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US firms fight for new talent
Scott Westcott, Inc.com | May 04, 2006
At Mindbridge Software, there's only one hard, fast rule when it comes to recruiting hot talent: Don't break the law. Pretty much everything else goes.
Recruiters from the Philadelphia-based intranet software company have gathered outside the office of a struggling rival and offered to buy lunch for staffers leaving the building. When a hot prospect was playing hard to get, a Mindbridge rep learned which car the man drove and waited for him in the parking lot at quitting time.
Nearly half of Mindbridge's 80 employees were lured by such tactics, says COO Scott Testa. "If we find someone who is a good fit, we'll do just about anything to get that person in the door," Testa says. "If we don't do it, our competitors will."
Like nearly all fast-growing companies, Mindbridge craves creative minds, fast thinkers, and innovators--ambitious first-stringers who are ready to hit the ground running. But try and find them--especially in the current job market. "The labor market is tightening at an alarming rate for high-performing talent,'' says Chris Forman, CEO of AIRS, a training and consulting firm based in Wilder, Vt. "If you're looking for game-changing folks, the slack is all taken up."
Are aggressive tactics the answer? It's a matter of some debate. Advocates say the relentless prowl for talent is simply the law of the corporate jungle. Others say overzealous hiring executives cross ethical lines to entice the best and brightest. What's more, they argue, such tactics can backfire. "If you're too aggressive, it can give the company being poached a good call to arms to fire up their employees," says Lawler Kang, a business consultant and author of the book Passion at Work.
Meanwhile, the war for talent rages on. The National Association of Executive Recruiters' code of ethics calls for headhunters to be honest and fair at all times. "Members shall refrain from using sourcing techniques that involve pretext or falsehood," the code states.
But the fact is, every company defines the rules of engagement differently. At AIRS, Forman draws the line at "rusing"--recruiting slang for calling up a competitor and playing dumb or working the receptionist until you get transferred to an employee who might fit your job description.
AIRS gets most of its talent by taking an energetic approach to referrals. The company hammers a mantra into the heads of its 42 employees: Everyone recruits. Employee referrals led to about 200 interviews last year, Forman says; about 10 people were hired. "It's not good enough to come to work, go to the meetings, and do your job well," he says. "You need to be looking for talent."
Referrals generate about 40% of new hires at NewsMarket, a New York City-based company that distributes broadcast-standard video clips over the Internet. Revenue has doubled in each of the past three years and the size of its work force has doubled, to 50, over the same period. NewsMarket paid out $10,000 through its employee referral program in 2005 and just upped the bounty from $1,000 to $2,000, says Shoba Purushothaman, president and CEO.
The company even asks job candidates for referrals. "We'll ask, 'Who are the top performers at your company besides you?'" Purushothaman says.
Constant recruiting is time-consuming. But it also can be a lot cheaper than hiring executive recruiters, who typically charge 20% to 30% of a successful hire's first-year salary. What you're paying for with a recruiter, of course, is a database full of qualified candidates. But there are ways to stockpile talent yourself.
Clew, a Boston-based competitive intelligence consulting firm, suggests placing perpetual job postings. That goes for jobs that aren't currently open--as well as jobs that may not yet exist. Clew founder David Carpe recently advised a client, a software start-up, to post nearly all its current and potential jobs. Company officials told applicants that the jobs weren't currently open but to keep in touch. When the company was ready to hire, it had a prescreened list of talent.
"We never had to go outside that list," Carpe says. Isn't that misleading? Carpe makes no apologies. The positions being listed aren't entirely fictional, he says; they're simply jobs that are not expected to open for several months. Besides, he says, "the alternative is a reactive hiring model that has you scrambling when you need to fill positions."
Even the most extreme recruiters admit that such tactics can be controversial. "We've had people who came straight out and said, 'I didn't like your tactics--it felt unethical,'" Mindbridge's Testa says. "Sometimes it backfires."
But even though they may skirt ethical lines, most recruiters, even those who regularly poach talent from rivals, are not breaking the law, says Philip R. Maltin, an employment lawyer and a partner at Silver & Freedman in Century City, Calif. "For the most part, employees in the United States can come and go as they please," he says. Only in rare instances are employees contractually restricted from doing so.
But that doesn't mean lawsuits aren't a concern. Mindbridge was recently threatened with legal action by a rival after it hired the company's four-person tech team. Testa says the employees approached Mindbridge first--and maintains that his company broke no laws. "Generally, if you're not getting sued, you're not doing business," Testa says. "Show me a high-tech company not involved in a lawsuit and I'll show you a company that is not aggressive enough."
There are ways to keep the lawyers at bay, adds Maltin. For starters, require recruits to sign a waiver stating they are not bound by noncompete clauses and confidentiality agreements. Some competitors stung by poachers, Maltin says, will "look to use litigation competitively." In one recent example, a company that Maltin represents hired a hustling sales manager with a Rolodex full of potential clients. Her former employer promptly sent the woman a threatening letter saying that soliciting old clients amounted to divulging trade secrets. Maltin advised the client to play it safe.
"There's a whole world of potential customers out there; leave the old ones alone," he says. Maltin's client "built a wall" around the recruit, right down to role-playing certain scenarios if an old contact would call.
Yet for all the ill will that poaching can spawn, aggressive recruiters will always have one thing on their side: human nature. Who doesn't love to be courted? Mindbridge milks that for all it's worth. The company once sent a recruiter off to Boston with a plane ticket, a credit card, and clear marching orders: Don't come home until you've successfully wooed the coveted candidate.
The result? A successful hire. "The times we've really gone overboard have worked out well," Testa says. "Who doesn't like to be chased? Who doesn't like to be flattered?"