With today’s workplace transitioning into a more mobile and fluid state, organizations are entering talent acquisition wars to hire, employ and retain a productive and talented workforce.
The term “Employee Poaching” (also known as Job Poaching, Talent Poaching, or Employee Raiding) is used to describe practices that involve companies hiring current or former employees from a competitor or similar company. Employee poaching oftentimes happens in growing industries that require employees with specialized skills.
The term gained notoriety in 2010. After an investigation into no-poaching hiring practices, it was revealed that several major tech companies (including Apple, Adobe, Google, Intel, Intuit, Pixar and eBay) attempted to suppress the recruitment of their high-tech employees. These agreements stated that companies could not practice “cold calling”, which refers to organizations soliciting each other’s employees. The companies under investigation subsequently agreed to no longer engage in no-poaching agreements with their competition.
Poaching is very common in the IT industry, as employers need workers with expertise for special tasks or projects. The demand is so high that companies are increasing their use of temp workers, independent contractors and even subcontractors.
Poaching does have advantages and disadvantages for each party involved. For example, if a company is struggling and decides to exercise poaching practices, there is high chance it will end up hiring the cream of the industry / talent that will help it revive itself. For skilled workers, it is an opportunity to change jobs as of they choose in order to pursue better opportunities and boost their salaries. In general, poaching employees from a competitor is legal, but it may be viewed as unethical. There are a few circumstances, in addition, that can leave the poacher in legal trouble.
For businesses, confidential company information (including business contracts or a list of customers of the firm) falling into the hands of competitors can also be a real concern. Innovative companies often have their employees sign non-compete agreements, which essentially prevent employees from pursuing employment with the company’s clients or direct competition for a specific period after the end of the employment agreement. There have been cases of companies suing ex-employees for going to their competitors. Should the employer win the case, the amount of damages paid to the employer may be hefty. A company could also sue their competitor for luring its employees. Finally, when an employer loses employees to competitors, they incur expenses which include recruiting, retraining, as well as sign-on bonuses.
In the staffing world, agencies are often the victims of poaching, with their contractors leaving them or being subcontracted to a different staffing or professional services firm. These contingent workers end up being placed on Client assignments at very high markups, resulting in losses for the organization that uses their services.
There are many ways to limit or prevent job poaching altogether. Creating a morale-boosting company culture to help employees feel connected to the company will make them less likely to leave for a different job. Businesses may also implement non-compete agreements or long-term incentive plans. When it comes to contractors, having a Managed Service Provider Program in place can ensure that any contractors on assignment are W2 employees of their staffing suppliers, resulting in cost control, less turnover, and risk limitations. Ask us how we can help!