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On Recruiting from a Competitor

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In response to my statement on prohibiting current employees from disclosing proprietary information from their former employers, blog reader Alberto from Sao Palo, Brazil, questioned me on the ethics of hiring from a competitor.

Competitors are the principal, sometimes inevitable, source for talent with industry-specific skills and relevant experiences. At first sight, the proposition of hiring from a competitor sounds quite rational: the recruit may be well-trained at the competitor; he/she may be able to jump-start a new venture and establish a customer-network readily. However, depending on the position your recruit held at the competitor, this attempt might be fraught with problems–ethical and legal.

In today’s competitive marketplace for talent, an employee has a fair right to seek employment with competitors of his/her current employer. However, the loss of a key employee and the fear that the former employee may reveal trade secrets to a new employer may lead to contention between the new and former employers. A recent example: the bitter dispute between Google and Microsoft when Google recruited a Microsoft executive to lead Google’s research initiatives in China.

Essential Considerations for Recruiting from a Competitor

Here are three important guidelines to consider when recruiting from a competitor.

  • Take into account the costs of hiring and retaining your new recruit. The recruit is likely to command a premium over his/her benefits with the former employer. Further, if your new recruit will leave a competitor to join your organization, he/she could leave your organization in the future and return to the former employer or transfer to a third organization. What will motivate him/her to continue to stay with your organization on the medium- and long-term?
  • During the recruiting process, understand any non-compete or non-disclosure agreements your recruit may have entered with the former employer. Abide by any such commitments—for the duration of the non-compete or non-disclosure agreements, if possible, assign responsibilities that do not conflict with terms of these contracts. Consult legal experts to weigh any potential risks.
  • If the recruit had held a key position in the competitor, he/she likely has access to proprietary information or trade secrets of your competitor. Do not solicit any proprietary information about the former employer—this is unethical and may expose you to liability.

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Virus on iPods: Apple blames Microsoft Windows

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On Wednesday, Apple’s iPod support website acknowledged that a small number of video iPods were infected with a Windows virus. In addition to describing the scale of infection and providing instructions to remove the virus, the website blamed Microsoft Windows for the glitch.

“As you might imagine, we are upset at Windows for not being more hardy against such viruses, and even more upset with ourselves for not catching it.”

Apple’s “114,000 viruses? Not on a Mac” advertisements have lately targeted Windows users to ‘Get a Mac’. Presumably, someone at Apple [AAPL] believed that blaming Microsoft Windows for viruses on the iPod could extend its ‘Get a Mac’ campaign. The outcome is a cheap shot at the competition.

The iPods were apparently infected with the virus at one of Apple’s contract manufacturers. There is no reason for Apple to be “upset” at Microsoft for not being more hardy against such viruses.” Microsoft [MSFT] has invested significant resources (money and talent) fighting hackers and improving its software development process. As Jonathan Poon of the Microsoft virus-scanning group pointed out on his blog, Apple should blame its own manufacturing system.

“It’s not a matter of which platform that the virus originated. The fact that it’s found on the portable player means that there’s an issue with how the quality checks, specifically the content check was done.”

Apple should also blame hackers, who were creative enough to get malicious code embedded on an Apple product while it was connected to a Windows machine on Apple’s manufacturing line.

The take-away lessons: (1) possess a healthy respect for the competition, and, (2) blaming the competition without cause constitutes poor taste.

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Philanthropy: Collaborative Initiatives to Transfer Corporate Values to the Social Sector

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Traditional philanthropy, whether personal, institutional or corporate, takes three forms: cash capital, volunteer-time in programming support, and cause-related sponsorship. I believe a fourth avenue, corporate and non-profit collaboration, can make an important difference in the society.

Following last year’s Katrina hurricane, Wal-Mart [WMT], Home Depot [HD] and FedEx [FDX] reached out to vulnerable victims by providing hundreds of truckloads of vital supplies, thanks to their immense supply chain infrastructures. These companies highlighted one promising area of effective corporate outreach and community collaboration. Can the corporate sector transfer logistical knowledge to relief agencies and aid them to set-up an infrastructure to support nimble disaster planning in the future?

One of the most significant characteristics of successful corporate leaders is their ability to clearly recognize new social, political and economic influences and to adapt their enterprises to developing circumstances rapidly and economically. These corporate leaders possess the dynamism, the ability to innovate and the mechanisms for spurring efficiency and allocating resources in entirely new channels.

Non-profits have limited access to such visionary individuals and the expertise necessary for social investments to overcome barriers in resources and operational efficiencies. Therefore, there is a pressing need for corporate leaders from all levels to collaborate with the social sector. I expect innovative corporations to launch and expand their philanthropy programs to create partnerships for sustainable initiatives and transfer corporate practices, values, oversight and accountability measures to non-profits.

*Keyword(s): Philanthropy, outreach, non-profits, Katrina, Wal-Mart, Home Depot, FedEx

Respect the Competition

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In business, as in sports or work-life, it is essential to possess a mature sense of respect for the competition. The recent arguments between US Airways [ LCC] and JetBlue Airways [ JBLU] form a case in point.

JetBlue recently announced services between New York JFK and North Carolina in direct competition with services offered by US Airways. As part of this announcement, JetBlue’s CEO David Neeleman commented, “… until now, the people of North Carolina have overpaid for sub-standard service.” This was a direct attack on US Airways, which has a strong presence in these routes.

In response, Doug Parker, the CEO of US Airways, addressed employees “upset by these remarks” as follows; read the full response here.

First, I know David pretty well and I can assure you he is a genuinely good person. That he chose to make such a remark is probably indicative of the stress that JetBlue is under and we should not take his remarks personally.

He then explained the problems JetBlue faces and compared JetBlue’s offerings with his company’s.

It doesn’t appear that our customers are overpaying; rather it appears that passengers aren’t willing to pay JetBlue enough for them to be profitable.

JetBlue is struggling mightily and the hard working employees of US Airways are a big reason why. Rather than get upset by their comments we should keep them in context … US Airways is going to be here long after JetBlue.

… we will compete aggressively, we will focus on running our own race and we will win. Thanks so much for taking care of our customers and please keep it up.

When faced with a competitor’s unfavourable remarks, it is tempting to confront and bad-mouth the competition. In such circumstances, employees look forward to directions from a company’s leadership. Often, blowing out the competition’s candle to make one’s shine brighter can backfire, create ill will among employees and lead to loss of customer respect. In his message, Doug Parker sets a clear competitive tone by first uttering words of respect for the competition and then explaining the circumstances involved.

In the intensely competitive airline industry, front-line customer service is a critical differentiator. Customer service consists of a series of interactions that customers have with employees: ticketing agents, gate agents and flight attendants. Evidently, JetBlue has a reputation for better customer service. Doug sends a clear message to boost the morale of his employees and motivating them to deliver superior customer experiences.

Clearly, Doug Parker’s respectful and pragmatic approach exudes a winning attitude. The trust and confidence in his message appeals to employees, customers and the competition.