Competitive Intelligence Specialist or Corporate Spy?
Case for Ethical Competitive Intelligence (CI)
by Paul K. Houston, RivalScape founder
(The following article appeared in the September
2004 edition of The
Fordyce Letter, a leading
publication in the executive search industry.)
In early June my business partner and I were preparing
for a presentation to a prestigious group of senior-level corporate
recruiting officers. The subject was how CI, conducted ethically and
professionally, could provide an advantage to the corporate HR and recruiting
functions by unlocking the competitive intelligence in their workforce.
took a break from the presentation and picked up the June issue
Fordyce Letter. You can imagine how my interest was piqued
when I read Paul Hawkinson’s “Publisher’s Corner” on
“Do you know what a ‘competitive intelligence
Try ‘corporate spy’ on for size. There is a rather large
group of these folks working surreptitiously for many of the Fortune
500 biggies. What you probably don’t know is that frequently they
conceal their activities by cloaking themselves as ‘headhunters.’ Maybe
that’s one of the reasons our reputation remains dicey to many.”
am both a headhunter and a CI professional. In fact, I just completed
a three-year term on the board of directors of The
Society of Competitive Intelligence Professionals (SCIP),
headquartered in Alexandria, VA.
My unique and small niche is helping
large corporations staff their CI functions with the most competent
and ethical specialists available. It’s been an interesting life.
I can use the skills I learned as a Russian-speaking Naval Intelligence
Officer followed by 23 years in the business world to help companies
avoid being blind sided by their competition.
So after I finished
reading that short paragraph from the June TFL, I called Paul immediately.
We had a very interesting discussion.
His first reaction was, “I
guess I’ve always known there
was someone like you out there, and now I’ve met him.”
biggest point I wanted to clarify was that Paul was not referring
to CI staffers at Fortune 500 companies, like the people I place.
He confirmed this. What he was talking about were outsourced collection
firms who are apparently hired by Fortune 500 companies to gather
information from external sources in the marketplace. There are many
varieties of these types of firms, but the common thread is they conduct
third-party research on behalf of corporate clients. Some of them use
the ruse of being executive recruiters, which indeed gives us all a bad
Let me state my personal opinion categorically.
this behavior, as described, is certainly unethical if not outright
illegal. If any of these collection firms that are using the “executive
recruiter ruse” happen to be members of SCIP, they are violating
the Ethics Code of the professional society. The key problem is
that there is no real position for which the recruiter is attempting
to find candidates. Candidates are simply being milked for information,
which absolutely sullies our reputation as recruiters.
believe the companies that hire such collection firms on an outsourced
basis have an obligation to ask their vendors about their own ethics
policies. How do they identify and represent themselves during
interviews with sources? The
SCIP Ethics Code for CI Professionals backs me up on this point.
Code has the virtue of not being complicated and is spelled
- To continually strive to increase respect and recognition
for the profession.
- To comply with all applicable laws, domestic
- To accurately disclose all relevant information,
identity and organization, prior to all interviews.
- To fully respect
all requests for confidentiality of information.
- To avoid conflicts
of interest in fulfilling one’s duties.
- To provide honest and realistic
recommendations and conclusions in the execution of one’s
promote this code of ethics within one’s company, with third-party
contractors and within the entire profession.
- To faithfully adhere
to and abide by one’s company policies,
objectives, and guidelines.
If third-party collection firms are
using the “executive recruiter
ruse” to gather intelligence on behalf of their corporate clients,
they are clearly violating bullet point # 3 above.
If a company
who hires these firms knows or even suspects that its vendor or
vendors are using the “executive recruiter ruse,” or
any other ruse for that matter, then that company is clearly violating
bullet points # 1, possibly # 8, and certainly # 7 above. If the
company is unwittingly ignorant of the fact that one of its third-party
collection firms is rusing, then it is violating bullet point #
7 by not doing a thorough enough job of promoting these ethical standards
with third party contractors.
Are any TFL readers aware of either
third-party collection firms or client companies that may be violating
Ethics Code for CI Professionals? If so, in my opinion,
they should be brought to the attention of the SCIP board of directors
for its consideration and possible action. SCIP is an individual
membership organization. One of the terms and conditions of membership
is that individual members must agree that they will abide by the
Ethics Code in order to remain a member in good standing.
Now that I have
condemned the behavior that Paul discussed in the June issue and
suggested a potential remedy, I would also like to state that I
believe there is absolutely nothing wrong with CI
per se. When done ethically
by trained professionals, CI is a necessary corporate function
that contributes enormously to the attaining and sustaining of competitive
Unlike many other specialties in the business world, executive
search consultants seem to understand CI intuitively. It doesn’t
need to be explained to us because we tend to be competitive by
nature, we know the value of search research, and we often try
to fill positions for our clients by seeking out talent from their competitors.
In short, we know how to gather and analyze competitive information
in order to be good at what we do.
But make no mistake, there is plenty
of opportunity to do a better job of CI in the corporate world,
especially on the recruiting side of HR. Want proof?
When my partner
and I gave the presentation to which I referred earlier to that
group of about 50 senior-level corporate recruiting officers, we
did a survey to determine the CI savvy and practices exhibited by these
Remember they are the same corporate recruiting
officers who hire us to conduct searches for them. Therefore, TFL
readers may be interested in the results, which strongly suggest
room for improvement in terms of workforce CI.
I’ll close with
these survey results, which speak for themselves:
Does your company
have a formal process, an informal process or no process that routinely
captures the marketplace knowledge that resides within your internal
FORMAL PROCESS: 14 %
INFORMAL PROCESS: 10 %
NO PROCESS: 74%
Do you have a formal process in your company
that identifies, contacts and interviews newly-hired employees
who have come from critical positions at competitors?
YES: 32 %
NO: 68 %
Do you have a formal process in your company that
maintains an up-to-date talent inventory of critical positions
at your competitors?
YES: 4 %
NO: 96 %
Do you have a competitive intelligence (CI) unit
at your firm?
YES: 44 %
NO: 40 %
DON’T KNOW 16 %
Of those who said YES to the above
question, have you ever worked with or coordinated with this
CI unit in any way?
YES: 58 %
NO: 42 %
(NOTE: For a more complete discussion of this survey
and its implications, see Corporate
Recruiters Survey on this