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It's not unusual for companies to cherry pick top talent from a business partner—or vice versa. But there's a right way and a wrong way to deal with the situation.
One of the most common avenues for hiring new employees is to cherry pick a business partner's organization to bring in "known quantity" talent. You already know such employees will excel in your organization because you know the people and their work.
Employees have a basic right to seek gainful employment in an open market. That right is seldom constrained unless the employee has a contract to work for a company for a set period of time or there are limits imposed by non-compete or nondisclosure agreements that curtail outside employment opportunities. But in most cases, it's okay for an employee to look for a job with your business vendor—and it opens the door for both you and your business vendor to cherry pick each other's organizations for top talent.
But cherry picking and hiring away employees can also leave hard feelings. After all, no one likes to lose their most valuable employees.
How does this practice get started in the first place?
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Let's say that a company opts to install a new ERP system. If the company doesn't have much experience with this system, it can be tempting to hire away the vendor's key support person who is assigned to the account and who already knows the system. Conversely, if the ERP vendor wants to add staff who really understand and can relate to its clients' businesses and not just the software, it might be inclined to hire away a key employee of the customer's to bring in this business knowledge.
There are few IT executives who haven't participated in or been the victim of cherry picking. Here are some best practices for dealing with the situation.
1: Begin things right when you hire your employees
Employees are presumed to be free to seek out employment opportunities whenever they want to. But there are some cases where employees may have or will be privy to highly classified information, such as intellectual property or trade secrets. In these cases, a non-compete agreement that forbids employees from directly competing with your company or sharing confidential information with other organizations for a certain length of time—or a nondisclosure agreement, in which employees agree not to disclose corporate information to third parties without company permission—are critical when the employee first signs on with you. These agreements should be carefully reviewed and signed by the employee before they start work.
2: Address cherry picking up front with your vendors and business partners before you sign a contract
You and your business partners should have a clear understanding of what circumstances make it acceptable to recruit each other's employees. Most commercial IT vendors have already been through this situation. It is likely that they will have a clause in their contracts with you that addresses the subject. If they don't have a clause in the contract, you should draft one. If they do have a clause, review it carefully—and modify it if it doesn't meet your requirements.
3: Understand the mechanics of hiring away each other's employees before it happens
No one likes to lose a key employee, but if there is a clear understanding between you and your business partners that it could occur and under what circumstances, at least the mechanics of the process won't be under dispute.
There are several different approaches to cherry picking and hiring away employees that seem to work best among organizations.
In one case, there is language in the contract between you and your business partner that prevents both of you from cherry picking and hiring away an employee for a minimal period of one year after the contract for service begins. In another case, organizations are allowed to hire away each other's employees, provided that the "losing" organization is compensated by the organization who hired away the employee. This compensation is usually in the form of a prorated amount of the employee's salary, which can then be put into recruiting a new person. A third mode of operation is for a company to make the decision to outsource a specific system and its support. In this case, the company will often transition its employees over to the vendor as part of its outsourcing strategy.
Cherry picking and hiring away employees is an established practice in business, and in today's competitive IT skills market, it will continue to be.
The key for companies, their employees, and their business partners is to discuss this possibility up front and to develop a sound framework and understanding for dealing with the situation before it ever happens. Because there's one thing worse than losing top talent: The destruction of good will and a long-term business relationship that everyone worked so hard to develop.