Lift-Outs vs Acqui-Hires
Bold Strategies for Accelerating Growth
Have you ever wondered why companies like Yahoo, Google, Apple, Facebook and Twitter are seemingly able to easily attract their industry’s top talent in droves, while your organization may be struggling to acquire any kind of talent? It’s how they deal with their talent acquisition pipeline.
In truth these companies are constantly waging a war to achieve their talent goals and they spend an inordinate amount of time upfront assessing the market. Consequently, they do some interesting things in order to hire talent, which you may not even be aware of. The aim of this article is to introduce you to some of these strategies and let you know how an executive search firm can help you out.
Strategy #1 the Aqui-hire
One of the most aggressive strategies employed by top companies for recruiting talent is aqui-hiring. Just like it sounds this strategy involves acquiring startups by established organizations. The technology industry has practiced this for decades now. The acquisition may not be just for a company’s products, but also to quickly get hold of an entire team of talented employees before a competitor.
One is the acqui-hire. That’s when a big company buys a smaller company—usually an early-stage startup—not to take over that business, but rather for the express purpose of acquiring its employees. This strategy was extremely popular in Silicon Valley—Yahoo was a particularly big proponent—but has fallen out of favor in recent years due to spotty performance.
Strategy #2 the Lift-out
The other is the lift-out, a less costly strategy, compared to aqui-hiring. This strategy potentially delivers all the benefits that the aqui-hire strategy provides without either the expense or aggression associated with aqui-hiring. Though, it takes more skill to finesse.
In this scenario, you “lift out” a group or team at another organization in its entirety. This approach can be quite effective. Indeed, research shows that great performers who move with their team become successful in the new company more quickly than those who move alone or are assembled as part of a new group. That’s because the team already works as a unit. They don’t need to get acquainted or iron out group dynamics. A lift-out that is well-planned and well-executed, you’ll see a boost to your company’s bottom line almost immediately. A lift-out is not for the faint of heart, however. It’s one of the most aggressive moves you can make. Invariably, you’ll want to contract this out to a professional.
My first lift-out experience was in 1987 when I “reallocated” a complete accounting department, sans CFO, for a real-estate development client. The client needed to be up and running quickly, or they risked losing a $100 million deal. They made their deadline with time to spare because fortunately for us, the CFO at another company had a reputation for paying above market salaries because he was ‘nasty’. Separating him from his team entailed quite an intricate courting ritual. Interestingly none of the six candidates ‘targeted’ knew I had recruited the others until they all had dinner Friday evening afternoon resigning in succession using an identical resignation letter.
Perry-Martel have completed several intricate lift-outs since then, in real estate and technology. Sometimes the teams were as large as ninety engineers, or as finite as an elite team of sales professionals for a hot product. The most interesting one for me though, was a team of two sales and marketing vice presidents who made the front page of the business section of our city’s newspaper. One client bought me a remote car-starter as “insurance” to insure I finished his projects…
Seven Key steps for a Successful Lift-Out
As you can imagine, there are a lot of moving parts in a deal like this. Here are the seven key steps that every company should take when implementing a lift-out:
- Ensure that the prevailing market conditions support the addition of a complete team.
- Be transparent where possible ahead of the change. Make the goals of the move clear to employees and new hires through honest open dialogue post event.
- Examine client loyalty pre the event. Clients may be more loyal to ‘firms’ than the team that leaves. A recent confidential survey for a client pre-event revealed that the targeted lift-out team’s customer base were split 60/40 in favor of staying with the firm.
- Is it solely to gain high profile clients? Make sure to ascertain whether current employees and the lift-out group are culturally compatibility – move forward knowingly.
- Provide the team leader with access to resources as well as management of your company. This is to ensure a seamless transition.
- It is critical to make the newly hired team feel they’re wanted. When the team is announced you need to get them together with their colleagues in a social setting
- Integration becomes complete and inseparable once the new team establishes its’ credibility, out to others to build relationships. Intervene where natural to help with the bonding process.
Irrespective of how a lift-out is executed, it is a disruptive and destructive event that a client has to face. Therefore, the services of an executive search firm will be of immense help in implementing a lift-out. Such a firm would be well versed in handling legal issues that are likely to arise when attempting a lift-out.