Depending on where in the world you’re located, the average interview process is 30 days before you make a hire. All those hours and costs only to find that competitors are poaching employees! And employee poaching is likely to increase as the skills shortage grows.
Many employers don’t expect key staff to leave, so when they get a resignation, panic sets in. The main reason for the shock is because we tend to assume that if someone looks happy, everything must be okay. The immediate reaction is to try to stop the person from jumping ship, but decisions made in haste generally lead to poor outcomes.
What is poaching in recruitment?
Bluntly stated, its “stealing” employees from competitors. Recruiters “poach” current or former employees from industry competition specifically because they have knowledge and skills needed by an employer.
The use of the harsh terms “stealing” and “poaching” indicates just how seriously businesses view soliciting employees from the competition. These terms are, however, driven by emotion. The anger and disappointment management feels when a star employee decides to leave can be akin to feeling jilted!
All the time, money and effort you put into an employee’s growth and training only to have them leave, can evoke negative and defensive emotions.
Is it illegal to recruit employees from another company?
No! Most countries don’t have employee poaching laws preventing employers from approaching passive candidates who are, or were, employed by industry rivals. The logic behind the lack of legislation is simple: people are not inanimate objects that can be stolen or animals that can be poached.
Employees have a right to leave of their own accord if they believe that they have more to gain by accepting an offer from another employer.
Previous attempts to implement no-poaching agreements failed when they were challenged in court. A case in point was when tech giants, including Adobe, Apple, eBay, Google, and Intuit, were investigated by the U.S. Department of Justice. The Justice Department found that no-poaching agreements limited employees’ opportunities for career and income growth.
The risks of losing staff to the opposition
Employee raiding is a genuine threat to businesses. It can be curbed but never wholly prevented. There are many risks attached to having an employee jump the fence and join the competition. Apart from impacting your employee retention rates, when someone leaves, they take all their knowledge about your organization with them.
Staff who were privy to trade secrets and intellectual property can (and probably will) share details with their new employer. That leaves your business horribly exposed. But there is something you can do about it. You can write a non-compete agreement into your employment contracts.
Non-compete agreements versus no-poaching agreements
A no-poaching agreement between two companies is an ethical arrangement whereby they agree not to poach staff from each other. These agreements don’t hold up if challenged in court.
A non-compete agreement is a legally binding contract between employer and employee. The contents can differ from one role to another. At the core, though, they restrict former employees from competing against their previous employer for a specified time. Some non-compete agreements can also include preventing an employee from working within a defined radius from their ex-employer for a specific time.
Employers draw up these contracts to prevent past employees from:
- Joining the competition and sharing trade secrets.
- Opening their own startup using product knowledge from their ex-employer.
- Canvassing for new business using their ex-employers' customer database.
- Opening up shop close to their ex-employer and providing the same products.
- Using databases from their ex-employer for any reason.
Non-compete contracts aren’t guaranteed to hold up in court
There could be different restrictions in a non-compete agreement, depending on the circumstances. Employers must, however, always get a legal opinion because non-compete agreements are not a sure win if you go to court.
An employer cannot prevent ex-staff from working in their industry for life. They also can’t define an extensive territorial restriction. Few courts will accept a radius of more than 30km. No one can be deprived of earning an income indefinitely.
A well-constructed agreement must define trade secrets and intellectual property and contain a non-disclosure clause, a confidentiality clause and a non-solicitation clause, among others. To hold up in court and the employer has to cover all their bases thoroughly.
How to curb talent poaching
Employers should cover themselves by including a non-compete agreement with individual employment contracts. Not all employees are privy to sensitive company information, so only executive and other relevant roles must be subject to these contracts.
If your organization goes overboard on placing restrictions on all employees, word will get out, and your employer branding will suffer. People won’t want to work for a company that’s so restrictive and top talent will be put off because they know their worth, and value their freedom to choose.
3 essentials to stop employee poaching
- Make employee engagement an ongoing priority
HR should have personnel dedicated to ongoing employee engagement programs through internal communication tools, newsletters, and events, such as wellness days. Managers should make performance management a continuous process, not an annual meeting. Performance management software allows for easy tracking, analysis, and evaluation of workers. Data will quickly reveal if an employee is slacking off, which is often a red flag that they’re unhappy. Step in before they decide to leave.
- A square peg in a round hole
Employees who feel that their skills aren’t being utilized and developed will leave. No one wants to go through the motions every day when they know they’re capable of much more. The 2017 State of the American Workplace Gallup Report found that only 4 in 10 employees felt they had the opportunity to do what they do best at work every day. Regular performance management, skills evaluations, and skills development programs will prevent churn.
- Market-related compensation
How regularly does your company compare market-related compensation with what you pay? Do you make salary or benefit adjustments to keep up? Money matters to people because everybody has household and living expenses. If your company is lagging behind, employees will move on to improve their living standards.
An employee has accepted a poach job; what now?
You can’t ever completely poach-proof your company, and there will always be people who are open to solicitation. There are plenty of recruiters in the poaching business, stealing employees from other companies. Your organization will always be exposed to some degree of risk.
Once you know that a top team member is leaving, relax. Remember, panicked decisions made in haste generally lead to poor outcomes.
Discuss the decision with the employee with an open mind. If you’re their manager and think your emotions might get the better of you, get HR involved as a neutral party. Find out what, if anything, can be done to get the person to change their mind. Sometimes small benefits like flexible hours or a work-from-home agreement can be a deal-breaker.
Don’t immediately go for a counter offer. It’s tempting to believe that a counteroffer will erase the whole problem. Even if it does, though, it will last only for so long. First, establish the real reason the employee wants to leave. Money might be a factor, but usually, there’s more to it. If you don’t resolve underlying issues, unhappiness will set in again after a while and the employee will leave anyway.
The employee is determined; now what?
If there is nothing you can do to sway the decision, or if you don’t have the means to improve on the outside offer, let the employee go. Don’t become defensive and frog march them out of the door. Think about it; yesterday they were one of your top stars, and now you’re kicking them out.
If there’s a non-compete agreement in place, it must be dealt with professionally in the presence of HR and your legal department. If everything is above board, wish the employee well. Genuinely thank them for their service. If you have a corporate alumni group, ask them if they want to join. Keep in touch every once in a while; don’t burn bridges.
You might be able to win them back in time to come. Boomerang employees bring great value because they know your business and you know they’re a cultural fit. Plus, they’ve gained broader experience that they can bring with them. You get a better-rounded employee next time.
You can go the legal route and implement all kinds of anti-poaching agreements, but on the whole, that’s reactive. It’s far better to be proactive and create a job environment where people are happy and a company culture that employees don’t want to leave behind.
If an employee entertains a recruiter hunting for passive candidates, there’s mostly a good reason. Happy staff won’t waste their time responding to a headhunter, and the headhunter will move on. Sometimes issues linger and other times there’s a trigger event that makes someone unhappy. Being overlooked for promotion, a change in management, the appearance of a workplace bully, etc.
Poaching employees can be beneficial as well because it allows people to gain experience in different environments which gives an industry greater depth and improves management skills. Better management and sharing of expertise will greatly benefit industries and companies alike in the long run.