Why your competitor's P&L is actually a Trojan Horse

Kenelm Tonkin reveals why hiring staff from the competition may be a double-edged sword.

Hiring your competitors’ staff is often considered a highly prized win in business. With gains of insider knowledge, industry contacts and expertise on offer, this hire is often viewed as a major drawcard with potential to increase your bottom line. But what are you really gaining if the person is unhappy with their current employer and willing to disclose confidential information?

This is the dilemma I worked to solve with a CEO of a leading private company. The CEO had conducted an interview with a competitor's managing director, who was so unhappy in his current position that he criticised his co-workers and came prepared with printed profit and loss reports. During the interview, the CEO couldn’t help reviewing the materials. As we worked through the situation, two questions became apparent: Should he employ this candidate and should he have read the confidential reports?

My advice: If the profit and loss is publicly available, then there is no problem even accepting a copy of the rival’s financial information. It is already in the public domain and the candidate is doing nothing wrong, nor was my client. One might question the applicant's constant criticisms though.

However, the competitor is a private company and it seems very unlikely that the profit and loss my client saw is in the public domain. If this is correct, then the answer to both questions is an emphatic 'no.'

First, while it is true my client cannot help it if someone puts confidential information in front of him, his response thereafter is very much in his hands and a matter of character. Do not take or make a copy of this information. Play a straight bat with this. My client, and even you, would never like rivals to take your proprietary information and, undoubtedly, they will have some sanction against you and certainly their managing director if you did.

Second, it would be an amazingly bad decision to witness an incumbent managing director breach his fiduciary duty to his current company by disseminating information to you in this unauthorised manner and then employ him. It is playing with fire. If the candidate can do such a terrible thing to one company, he will have no hesitation turning on my client's or yours when convenient to him.

What you can glean from this experience, however, is that your competitor is making basic mistakes when recruiting its key people.

When hiring staff generally, including from your competitors, you look for The 3 I's, three indispensable attributes:

• Integrity: the candidate must be honest, discrete and refrain from back-stabbing;
• Intelligence: the applicant must be intellectually and emotionally smart; and
• Industry: the prospect must be industrious and hard working.

The most important of The 3 I's is undoubtedly integrity. When you think about it, if your new employee is dishonest, you actually want him dumb and lazy rather than smart and hard working. Nothing beats integrity.

About the author

 Kenelm Tonkin is the Chairman of Tonkin Corporation. For further information visit: www.KenelmTonkin.com