Is acqui-hiring right for your firm?

By Abhijit Bhaduri|13th Dec 2016
Clap Icon0 claps
  • +0
    Clap Icon
Share on
close
Clap Icon0 claps
  • +0
    Clap Icon
Share on
close
Share on
close

All my summer vacations were spent at my grandparents’ house in Kolkata. The house was always full of people. Over time, my cousins settled in the US and my grandparents passed away. The house was sold off to a builder who promptly came and tore down the old building, which had a million memories attached to it. The builder had no such emotional attachments. He wanted the real estate and not the old building. We only cared about the building and did not even realise that the house stood on prime real estate in the heart of the city. Acqui-hiring is a bit like this.

yourstory-employee-acquisition-engagement-retention
The tech world has seen this happen over and over again. Facebook, Google, Apple, Amazon, and all other big companies have used acqui-hiring for multiple reasons. Facebook bought the location-sharing app company Glancee, killed the app, but kept the engineers who had built it. The engineering talent was assigned to other Facebook projects. The entire purpose behind buying out a company is to acquire the talent pool and not the product or service. In one swoop, the employees move from one startup to being in the employ of a larger entity.

When does acqui-hiring make sense?

Firms that are targets of acqui-hiring are often a great talent pool of people who have niche technical skills.

 

  • Fastest way of hiring several people with cutting-edge skills
  • Access to the pool of customers of the acquired company
  • In some cases, acqui-hiring is a great way to remove competition for the firm that is buying out the smaller firm.
  • Cash-strapped founders who do not have deep pockets often have no choice but to sell their firm to the bidders and make an exit.

What to watch out for

 

  1. Assess the talent pool:

During the process of hiring, it is important to assess the entire pool of talent that is being hired. Not everyone’s skills may be of the same high calibre. It is like buying an album which has only one or two good songs. A formal talent assessment is important to understand the depth of talent that will be available.

 

  1. Career paths may not attract everyone:

A large firm has defined career paths and several HR processes. These can be suffocating for people who have worked in smaller firms, which do not have defined processes for everything. This is a frequent area of cultural mismatch. One man’s process is another man’s bureaucracy. While having a career path may be a talent management practice in the larger firm, it may not be a selling point for many.

 

  1. Managing the emotional turbulence:

The acqui-hired firm often has to deal with an emotional roller-coaster. There is the pain of seeing the app they built over years being ripped away from the app store. They see themselves moving from being the big fish in a very small pond to suddenly becoming small fish in a bigger pond. That can be a big dent to the ego and of course, the identity of the person. The founders of the acqui-hired company also lose their exalted status and become one among equals. This transition is also hard to reconcile to. It may be worth investing in a seasoned coach to address the emotional turbulence.

In conclusion

In the last three to four years, several technology firms have bought design firms. Accenture acquired design firm Fjord. Google bought the design firm Mike & Maaike while Facebook acquired Hot Studio. Flextronics bought Frog Design. Wipro bought DesignIt. Many of them have tried not to integrate the design shop into the larger firm, keeping the integration to the bare minimum. The acqui-hired firm continues life as if nothing has changed.

That may lead to its own set of challenges when the firms go together to the customer. But acquisitions are far more than about acquiring skill sets. They are also about acquiring the culture of the new firm and the emotions of the acqui-hired firm. Therein lies the complexity.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

Get access to select LIVE keynotes and exhibits at TechSparks 2020. In the 11th edition of TechSparks, we bring you best from the startup world to help you scale & succeed. Join now! #TechSparksFromHome