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Acqui-hiring: A Powerful Recruiting Strategy That You’ve Never Heard of
Posted By Dr. John Sullivan On December 10, 2012 @ 5:49 am In Advice and How-Tos | 21 Comments
The war for technical talent is so intense that a handful of firms like Google , Facebook, Cisco, Apple , Twitter, and Zynga have shifted to a powerful but rare recruiting sub-strategy known as acqui-hiring. It involves established firms acquiring startup firms not for their products (only Facebook admits it) but instead primarily to capture an entire team of talented engineers and designers at once.
If in the past after reading about an announcement of an acquisition you’ve wondered to yourself why a technical giant was bothering to buy a startup with no profit, a seemingly unrelated product, and a product that was in a completely different field, now you know why. The strategy has recently received some added publicity because Yahoo’s new CEO Marissa Mayer recently announced that she was going to adopt the strategy used by her former employer Google, a king of acqui-hires. Mark Zuckerberg has boasted that “Facebook has not once bought a company for the company itself. We buy companies to get excellent people” (“Engineers are worth half a million to one million” — V Smith).
Acqui-hiring (acquisition hiring) is in direct contrast to most traditional corporate hiring, which simply doesn’t work when you are recruiting innovators who prefer startups over what they consider to be onerous “corporate jobs.”
The strategy originated when large tech firms were restricted from hiring each other’s talent because of “non-poach” agreements . However, even though those agreements are dead, the strategy has even expanded because firms have since come to realize the quality of the innovative talent that work at startups.
The Holy Grail of recruiting these days is successfully recruiting innovators, game changers, or what some call purple squirrels . They are so valuable because they “think outside the box” 24/7 and they are the kind of people who come up with innovations like mobile phone apps, social media applications, and game-changing products.
The problem with these individuals is that they prefer the freedom of a startup environment, and as a result many would never even consider applying to a large corporation. The acqui-hire strategy (sometimes spelled acqhire) allows large corporations to get this talent by simply buying their firm and as a result they get every one of their teams. Be aware that the strategy is not for the risk-adverse recruiting leader, but if you are strategic, you should realize that it does have numerous advantages. They include:
Because the acqui-hire strategy involves buying companies, obviously executives have to be sold on the ROI of the process. Recruiting leaders also have to show that they are strategic, or they won’t be involved in the acqui-hire process at all. If executives are skeptical, recruiting leaders need to demonstrate how the total value added as a result of the acquisition (including employees, products, patents, and customers) exceeds the cost.
You also need to include the delay and the recruiting costs involved in acquiring the same number and quality of talent through normal recruiting channels. Obviously recruiting executives need to spend time with the CFO’s office to come up with a process for demonstrating how acquiring talent this way is more effective and cheaper than the traditional approach of simply hiring individuals.
Once executives are on board, the role of recruiting shifts to developing a set of criteria for assessing which firms have a large percentage of desirable talent. Once those criteria are set, recruiting leaders need to have a process that identifies and assesses the talent quality at each of the potential acqui-hire purchases.
It’s unusual to hear M&A strategy discussed in the same conversation with corporate recruiting, but a handful of firms have learned the advantages of combining the two strategies. A few firms have tried “lift outs,” where they recruit a single intact team but this acqui-hire strategy brings in multiple teams. Although companies like Facebook report phenomenal successes, others like Apple have had problems (they reportedly used the strategy to acquire their mapmaking talent). If you have been striving to be more strategic and bold in your recruiting, you should seriously consider this option.
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 Google: http://search.ere.net/results/?cx=005106741110345417136%3Aav2yz16qqik&cof=FORID%3A9&ie=UTF-8&q=++google&sa=Search+ERE&siteurl=search.ere.net%2Fresults%2F%3Fcx%3D005106741110345417136%253Aav2yz16qqik%26cof%3DFORID%253A9%26ie%3DUTF-8%26q%3Dapple%26sa%3DSearch%2BERE&ref=www.ere.net%2F2012%2F06%2F18%2Fthe-strategic-recruiting-of-purple-squirrels-innovators-and-gamechangers%2F&ss=40823j1514840403j8
 Apple: http://search.ere.net/results/?cx=005106741110345417136%3Aav2yz16qqik&cof=FORID%3A9&ie=UTF-8&q=apple&sa=Search+ERE
 Image: http://www.ere.net/wp-content/uploads/2012/12/Screen-Shot-2012-12-06-at-12.18.47-PM.png
 “non-poach” agreements: http://www.ere.net/2012/02/06/25-ways-that-no-recruit%E2%80%9D-secret-agreements-can-damage-your-firm/
 purple squirrels: http://www.ere.net/2012/06/18/the-strategic-recruiting-of-purple-squirrels-innovators-and-gamechangers/
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