It’s nothing personal. It’s just business. Except when it’s not.
When Google brought out a smartphone OS in 2008 that let some competition into what had been an Apple-only field, the reception was mixed.
Just like with any new tech product, a lot of people were sure they’d never feel the need for one. (I thought the same. Now I have a Samsung the size of a door. I wrote some of this post on it.)
Some people were overjoyed – it’s just like an iPhone, except I can afford it. Awesome!
And then there was Steve Jobs. Boy, was he pissed.
It’s just like an iPhone – except I didn’t make it.
Jobs was furious.
Reports differ, and he told versions of the same story to a few different people, but to put it in a nutshell, here’s what Jobs told his biographer, Walter Isaacson:
‘I will spend my last dying breath if I need to, and I will spend every penny of Apple’s $40 billion in the bank, to right this wrong. I’m going to destroy Android, because it’s a stolen product. I’m willing to go thermonuclear war on this.’
Dying breath. Every penny.
This isn’t the Steve Jobs we’re used to seeing in inspirational quotes.
And it sounds like a different guy from the Jobs we’re used to seeing on the podium, introducing a new piece of the future fresh from the Apple lab. Here’s Jobs telling college graduates to follow their dreams:
Ex-hippie, acid fan, and practitioner of Buddhist meditation he may have been; when Google borrowed the idea of the smartphone and ran with it, they just plain broke his Zen.
This wasn’t a momentary lapse, either. Jobs remained committed to it for life: the year he died, he sent out an email to the top 100 people at Apple, calling for ‘Holy War’ against Google.
Jobs was right – that year, Apple did seem to be hanging on to its old laurels while Samsung debuted the “phablet” and encroached into the smartphone market that Apple had once owned. Market share for mobile in 2011 shows a pretty clear picture.
So was Jobs really just jealous? And apart from the enduring appeal of juicy gossip about the famous, why should anyone care?
Because this was also the beginning of an agreement between tech giants and giants-to-be that they wouldn’t ‘poach’ each others’ employees. Jobs was characteristically firm about this, telling Google’s Sergey Brin in 2005:
‘If you hire a single one of these people, that means war.’
Later, this uneasy armed truce would be variously described as a ‘gentleman’s agreement’ (Steve Jobs), a ‘wage-fixing cartel’ (Pando journalist Mark Ames) and a ‘facially anticompetitive’ agreement that ‘eliminated a significant form of competition…to the detriment of the affected employees who were likely deprived of competitively important information and access to better job opportunities’ (US Department of Justice).
A major class action lawsuit resulted in an out-of-court settlement of $415 million to Silicon Valley tech employees, an average of $5,770 each.
So we can see that agreeing with other businesses not to poach is somewhat illegal. And the agreements between Google and Apple seemed to go beyond that and become agreements not to hire, which is a different thing (and also illegal).
But is poaching all that great?
Should You Poach?
A business is the people who work there and the customers. Everything else is replaceable. So it’s understandable that businesses would seek to hire the best people they can. If the best possible person for the job works at Competicorp, it seems to makes sense to give them a quick call and see if there’s anything you can offer them to cross over and work for you.
There are three questions to answer here.
- Is poaching legal?
- Is poaching ethical?
- Is it actually a good idea?
Is poaching legal?
Poaching an employee can breach non-compete agreements. Says Mike Travis of Massachusetts law firm Travis & Co., ‘it’s very easy to run afoul of a non-compete, and it’s very expensive to fix your mistake.’
Otherwise, poaching is legal.
Is poaching ethical?
Poaching just to get trade secrets is unethical, and so is making false promises to get an employee to sign on with you. But there’s an ethical way to go about poaching.
Tim Gardner, a professor at the Vanderbilt Owen Graduate School of Management and co-author of ‘The Ethics of Lateral Hiring,’ argues that poaching is actually a positively ethical thing to do.
‘The employee-employer relationship is simply an ongoing but open-ended economic transaction that either party may terminate at will,’ says Gardner. ‘Both parties realize the relationship is not permanent but when a better offer from an outside employer unexpectedly ends the relationship, the original employer takes the loss personally rather than just as a normal part of business.’
Looking at you, Steve.
So there’s an argument that poaching is really just competition: want the best staff? Offer the best deal. Sounds fair.
And Val Matta, of CareerShift, says there’s a white hat way to poach. He recommends being friendly, transparent, and telling a great story about why working with you is a good idea. Being a pushy, grabby headhunter stereotype with dollar signs in your eyes? That’s the black hat way.
Is poaching a good idea?
Poaching can cause several serious negatives. It can trigger a poaching war, where competitors from whom you’ve poached seek to snatch up your best talent and leave you dead in the water. Deep pockets, exciting work or killer company culture can all make another company come out on top here. It’s a can of worms and it’s not just that it could go either way: you could both exhaust yourselves and then find other firms waiting in the wings to trounce you both.
Poaching the ‘best talent’ at another business doesn’t guarantee that they’ll take your biz to the next level; they succeeded in their last gig for a variety of factors and they’ll perform differently in a different environment. Kris Van Der Ahe, senior client partner at Korn/Ferry International in Los Angeles, says figuring out where staff will fit in at your business is vital. ‘Just because they work for a competitor,’ he cautions, ‘doesn’t mean they’ll fit into the culture’ of your firm.
So poaching isn’t such a great idea after all?
The problem is that getting talented individuals and groups to work for more than one business is also kind of necessary.
Poaching: a necessary evil?
In Japan, corporations operate in a tightly interlocking way that lets them share top talent around – exec-level staff flow from business to business, unimpeded by noncompetes, accusations of disloyalty or threats of ‘holy war.’ This pattern is called, ‘keiretsu,’ meaning ‘grouping of enterprises’ or ‘system.’
Silicon Valley has its own approach, instrumental in creating the foundational image of the Valley as a place where normal business rules were not so much suspended as superseded. The Apple/Google agreement (and Jobs’ many declarations of war) seem to oppose that tradition, but the tradition remains intact.
It began when Silicon Valley really was about silicon – the chips themselves. Says Steve Blanks:
‘In 1962 Walker’s Wagon Wheel Bar/Restaurant in Mountain View became the lunch hangout for employees at Fairchild Semiconductor. When the first spinouts began to leave Fairchild, they discovered that fabricating semiconductors reliably was a black art. At times you’d have the recipe and turn out chips, and the next week something would go wrong, and your fab couldn’t make anything that would work. Engineers in the very small world of silicon and semiconductors would meet at the Wagon Wheel and swap technical problems and solutions with co-workers and competitors.‘
Rather than the Japanese formal structure for sharing talent, Silicon Valley folks would get together and do their own sharing.
That collaborative culture is a massive strength. Like keiretsu, it lets companies spread the cost of building great people, and it lets people experience working with multiple successful individuals and companies. But unlike keiretsu, it’s casual, informal and personal.
It can mean that ‘newly poached employees don’t just share knowledge about how a previous employer operates, they also offer intangibles like different attitudes and ideas, plus a different take on what works, what doesn’t, and why,’ says Rephael Sweary.
But it can also bring litigation and bad feeling in its wake, and encourage a mercenary work culture of distrust and a focus on financials just as company culture is coming even more to the fore in the most successful firms.
Then there’s the question of what exactly you get when you poach someone. You can teach skills, even complex and difficult ones. But you’re going to work each day and entrusting your income and your dreams to the people you work with. If you could offer them a fistful of dollars to leave their old outfit and come work with you, what won’t they do for a few dollars more?
Alternatives to Poaching
If you’re not going to poach, how are you going to get the best people on board?
You can either start with the staff you already have and coach them to be better, or attract the best staff by building the company they’d want to work with.
Think of it like you’re building your resume for an interview where your ideal candidate is hiring you.
You check up on candidates – look at their social media, ask after their references, and figure out what they have to offer your company.
They’re doing the same to you.
The kind of person who knows their value and is looking for the right fit – the type you want to hire, in other words – will ask around, finding out what it’s like to work at your company.
They’ll look at salary and benefits, but they’re looking at ROI – everything it costs them to work with you, vs. everything you get in return.
‘There is only so much businesses can offer employees in the way of pay, benefits and extra perks to stand out from the competition,’ points out TriNet’s Rosemary Bryant. ‘And, if you’re a small business or startup, it becomes even harder to compete financially for the most coveted employees.’ A battle of who’s got the deepest pockets is unwinnable when you’re running on VC cash. Even when it’s not, cash and cash-substitute benefits like health insurance matter, but they’re actually a weaker day-to-day performance stimulator than you’d think.
Culture, value prop… brand. Interacting with employees increasingly resembles interacting with customers, so perhaps the most telling phrase in Jobs’ email isn’t the threat of ‘Holy War’ but the stated desire to ‘further lock customers into our ecosystem.’
Gallup agrees. They say that ‘employee value proposition’ (EVP), closely related to ‘employer brand,’ is a key indicator that that company will be able to attract the right candidates. Ironically, the example the report’s authors cite is Apple, whose education reimbursement policy revolutionized their hiring practices – no thermonuclear war necessary.
‘Culture is the key differentiator,’ Bryant goes on.
And just like a really solid resume, filled with actual achievements, this is more or less impossible to fake.
The smartest move is to make your company genuinely awesome to work for. Promote your company culture, for sure, but put the emphasis on the actual experience of working with you and word will get out.
Don’t forget about working with the staff you already have. Improved onboarding, continuous coaching and a company culture that generates and rewards engagement are all great ways to improve staff performance and retention. According to that same Gallup report, ‘the most highly engaged business units are 21% more productive, experience 48% fewer safety incidents, are 22% more profitable, have 10% better customer ratings and experience 37% less absenteeism.’
Trouble is, build great people and you increase their market value. It’s like doing up your car, only for it to be stolen.
You need to be sure that the people who make up the core of your company can be trusted.
That brings us to defense against the dark arts: how do you stop your people getting poached?
Gamekeeping 101: How to Stop Poachers
(If you poached them yourself, a lot of these ideas won’t work. You might find yourself dealing with people who view their work in mercenary terms and only a higher cash offer will hold them.)
‘The war for talent is going to intensify,’ says Claudio Fernández-Aráoz, author of It’s Not the How or the What but the Who: Succeed by Surrounding Yourself with the Best, ‘and it will get tougher.’ Just because you’ve decided not to poach, doesn’t mean your competition won’t. So how do you hang on to the staff you need to succeed?
You need to trust them. Ask for noncompetes if you want, but don’t make them a core component of your retention strategy – and don’t rely on them.
Treat your employees the way you’d treat your customers. Churn is a start-up killer, for sure – but employee churn can be combated with some of the same techniques. Rather than waiting until you lose valuable employees, consider taking a leaf out of Groove’s book by figuring out what employees tend to do just before they quit or let themselves be poached, and watching out for those flags.
Groove slashed customer churn that way; treat employee churn as preventable and predictable and you could hang on to valuable staff for longer. A classic example: work anniversaries are the most common time for people to switch jobs, so they’re a good time to remind your employees why they like working for you!
Don’t be too quick to jump to a counter-offer. Again, that’s playing in the direction of being more mercenary – and that’s not necessarily what you want in your team. If you have someone who wants to leave, it’s not betrayal – and if they want to leave for more money, then that’s what’s important to them. That means it’s time for them to go; there’s no sense in going to war over it.
Becoming poach-proof: a question of culture
If your business culture is awesome and the work is engrossing and fun, the right people will apply and want to stay even if they could make more money somewhere else.
Like customers, it’s a question of fit. Think of poach-proofing your culture as having a strong inbound game and a great customer success team: get that right and you won’t need to chase new customers, or wonder where they’ve all gone.
Like Kissmetrics’ Zach Bulygo says: ‘Culture sustains employee enthusiasm.’
Zach goes on: ‘When you put a focus on culture, you’ll have guiding principles. People will know you for this. Employees will live by it… If your company ramps up to more employees, the culture will become a self-selecting mechanism for employees and candidates.’
‘The people who would fit into your culture become attracted to it and may end up with a job.’
Instead of trying to stop individual employees from getting poached, it makes more sense to make a poachproof culture.
- Don’t try to stop people leaving: try to make a culture that the right people won’t want to leave.
- Look for ways to get expertise that don’t involve riling your competitors and neighbors.
- If you must poach, be open and fair.
- The best way to get a great employee is to attract one or build one: training, collaboration and trust are more productive than intrigue.