Why acquihiring makes so much sense?

default“Acquihiring” refers to corporate acquisitions done primarily to acquire talented teams of the company being acquired, and not so much to get hands on the technology, product, or customers of the acquired company. As is also evident from several acquisition examples where the products of the acquired company were quickly abandoned and the teams went on to work on the acquirers’ products after the acquisition.

While the most visible benefits of hiring star talent in this manner include the quality of talent and the speed of recruiting, there is psychological evidence as well that proves that acquihiring is more beneficial than hiring star performers individually.

Research suggests that people’s success is not entirely dependent on individual capabilities but also on their collaborative relationships with other people. This is because our productivity soars when we are surrounded by other talented people who contribute with their fresh ideas and thoughts. It is also true for seemingly independent jobs that rely on individual brainpower (“knowledge workers”), still the success depends more on others than generally perceived.

Renowned author and Wharton School Professor Adam Grant in his bestselling book Give and Take mentions about a research which was conducted to study whether medical surgeons’ performance increased with experience. The results showed that surgeons got better only at the specific hospital where they practiced. And that was because they were becoming more familiar with particular nurses and anaesthesiologists, learning about their styles, strengths, and weaknesses. This familiarity helped surgeons to avoid patient deaths. Similarly, another research showed how security analysts’ performance dropped when they switched to a different firm, even though they were star performers in their previous organization.

To conclude – hiring stars is advantageous neither to the stars themselves nor to the hiring companies. On the other hand, when teams move together (such as in the case of an acquihire), they retain their collaborative DNA and therefore the chances of them performing well increase.

Having said that, acquihiring is not without its share of challenges. Apart from the high cost of acquisition, ensuring the cultural fitment and smooth transition of the acquihired team into the broader organization is always a key challenge.

What’s your take – do you think acquihiring works better than individual talent scouting in the long run? Why or why not?

Posted by Vineet Arora, Co-founder, TalentNiti

Image courtesy: LinkedIn

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