A couple of years after we put our company the Whitehouse together, we made the decision that we needed to add some talent to our London office.
Adding talent on demand is one of the hardest things for any business to do.
In every industry, the pool of difference-makers is small, and the ability to offer significantly better terms than their current employer is limited by the economics of the business you’re in. If they’re not unhappy, a five or ten percent increase won’t normally do it. Offer more and you undermine your own company’s compensation structure. And the benefits of hiring them.
John Smith, the partner responsible for our London office at the time, made some calls including one to a highly regarded editor at one of our biggest competitors. We weren’t optimistic, but nothing ventured nothing gained. The editor wasn't around. John left a message, called me to fill me in, and went home. It was 7pm in the UK.
Several hours later, as I was finishing a meeting in Chicago, I got a message that the competitor’s managing director - whom I had met once - had called. He asked that I call him back that night. He left a UK number.
I looked at my watch, added 6, and wondered if he really wanted me to call him at midnight in London. According to our receptionist who had taken the message, he did.
Negotiation is a fine art. One of the keys is to know the relative importance of the issue to the other side. I knew the answer to that question before I started to dial.
He answered the phone on the first ring. And explained forcefully that he and his parters were very upset that we had approached one of their editors who, he added, was also a partner.
Approaching talent is one thing. Approaching partners is another. It crosses a line of propriety. And it’s illegal. In the States, it’s called tortious interference. And it’s a very big deal.
In this case, I explained gently, we hadn’t known. We hadn’t spoken to him. And we certainly wouldn’t pursue it now that we did know. That, I thought, would bring the conversation to a close.
He paused for a moment. “I think we should have an agreement that we won’t approach each other’s talent," he said quickly. "After all, we can both offer great opportunities. It’ll just be easier if we don’t hire from each other.”
Company owners use a variety of methods to keep key talent. Contracts and compensation being two.
But, while compensation is always part of the equation, I have never found contracts to be compelling. Other than formal definitions of the terms of employment. In my experience, they usually just provide a place from which to start the conversation.
Any key employee who is desperate to leave is not worth keeping. And by the time the lawyers get involved, you’re arguing about issues that were created long before you got to this point.
The key to getting employees to stay is to pay them fairly and provide them an environment which lets them explore their talent and cares about their future. Get that right and the only ones that leave will be those that yearn to own their own business. And some of those you can keep if you get your ownership structure right.
By the time I was on the midnight call with my competitor I was confident that these underlying philosophies had become embedded in the DNA of our nascent culture.
“How about this instead,” I offered. “Why don’t I email you our company’s address list so that you can contact any of our people you want. If you can convince any of them to leave, I’m not doing something right. I’ll get more value from finding that out than I will from creating an artificial situation that prevents people from working where they want.”
He declined. And hung up.
The free market is a powerful force.
And people do their best work in an environment they want to be part of.
Not one they are forced to be.
Keeping the doors to your company open requires confidence.
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