MumbaiWhen Abhishek Goenka, a partner with tax consultants BMR Advisors, quit his job as the firm's south India head, it wasn't just a senior employee exit. PricewaterhouseCoopers (PwC), the company Goenka is moving to, had scooped up around 20 others from the unit that he had been heading.
Similarly , ace lawyer Akshay Chudasama took 1dd people from J Sagar Associates to Shardul Amarchand Mangaldas' Mumbai office where he joined as managing partner.
If the oft-repeated “employees are the soul of a company“ holds true, this is what “sucking the soul out of the company“ may mean: firms looking to set up a new arm or boost their existing ones are swooping in on entire teams from rival firms.
Lifting out a high-performing team or acquiring a group of key executives, as it is termed, is gaining traction as a strategy in India.
Companies see this as an attractive alternative to acquiringmerging with other firms for gaining talent or building new teams from ground-up. Besides, hirers needn't face the cumbersome psychological and cultural transitions of employees. Such a move helps increase client base, geographical reach, revenue growth, domain knowledge and gain better position vis-a-vis competitors.
Ajit Issac, chairman of Quess, a leading recruitment firm, says, “Teams often bring clients with them and, therefore, there s a ready start to revenue. The proof of their teamwork is es ablished in their previous organization and, therefore, chances of failure are lesser.“
Lift-outs, most prevalent n people-driven sectors like consultancies, legal firms, audit practices, investment banking and search practices, are gaining more accep ance with employee loyalties ncreasingly shifting from companies to leaders.
“The service industry's big gest asset is people. If the immediate leader moves and more so, when the person is a great boss, and liked by team members, hey would like to move with himher. If she had to build a new team then she would face ssues like finding right candidates and gelling with working styles,“ says Vaibhav Kakkar, partner of law firm Luthra & Luthra.
The first known lift-out is sa d to have taken place in the US n 1946, when an air force Colonel brought nine of his team members to Ford Motor Co.
“Most people work for people. The road of loyalty to an organization often runs through the boss's house. To that xtent, personal loyalty scores n loyalty to the organiza ion,“ says Issac.
HR specialists point out hat compensation for leaders s linked to the acquisition of heir entire team and they of en receive a one-time compen ation, or a share from future evenues. Other team members usually get between 1.3 to times of their previous compensation.
A lift-out, which is a short ut route to ramping up talent, rains the target companies financially and competitively .
The exodus disrupts the organization from where people are eaving, especially if the business doesn't have robust succes ion planning,“ says Amit Jaiswal, partner, Grant Thornton ndia.
HR experts say that the mployee exit velocity , trigge ed by merger & acquisition si uations and crisis of reputa ion like what happened at con ulting firm Anderson, also et converted into lift-outs.
A few years ago, PWC faced a large exodus of tax consul ants reportedly due to firm's nvolvement in the auditing of cam-hit Satyam Computers.
dd people from J Sagar Associates to Shardul Amarchand Mangaldas' Mumbai office where he joined as managing partner.
