There's a fascinating article today in the print version of the Wall Street Journal about a new company who taps the information and expertise of middle managers to help make investment decisions for large hedge funds.
Big Investors Turn To Network of Informants (subscription required).
A networking wizard has done for professional investors something akin
to what Match.com has done for the nation's singles. He hooks up middle
managers from hundreds of companies with professional investors
desperate for an investing edge.
The gist of the article is the success of 34 year-old Mark Gerson in building a network of informants for investment representatives to call to get "real" information about companies the investors are looking to put money into.
There are of course some serious ethical questions at play, namely whether the information provided by this network of informers is a breach of company confidentiality laws, but there is that grey area between illegal, frowned upon, ethically wrong, and traceable.
With pay rates of $100/hr and more, can middle managers at companies like Bed, Bath & Beyond, Applebee's, or Penske Auto Parts walk away from casual chats with information hounds?
More important for our audience, what is the role, and indeed the responsibility of recruiters if approached about information gathered during a recruiting call? Recruiters are excellent sources of information because a) they have access to time sensitive projects throughout the enterprise, b) they have access to a wide variety of contacts, and c) they are trained to pull information from people.
That sure sounds like helpful traits for someone searching for competitive intelligence. So is there a clear ethical line on the information we gather from clients, prospects, targets and candidates?
1) The Client: Passing on information about a client (defined as someone you are under contract with) is pretty clearly taboo, seeing as it is specifically covered by the contracts we sign (recruiting companies are required to safeguard confidential information). A recruiter passing on information about any client is often someone who doesn't stay in business too long. Gossips are notorious in our business, but sharing gossip is a quick way to destroy a client's trust that you will keep their secrets close to the vest.
2) Targets: Targets are companies that are identified as possessing people with the skills we need for clients, with a low probability of signing on as clients. Whether bad blood or another vendor in place, a target is considered fair game for competitive recruiting, so why wouldn't information gleaned from a target company be available for trade?
This is a personal ethical choice, but the most likely for recruiters and sourcers who move into the intelligence arena. Is it wrong, or is it just business?