the sadistic vein in the CEO.... whatever the reason, it is real and headed your way eventually.

Now, as to how to head it off; You need to understand that no solution is perfect for all situations and you are not likely to avoid losing staff this way. Knowing how the law on this point works (remember folks, I am NOT a Lawyer - this is solely based on my opinion and experience).

Employees in the U.S. are bound by a common-law duty not to compete with their company. This means that while they are under your employ, they are not permitted to solicit your customers, influence your staff to leave, or take any action to steal your intellectual property. You can use this common-law as an educational point to your staff - having them understand their obligations may help them avoid the temptation in the first place.

Many employers try to protect their secret sauce by having key staff (Executives / Officers, top sales people, strategists, programmers, etc....) sign a non-compete / non - disclosure / non - solicit agreement in which the employee promises not to directly compete, disclosed confidential information to, or lure other staff to work in a competing company. This is not a bad approach and it can be VERY effective in the short run. These agreements have a couple of major drawbacks though; First, you have to get the employee to sign them in recognition of something of value you provide to them - usually a bonus payment . Second, they have to be specific and reasonable. I wont bore you with the details, but suffice it to say that the limits have to be short in duration (generally less than 12 months), specific to known and named competitors in specific geographies and reasonably not preclude the employee from working in your industry in some non-competing way. Not a perfect fit, eh??

In my opinion, these methods are mere adjunct tools in a larger strategy which is much more basic and incorporates all the "little things" that make you a great employer, make your employees loyal to the cause and forms the basis of the real "secret sauce".

Take a look at your exposure to poaching. Resolve all the obvious details like pay equity (internal and market based), truly open lines of communication, fair and consistent performance evaluations, constant and constructive feedback and most important of all - show the troops that you really care. If you get all of this right, you are doing more to protect your business than ANY non-compete agreement can do.


Blogger said...

Poaching has become increasingly popular and I sometimes get specific pay ground to hunt and recruit talented ppl.
There are various forms in which we earch talent.
For more updtes on talent hunting kindly refer to labels executive search, talent hunting on my blog.

Amit Bhagria

Amit Bhagria said...

Last year, one of the highest-paid employees of MindTree Consulting was given the marching orders after he was found guilty of rigging his mobile phone bills. At about the same time, the IT services firm had shown the door to 80 lateral hires (out of 1,000 people hired in 2005-06) because they had presented incorrect personal information before and during employment at MindTree. "The company will punish anyone involved in any kind of falsification, irrespective of role and seniority," Subroto Bagchi, COO, MindTree Consulting, had said at the time.

In fact, MindTree has laid down guidelines on ethics for its employees in a book titled All About Integrity. In an interview to The New Manager on ethics in the workplace, Bagchi is categorical that integrity is a black and white issue and there are no shades of grey.
For more excerpts from the interview, check out the link below:


Chris Young said...

Poaching is a reality in the workplace, there is no doubt about it.

One thing we repeatedly stress to our clients is to be incredibly selective when hiring new employee to ensure that they are a good fit for the job.

We find that when a team member is well aligned with a job given their unique skills, values, and behavioral style job satisfaction is greatly improved.

This makes it less tempting to jump ship and head to the competition where there are many unknowns.

Quite simply - happier employees are less volnerable to poaching as they are more adverse to giving up what they already enjoy for the unknown.

Of course if your organization is behind the curve with respect to pay or benefits the probability of the competition poaching your talent increases dramatically.

Chris Young
The Rainmaker Group

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