How to poach your competitors’ best staff

The economy is the weakest it has been in years. Businesses are struggling. Time for sensitivity and charity? Perhaps. But it is also the perfect time to poach your competitors’ top staff. MIKE PRESON explains.

By Mike Preston

The economy is the weakest it has been in years. Businesses are struggling. Time for sensitivity and charity? Perhaps. But it is also the perfect time to poach your competitors’ top staff.

Retaining good staff means paying them above industry rates and offering an exciting, secure career path. Of course, during a downturn this can be a difficult thing for a struggling business to do.

But if you are prepared to be bold and have the resources to trump your competitors, you may be able to entice a top performer to your business for what may come to seem a bargain.

And if you’re not doing it, chances are your competitors are. Executives from firms ranging from giants like Google and MBF to listed mid-caps Destra and Funtastic have endorsed the value of strategic poaching.

Speaking recently, Funtastic managing director Tony Oates agreed that, given the economic environment, now is a good time to make a move on the competition’s best and brightest.

“Yes, we do poach staff, and make no apologies for that. We brought in a top flight manager from Mattel and he’s made a huge addition to our business; he’s probably added $5 million to $10 million to the bottom line, so it’s been very worthwhile,” Oates said.

Getting the best people isn’t cheap, Oates acknowledges, but in the long run the investment will be more than repaid.

“You are paying an extra $30,000 to bring that person in, but the $5 million or $10 million he brings to the bottom line because of the processes and disciplines he brings to his role and the business environment means it’s a small price to pay,” he said.

Umm… but isn’t poaching wrong?

The notion that poaching staff is in some way unethical or immoral is on its way to becoming a relic of the pre-skills-shortage world. In the past few years, the battle for talent has escalated to the point where qualms about poaching are a luxury few businesses can afford.

The fact is, business is all about competition. You wouldn’t feel bad stealing a competitor’s customer, so why have discomfort about nabbing one of their staff?

Ethics aside, reputation may be a legitimate concern – the small and medium sized business community is a surprisingly small place.

Janette Thorogood, director of executive human resources company Partners Directors Managers, says: “There is definitely a stigma attached to poaching. Companies usually don’t mind if staff are approached by former colleagues, but if a business owner starts cold calling people out of the blue they do get known.”

For those concerned about reputation, one solution can be to get a recruiter to act as a middle man. “It is almost acceptable if you go through an intermediary. These days you have to poach; it’s just how you go about it,” Thorogood says.

Figure out who the high performers are

The first step in the poaching process is to find out the identity and location of the top performers in your sector.

Recruiters hire teams of researchers to put together databases to do just that, an exercise they call talent mapping, but many of the resources they use are in the public domain.

Industry conferences, journals and other publications, alumni events from industry relevant courses, social networks such as Facebook and LinkedIn, industry online forums or blogs and, of course, the good old Google search, are all good sources of information for talent mapping.

But your own networks are likely to be the most fruitful. By keeping your ear to the ground, regularly asking staff about who they respect, and touching base with former employees still working in the sector, you should be able to put together a pretty good talent map of your own.

Prepare the ground

Deciding who you want is the easy part. Getting them to the stage where they are ready to jump ship from their current job is where the hard work really starts.

It’s not just a matter of picking up the phone and offering the person concerned a big pay rise. According to Allan Marks, joint managing director of Crown & Marks Executive Search, putting in a call without proper preparation can end your poaching venture before it begins.

“Sound background research is absolutely essential,” Marks says. “You hear of people looking for someone in the wrong area of a competitor’s business, calling another person with a similarly spelled name or making a completely inappropriate offer – there is nothing more certain to turn a candidate off.”

Once you have a name, it shouldn’t be that difficult to find out the target’s job title and where they fit in your competitor’s business. Use the web – for senior staff, annual reports are a goldmine – and ask your staff if they have had any dealings with the person.

The ideal situation is if someone on your staff knows the target. Get them to make an informal approach to the person – a cup of tea after a conference, a quick beer down the pub on a Friday afternoon – to sound them out about their receptiveness to a possible offer.

The first call is the deepest

The most crucial part of the poaching process is the initial phone call. A good call will put you well on the way to snaring your prize. A bad one, and you might as well give up.

Think carefully about the words you will use in the phone call. Partner Director Manager’s Thorogood recommends you should be brief – time wasting is a big no-no – and circumspect.

“If you are having a direct call, approach the person softly. Something along the lines of ‘We admire your work and know you’ve got a good career path where you are, but are you open to other options?’,” she says.

If you have no idea what their response will be, an even gentler approach may be warranted.

“Call them and ask them if they know anyone else who is looking: ‘We know you’re great, do you know of anyone else looking for a job because we highly value your opinion on the sector?’ If they are interested, you should be able to hear it in their voice.”

Others take a different approach. When he was still the chief executive at Destra, Dominic Carosa was unapologetic about his direct approach to poaching.

“If we chase people from competitors we will be very upfront about it, not secretive at all. We just approach them directly and ask them for a chat,” Carosa says. “When we first contact them we ask them what they want. If there is some synergy with where we’re going, then that’s the start of coming across, because usually it’s about progression and being involved in a successful company that’s going places.”

A tricky thing about making the first call is that you need to be very flexible – more often than not it is the first step in a long courting process, but if they do indicate they’d like to move you must be ready to make an offer then and there.

If they are receptive, you need to make your pitch. What is it about the job and your company that will make the target want to come across? Explain your vision for your business and their place within it, and then put your offer on the table.

Higher pay, flexible working hours, a more senior role, association with a big brand name, quality work, learning and development or study, mentoring and leadership, travel opportunities, job security and a well defined career path are among the carrots that can be dangled.

The most important thing, Thorogood says, is to get a sense of what the person wants and tailor your offer accordingly – although she says there are some general principles you can apply.

“People in their 30s and 40s are often interested in family friendly policies, especially young men funnily enough – they won’t expect it, so their ears will prick up if you offer it up-front.”

For younger people, big titles and company cars can work. “When you’re 23, a new company car that saves you $20,000 is a big deal, even if it’s not that significant to you,” she says.

And Thorogood advises business owners to avoid approaching more than one person within the same organisation – if word gets out, you will look desperate.

Make them want to come

Don’t be surprised if the target candidate doesn’t decide to come over to you after the first call. In most cases, the initial contact is the beginning of the recruitment campaign, not its end.

Michelle Hamman, the general manager of InsideJob, a firm that specialises in recruiting recruiters, says there are many strategies that can be used to slowly persuade someone to join you.

“Don’t waste their time with constant phone calls. Instead, offer opportunities that will help build a connection and be useful to them. Invite them to lunches with interesting speakers, fly them to industry conferences, send articles of interest – if they are an engineer, for example, a coffee with a senior engineer in your business to discuss the latest innovations may work,” Hamman says.

Because poaching staff can take some time, Hamman advises approaching multiple good people, even if there is no immediate opening for them.

Strike quickly and quietly

If the strategy works, the time will come when the candidate is ready to come over. When that happens, you have to be ready.

Make sure you have already worked out the offer you want to make and be prepared to respond quickly to any additional requests they may make.

Moving quickly also has the advantage of minimising the risk that their current employer will find out what is going on. The last thing you want is to get into a bidding war.

Keep in mind that the candidate is taking a big risk in jumping ship. If you hesitate, or show signs of reluctance, they may decide it is a safer bet to stay where they are.

And, Hamman says, don’t treat them like you would a job candidate that has come through a conventional advertise and application process – remember, you are chasing them.

“The whole process can still fall over at this point. If you have been treating them like a VIP and then try and make things hard for them at the interview process, they may just walk away,” Hamman says. “By that stage you should know them, and the interview should really just be about dotting I’s and crossing T’s.”

Don’t forget the legals

Senior executives and highly trained technical and professional staff will often have hidden landmines buried in their employment contracts, just waiting to explode on avaricious poachers.

According to Stephen Trew, a Sydney partner with law firm Holding Redlich, non-compete and confidentiality clauses are common methods used to try and deter employee departure.

Non-compete clauses are designed to prevent an employee working for a competitor for a period of time following their departure, while confidentiality clauses prevent a new employee bringing certain forms of restricted information with them to their new job.

Both kinds of clauses are viewed sceptically by courts, so excessive restrictions can often be struck down – although not without incurring substantial legal costs.

Trew advises business owners poaching staff to ask to see their old employment contract as part of the deal.

“You can be liable for inducing someone to breach a contract that includes a non-compete clause, so you need to be aware of the term of their contract to ensure they can lawfully join you or if there are temporary limitations on the kind of work they can do,” Trew says.

With the target person signed up and the legals safely tucked away, you can relax – your poaching venture has been successful and you have taken another step in building an advantage over your competitors.

As long as you are confident none of your staff are about to jump ship. After all, there’s nothing your competitors would like better than to be able to return the favour.