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The dangerous game: Hiring from a competitor

Sometimes it is the first thought you or your managers have when in need of skilled talent, especially for sales or product development.  It is not hard to find and observe the best employees of a good competitor at work, skillfully moving the competitor forward in a visible way.

Two slices of the pie for one price

And it is a tempting slice of pie – two slices for one price – to take a critically needed employee from a competitor, damaging that firm while building yours.

The negative aspects of the process

The problem is that a visible hire that “cuts” the competitor makes the competitor’s management bleed.   And you’ve heard of blood revenge.  That’s the worst kind, because it results in emotionally lashing out at the offender (you) with a response that is greater than the action that precipitated it.  In many cases, your firm can withstand the response.

Legal issues

[Email readers, continue here…]   In a particularly acrimonious case, the competitor’s management may threaten to sue, based upon the exiting employee’s knowledge of trade secrets or accusing the employee of removing confidential information.  To protect yourself, first it is important that the target new hire either have already quit the job from the competitor, or has approached his or her senior manager with a request to exit and work for your company.  Yes, this flies in the face of a “grab the best employee” hire, but blunts most of the energy from the opposite side.   If you are willing to accept the risk of legal action, then the next issue rises to the top…

The danger of a salary contest

In some cases, though, cross-raiding of employees by offering unsustainable salaries or perks you cannot offer to all because of your size and financial position will leave you in a position to pay grandly for your action.

Considerations to contemplate before doing this

Consider the relative size of the competitor, the visibility of the target employee, and your ability to withstand a backlash before exercising the two-slice tactic.

  • Michael O'Daniel

    TV networks used to (and perhaps still do) try to hire star performers away from other networks just so they can get those stars’ shows off the air and have a better chance of winning that particular time slot in the ratings. I was personally involved in such a caper, when the two other networks at the time were pursing Redd Foxx while “Sanford and Son” was the #1 show at 8pm Friday on NBC and actually provided the foundation for NBC winning the entire evening. In an unexpected twist involving an executive also moving from one network to another, we didn’t wind up where we thought we would but we also wound up with a much better deal than we had originally anticipated. Foxx died owing me a $250k commission I will obviously never see…

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