when good people resign (to join you)

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What should you do after you make an offer to hire an A+ player from a big company for your small startup? Mark Suster - as part of his startup series - talks about how bigger companies roll out the red carpet when a good employee resign to keep him/her from leaving. This is an all too familiar phenomenon. Companies do not do enough for their A-players (due to the fear of antagonizing others - most likely, B-players) till the person resigns and then suddenly everybody from CEO down wants to meet in person and convince him/her to stay promising big raises and perks. At hCentive - my current startup - we have seen it from the other side of the table. When we make an offer to an excellent engineering or business person from a bigger organization - they are usually given royal treatment from their current company as soon as they tell them about it. Meetings with CEOs are arranged, salaries are raised and sometimes offers to fire their immediate boss are given in hushed voices. What should be your role as a small entrepreneur who has been able to attract this hotshot engineer or business guy but now his current company is making him an offer he cannot refuse? Here is my list of things we all should be aware of:

It ain’t over, till its over. The selling does not stop just because somebody has accepted the offer. Be prepared for the fact that if he is any good, his current organization will try to do everything they can to win him back. You have to continue to woo him and keep the selling hat on - at least till he officially starts working for you (and may be a little later). Peter Harrison - CEO of my last startup - knew this game very well. He would invite potential hires to our office and his home continuously - making sure they are engaged and excited about their work, their boss and the team. He would continue to be close to them (directly and thru common friends) trying to see if there is anything at all that can derail the deal.
Negotiate a win-win deal. This is a lesson I learnt the hard way. Just because somebody is excited to join you is not a good reason to offer him less than what he or she is worth. It is true that you are a small startup and you should be careful about where you spend the money. However, the best way to spend money in a startup is to spend it on your A++ players. Offer them good money - always more than they are making now (or at least a time-bound promise of reaching that level). People get used to the money they are making and adjust their living standards to it. It is very hard for them to cut back even when they are excited about their work. They might say they can live on less but as time passes and when a sweet counter offer comes in (and, trust me, it will come in), that excitement may not be enough for them to stop from reconsidering. You got to pre-empt that. Yes, I know, YOU are willing to live on Ramen noodles and on cheapest health insurance for your dreams. But, there is a reason why you are an entrepreneur and the person you are hiring is a salaried employee.

To be fair, I think most hires will have a lot more maturity and will not consider going back regardless of the sweetness of the counter-offer. Afterall, the love is already lost and they will be forever tainted and remembered as someone who was willing to leave, but could be bribed to come back. But, this is something you do not want to bet upon. Bottomline: it never hurts to be too careful and offering a little extra when hiring the people you know will make a difference to your company.