What is employee poaching?

Employee poaching happens when your company intentionally recruits and hires someone who’s employed by another company. This practice can also be called lateral hiring, employee raiding and talent poaching. You might consider recruiting another company’s employee when you have a position to fill that requires a unique combination of skills.

Is employee poaching ethical?

Your company can decide whether employee poaching is the appropriate approach based on your business code of ethics. However, it’s not usually considered unethical. Employees can choose their employer and have the option to decline your offer.

There are many reasons that passive candidates, or people who are already employed and not searching for a job, might be interested in a different position. They could be ready for a new experience or a promotion, for example. Or, you may be able to offer a more competitive salary and a better benefits package.

Employee poaching: benefits and considerations

Before pursuing an employed candidate, evaluate the potential benefits and drawbacks. Analyzing the situation can bring to light the potential impacts, so you can decide if it’s the right recruiting strategy for your business.

• Specialized skills and ideas: Candidates who already work in your industry may bring useful experience, contacts and new ideas to your business.
• Less training: Someone who’s working in a similar role may be able to contribute sooner.
• Hiring time and cost: If your usual hiring efforts haven’t produced the right candidate, recruiting someone who’s interested may let you move to the job interview process sooner.
• Industry reputation: Frequently recruiting other companies’ employees may affect your reputation in the industry.

How do non-compete agreements affect employee poaching?

Non-compete agreements are contracts made between an employer and an employee. When an employee signs a non-compete agreement, they agree not to take actions that might affect the employer’s business. This might include:

• Working with the company’s customers
• Recruiting the company’s employees
• Sharing proprietary information
• Working for a competitor

A non-compete agreement might apply while the person is employed and for a period of time after they leave the company.

If your passive candidate has signed a non-compete agreement, consider talking to an attorney. Although these contracts mainly impact the employee, they could create legal concerns for your business. Even if a court refuses to enforce the agreement, you may not want to take the risk.

An important caveat is that non-competes vary by state in enforceability. While federal categorical bans may have been vacated, regulatory bodies (like the Federal Trade Commission) sometimes scrutinizes non-competes on a case-by-case basis under antitrust laws.

Recruiting someone solely to harm a competitor, gain access to trade secrets or encourage them to break an agreement can also raise ethical or legal concerns.

What are no-poach agreements?

While non-compete agreements involve contracts with individual workers, no-poach agreements occur when multiple employers agree directly with one another not to recruit each other’s staff. Even when unofficial, these B2B arrangements restrict career mobility and wage growth across an industry.

Because no-poach agreements can affect workers, they may violate antitrust laws. According to the U.S. Department of Justice (DOJ), these agreements could lead to civil and criminal charges. Consider talking to an attorney and reviewing applicable laws.

How to retain your employees

In some cases, other companies might try to hire your employees. Try these tips to encourage your workers to stay with your business:

• Conduct stay interviews: Ask employees what they value about their jobs, what frustrates them and what might make them consider leaving. Look for common concerns and follow up on what you learn.
• Map career paths: Identify the skills and experience employees need to qualify for other roles. Use development discussions to help them plan their next steps.
• Review market-rate compensation: Compare salaries for similar roles in your industry and area at regular intervals. Identify significant pay gaps and consider adjustments.
• Evaluate retention incentives: Review whether longevity bonuses and other benefits address employees’ needs. Use employee feedback to decide whether changes would make them more useful.
• Give employees more responsibility: Set clear expectations and give employees the autonomy to make decisions within their roles.
• Review workloads and flexibility: Look at overtime, staffing levels and employee feedback to identify work-life balance concerns. Consider remote or hybrid schedules where the work allows.
• Act on employee feedback: Use surveys and exit interviews to identify recurring problems with company culture. Share the changes you’re making and follow up to see whether they’re helping.
• Connect work to company goals: Show employees how their projects support your mission statement. Invite them to suggest ways to contribute.

While employee poaching may seem aggressive, it’s a common practice in many industries. As long as you keep your process ethical and avoid potential legal issues, you can recruit passive candidates with confidence. After all, the decision to join your company is always up to the employee.