Job poaching occurs when a company hires an employee from a competing firm. Job poaching happens in many emerging industries that require high-demand skills.
What is job poaching?
Job poaching is the intentional act of one company hiring an employee or group of employees who are currently working at another competing company. Attracting talent from another company is a strategic move that can enhance the company’s workforce while simultaneously depriving the competitor of talent. The term “poaching” refers to illegal hunting, but job poaching is not illegal. Alternative names: employee recruitment, talent acquisition, employee transfer, lateral hiring.
How does job poaching work?
Poaching commonly occurs in industries that require high-demand technical labor, such as programming, software development, and data analysis. Employees with sought-after skills are in high demand, and recruiters may offer better pay and benefits to entice them to switch to their companies, bringing their talents along.
For example, a smart and qualified engineer at a leading software company might receive a phone call from a recruiter at a competing firm. The recruiter may offer the engineer a higher compensation package or other incentives if they resign from their current job and take a position at the competing company. If the engineer agrees, they have been “poached” from their current job by the competing firm.
Changing jobs can yield higher financial rewards for workers, especially if they are seeking a new position while already employed and can afford to wait for an attractive financial offer. This is sometimes referred to as “job hopping.”
Job hopping does not only mean obtaining higher salaries in the short term; in the long run, it can have other benefits for workers by providing opportunities to learn new skills and receive promotions that lead to better job titles and more prestigious employers to list on their resumes.
Of course, job hopping is not without risks; frequently changing jobs can lead to appearing disloyal or lacking professional focus. However, the ability to switch jobs when needed is crucial for career growth.
No-poach agreements
To combat job poaching, many companies have implemented no-poach agreements with their competitors, agreeing not to hire or recruit each other’s employees. These agreements eliminate competition for employees, depriving workers in those markets of the ability to pursue better opportunities and negotiate higher salaries by leveraging competing offers.
Not only have tech companies implemented no-poach agreements, but fast food companies have also attempted to restrict their workers’ ability to move and work for other companies, even though these employees are not typically considered the type of skilled or knowledge workers targeted for poaching. These no-poach agreements severely restricted these workers’ ability to work at other branches or locations of restaurants.
Note: Because no-poach agreements stifle competition, they are generally considered a violation of antitrust laws by the government.
The federal government has frequently intervened to defend workers affected by no-poach agreements and has issued guidance warning human resources professionals about potential antitrust violations if they use no-poach agreements.
Without such agreements, workers can change jobs at any frequency they choose to increase their earnings and pursue better opportunities.
Alternatives to job poaching
Although no-poach agreements are mostly illegal, non-compete agreements are a different story. A non-compete agreement or non-compete clause (NCC) is a contract between an employee and employer. It states that the employee will not enter into competition with the employer after their contract ends. This usually means that the employee cannot work for the company’s competitors or start a competing business.
The aim
The non-compete clause is to prevent the former employee from transferring trade secrets to a competitor after the end of employment. It can also be used to prevent the employee from opening a competing business.
However, companies cannot prohibit workers from working for a competing company indefinitely. Non-compete clauses typically cover a specified time period, often several months, to prevent workers from transitioning directly from their current employer to a competitor after their contract ends. But companies cannot require workers to agree not to work for a competing company for the rest of their careers, or for a time period that affects their career significantly. This would unfairly affect their ability to earn a living in their chosen profession.
Non-compete agreements usually include the effective date on which the agreement will commence, the reason for enforcing the agreement, the dates during which the worker will be prohibited from working with a competitor, the location of the agreement, and details about compensation for the employee’s agreement to the non-compete clause.
Note: If you are asked to sign an employment contract that includes a non-compete clause, your best option is to seek legal advice. Each state has its own laws regarding the enforceability of non-compete agreements; some states, like California, do not enforce them at all.
Companies may also try to prevent job poaching through other means besides non-compete clauses. For instance, a company might offer workers incentive plans. An incentive plan may provide bonuses to workers tied to the future success of the company. These bonuses can offer a financial incentive for workers to stay with the company, as well as encourage them to contribute to its success.
Some companies also attempt to restrict job poaching by finding ways to help workers feel a sense of belonging to the company. They may do this by creating a company culture that fosters morale, or by organizing initiatives or activities to make workers feel like part of a team. The hope is that this will make workers less likely to leave the company for another job.
Takeaway
Job poaching occurs when one company recruits an employee from a competing company. Job poaching increases competition for top talent and helps skilled employees to enhance their earnings and career potential. Non-poaching agreements may violate antitrust laws by eliminating competition. Instead, companies can lessen poaching by offering attractive incentives to their employees.
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Sources:
- SHRM.org. “The Value of Poaching.” Accessed July 28, 2020.
- U.S. Department of Justice. “No-Poach Approach.” Accessed July 28, 2020.
- Department of Justice Antitrust Division. “Antitrust Guidance for Human Resource Professionals,” Page 3. Accessed July 28, 2020.
Source: https://www.thebalancemoney.com/what-is-employee-poaching-2061980
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