Struggling to find great talent for your startup? There are superstars out there--although they may be working for another company at the moment. In this tough hiring market, poaching employees from the competition often seems inevitable.
The situation is particularly challenging in the tech industry, where high-quality developers are in short supply. The good news is that according to a recent survey by Dice.com, a tech-career website, 65 percent of technology professionals are confident they could find a new, better position. Your call may be the nudge they're looking for. "I see very little loyalty to companies," says Jaime Klein, CEO of Inspire Human Resources in New York City.
Though you may not be able to match the salaries of bigger employers, you do have plenty to offer potential hires. If you choose to offer equity, be judicious, says Andrew J. Sherman, a partner at the law firm Jones Day in Washington, D.C.
A rule of thumb is 3 percent to 5 percent for senior hires. Sherman recommends imposing a vesting period of six to 12 months after a new hire joins the company. He also suggests limiting the total amount of equity you distribute to no more than 10 percent to 15 percent. Give away any more than that and you may scare off outside investors.
When a competitor has a shakeup, that's a good time to approach its employees. Talent tends to attract talent, so snagging a hotshot engineer from a rival or, if you get lucky, a high-profile company such as Apple, could be the magnet that you need. "When a visionary leader leaves, it signals to the remaining staff that the company might not be as solid as it was," says Klein. Likewise when a company announces planned layoffs. "In those cases, it is 100 percent fair to come in and start courting employees," Klein says.
But before you start cold calling those folks, you should seek legal advice; in many states, there can be repercussions for poaching. "The first thing a responsible employer would want to do is to find out whether the talent they want to snag is subject to any covenants, such as a noncompete agreement," says Sherman.
Even if the noncompete isn't enforceable, the case may still end up in a legal battle--which takes time. "If you're trying to snag talent, the whole point is to put them to work right away," says Sherman.
One way to protect your company is by having new hires sign agreements saying they won't bring over any information or work in a division in which they can share trade secrets.
Finally, be realistic. If you're poaching, your rivals may do the same. "It definitely leaves a bad taste in your mouth," says Klein. "But we all need to live in the real world."
Make your team poach-resistant
It's illegal to make agreements not to snatch talent from competing companies, as underlined by an antitrust case scheduled to begin this spring against some of Silicon Valley's biggest names--including Apple, Google, and Intuit. Fortunately, there are plenty of ways for employers to keep their stars loyal without treading into dangerous territory. Here are three:
1. Ask what matters to them. Not all employees have the same goals and priorities, so find out what each one cares about. You may be surprised at what makes them want to stay put. "So many people say, 'The company is challenging--but they let me work from home on a snow day,' " says Jaime Klein, CEO of Inspire Human Resources.
2. Create a 12-month plan. Lay out a clear path for career growth, outlining your mutually agreed-upon goals, high-priority projects, and quarterly checkpoints to measure progress, says New York City-based executive consultant Stefanie Smith. "Who wants to jump ship halfway through a 12-month plan?" she asks.
3. Give the highest, most specific titles you can. "[This] can make a tremendous difference in how they feel recognized and valued," says Smith. Just be sure no one's title is inflated, so you don't annoy everyone else.