The tech industry is infamous for talent poaching, especially of top talent. In an attempt to reduce the constant swinging door in Silicon Valley, Apple, Google, Intel, Adobe, Intuit, and Pixar signed “non-solicitation agreements” between 2005-2007, to prevent one another’s recruiters from cold-calling their employees with job offers.
The six tech giants were sued soon after for doing so, as such anticompetitive agreements are illegal in the USA’s free market, and they settled with the Department of Justice on September 24, 2012. Today, talent poaching remains as much of a reality in the tech industry as it was ten years ago.
Particularly dangerous for established tech companies are “unicorns,” startups with over $1 billion valuations. According to CB Insights, a research firm that tracks startups, there are more than 124 unicorns companies. Uber is one such young hotshot.
Especially for engineering roles, Uber is known for tempting important hires with generous compensation packages. In 2014, Uber offered millions of dollars in restricted stock units to some highly sought-after engineers from Yelp. Uber is also known for targeting Google’s developers.
Uber targeted and systematically hired Google’s experts in mapping technology as part of the livery service’s plans to reduce its reliance on outside companies for mapping. Uber has also gone after tech talent in Google’s Geo unit, hiring at least a dozen mapping specialists over the course of a year. Even among executives, Uber has succeeded in wooing talent away from Google. In June 2015, Uber hired Brian McClendon, a Google vice president for engineering, to lead their driverless car and robotics research center.
Uber isn’t the only unicorn company with its targets set on Google’s employees. In 2015, Airbnb poached more than 100 employees from Google. The intense competition for its employees has incited defensive measures from Google. Offers from a short list of companies, including Uber and Airbnb, along with Pinterest and Palantir, frequently produce counteroffers from Google. The most senior Google employees might also get a one-on-one meeting with Google co-founder Larry Page, to try to persuade them to stay.
Google has lost its fair share of talent to poaching, but not for want of resistance. Unicorn companies and young startups have an inherent advantage over more established companies, however, in their speed of operation. “In one case, I replied to a recruiter on Thursday. I was interviewing on-site by Saturday, and I had an offer by Monday,” said Rodrigo Ipince, a 28 year-old software engineer who recently left Google for a mobile gaming video start-up, Kamcord. In the absence of entrenched bureaucratics, new companies can sign new talent faster than their competitors can react.
The threat is even coming from companies who are not traditional competitors. Wall Street is now pulling talent from the same limited pot that the tech industry is already fighting over. In March 2016, Bridgewater Associates, the world’s biggest hedge fund firm, announced that it had hired Jon Rubinstein, a former Apple executive, as new co-chief executive officer. “We needed to bring in an exceptional co-CEO with a strong tech focus to supplement the existing leadership,” Bridgewater wrote in a note to its clients. “Technology is pervasively important at Bridgewater, especially since one of our major strategic initiatives in the coming years is to continue building out the systemized decision-making that has been so successful in our investment area and to extend it to our management as well.”
Other financial firms are similarly attracted to tech talent. Two Sigma Investments, a New York quantitative trading hedge fund firm, poached Alfred Spector, then Google’s vice president of research and special initiatives, to join as its chief technology officer. Bill MacCartey, formerly a senior research scientist at Google, left the world renowned search engine for BlackRock, the world’s biggest asset manager.
In a desperate attempt to hold on to tech talent, companies are trying ethically-questionable but legally-passable strategies. “Many companies even put in place aggressive anti-poaching mechanisms, like secret hiring agreements, to prevent their top talent from being lured away” said Rephael Sweary, president of WalkMe.
But is talent poaching harmful? Some in the tech world don’t believe so. “Talent poaching can be a net positive if it's practiced at a wide enough scale, breeding a more innovative workforce” said Sweary. As workers move between companies, they gather more diverse experiences and a more diverse skillset than they would have likely acquired at only one company. If grudges aren’t held and exits are made gracefully, they also bring contacts from previous positions to their new positions and create a more interconnected industry, in which ideas can flow more freely.
But if that sounds idealistic, that’s because it is. While companies like Google can afford the losses they sustain when top talent is wooed away, some companies cannot. Executives from Mission Motors, a now-defunct firm that built electric motorcycles, blame the company’s demise on losing its top engineers to Apple. “Mission had a great group of engineers, specifically electric drive expertise,” said Derek Kaufman, former CEO. “Apple knew that—they wanted it, and they went and got it.”
So how can companies legally and effectively protect themselves against talent theft, while also taking advantage of opportunities to win the talent they need?
How to Poach
According to a survey by Dice.com, a tech career website, 65 percent of technology professionals are confident that they could find a new position that is better than their current job. While this is concerning in terms of keeping your talent, it’s great news if you have your eye on a competitor’s developer. "I see very little loyalty to companies," says Jaime Klein, CEO of Inspire Human Resources in New York City.
Some situations make poaching more opportune than others. If a competitor has a major shakeup, pounce in the aftermath. "When a visionary leader leaves, it signals to the remaining staff that the company might not be as solid as it was," says Klein. Similarly, if a competitor has layoffs, not only will the laid off employees be available, but top talent still on the team will be much more eager to leave for a more stable company. "In those cases, it is 100 percent fair to come in and start courting employees” says Klein.
Advantageous circumstances, like a competitor’s downturn, don’t happen everyday. In the absence of such an opportunity, talent that is presently undervalued, but has a lot of potential, is optimal for poaching.
Andrew Filev, CEO of Wrike, suggests looking for undervalued, potentially high performers outside of major brands. Rather than trying to steal away a star from the Salesforce or LinkedIn team, target workers who aren’t being used to their full potential at small or large business, or at lesser-known companies. Offer these developers the opportunity to grow and shine at your company, instead, and you might find your next top performing hire.
While poaching is inherently liable to ruffle some feathers, there are (comparatively) polite ways to poach and blatantly impolite ones. Try to be as polite as possible in order to protect your company’s reputation. To start with, make sure that the employee you have your eye set on is not subject to a non-compete agreement. Some companies put in place agreements with employees that prevent them from working for a competitor, often specific to direct competitors, within a certain period of time after leaving. Make sure that you aren’t on that list.
Second, make sure that the employee leaves their current employ respectfully. This includes giving at least two weeks’ notice and not bad-mouthing or allowing the employee to bad-mouth the former employer in your presence.
Third, do not ask the employee to share trade secrets or any other insider information or confidential work with you. It’s unethical, quite possibly illegal, and not only has potential to damage your company’s reputation, but also sours your new employee’s opinion of you.
Last, some talent should always be off-limits for poaching, no matter how perfectly their skillset aligns with your needs. “If an employee works for a business partner or vendor, you’ll likely find the lost business connection is far more costly than losing the great employee” says John Boitnott, CEO of Boitnott Social Media. “Even if the employee contacted you, rather than the other way around, you're smarter not to hire someone who will cost your business money in the long term. Additionally, avoid luring employees of personal friends. Instead, ask the friend if that employee can refer someone who has similar skills and talents.”
How to be Poach-Proof
Losing valuable tech talent can be disastrous, as in the case of Mission Motors, or simply an expensive pain in the neck. Either way, you want to avoid becoming the victim of poaching in the incredibly competitive and aggressive tech industry. These three steps to poach-proofing your team can significantly reduce your risk of losing great employees to your competitors, or the high paying big dogs in finance.
1. Ask your employees what matters to them.
Good pay, ample time off, reasonable hours, free snacks, high quality computers and other work equipment, a customizable workspace, and the option to telecommute are all great guesses for what might keep your employees happy and committed to working for you, but even the best guess falls far short of a fact. Instead of giving your employees what you think they want and hoping they’ll stick around, find out what they really want and give them that.
There are numerous ways to do this. A request form at onboarding with a variety of options to choose from and a free response answer is one way to ensure that new hires are happy from the start. Periodic check-ins where you meet with each employee and discuss what they’re happy with and what they feel they’re lacking is another way to stay on top of long-term employee retention. Or, if your company is too large to personalize work conditions, company-wide surveys assessing what is desired overall is another, more scalable option.
Whether you choose one of the options listed above or create your own approach, the most important thing is that you have the discussion, one way or another, with your employees and then do your best to give them what they want. If you don’t, it’s possible that they’ll run off with a company who will.
2. Create a 12 month plan.
Far too many companies hire new employees with a promise of room for growth within the company, but no clear plan for how or when that growth will take place. Employees end up uncertain of how promotions work, as well as how and where their hard work can take them both in the near future and in the longer term future.
Stefanie Smith, a New York City-based executive consultant, recommends a 12 month plan. The plan should include a clearly laid out path for career growth, that outlines mutually agreed upon goals, priorities, important projects, and quarterly checkpoints to measure success, in order to make each employee’s potential trajectory within your company clearer and provide incentive for sticking around to see it through."Who wants to jump ship halfway through a 12-month plan?" asks Smith.
3. Give generous and specific titles.
Everyone wants to feel valued and your employees are no exception to the rule. A title that points out what they do and sounds important can be a very satisfying ego stroke. "[This] can make a tremendous difference in how they feel recognized and valued," says Smith. Because assigning a job title doesn’t cost anything, a compelling job title may have the highest ROI of any recruiting or retention tool.
According to Dr. John Sullivan, a HR thought leader in Silicon Valley, a compelling job title should inspire confidence in the person hearing it in the title holder’s ability to do the job, indicate that the job is performed at a high level, unambiguously reveal what the job entails, and appeal to the employee holding the title.
Exercise caution in determining how high of a title is reasonable, however, because overly inflated titles for some team members will make those with lesser titles feel undervalued. A Pearl Meyer survey found that nearly 30% of firms have varying job-titling practices from one department to another. Consistency is key to making employees feel fairly valued, rather than overlooked.
Ultimately, talent poaching is as much a part of the tech industry as elaborate perks and high salaries are, and it’s unlikely to go away soon. The best way to handle talent poaching is to make your company as naturally resistant to poaching as possible, by keeping employee satisfaction high, and to take advantage of your own opportunities to woo a great developer away from a rival.