What Is Poaching Employees? The Legalities & How To Deal With Employee Poaching
Some consider poaching employees to be unethical, while others think it’s fair game. In fact, 60% of hiring professionals believe it can be the only way to attract the right employee. So, what should HR professionals know about this controversial practice?
Poaching employees (also known as employee poaching or talent poaching) is nothing new but remains a hotly debated hiring practice. And despite what its name may suggest, it’s perfectly legal. But what do HR professionals make of it?
According to a Skynova survey of 600 full-time employees with staffing responsibilities, 71% think poaching employees is simply part of doing business. The same percentage also see it as an important hiring strategy.
As an HR professional, you’d benefit from familiarizing yourself with employee poaching — from its definition, legality, and ethics to its different causes and effects.
Contents
What is employee poaching?
Is poaching employees illegal or unethical?
10 employee poaching strategies to retain your talent
How to deal with employee poaching
Tips on how to poach employees ethically
FAQ
What is employee poaching?
Employee poaching refers to the legal practice of an employer approaching an employee of a competing company to try to get them to join their company instead. HR, recruiters, hiring managers, and even employees can be involved in this practice. To sway and entice potential employees, the poaching party may offer higher pay, better benefits, more career advancement opportunities, or anything else the poaching target might want.
While employee poaching is more common in industries where it’s challenging to find talent — such as tech and customer service — it certainly isn’t limited to those sectors. Any company can and will, from time to time, engage in talent poaching.
Poaching employees is also not limited to external employees. Internal employee poaching works the same way but involves approaching existing personnel at your own organization to convince them to fill a different role within the same company.
Whether internal employee poaching is acceptable depends on the organization. To avoid conflict and maintain a healthy work environment, establish and follow a specific set of rules regarding internal poaching (e.g., always speak to an employee’s manager before approaching the employee themselves).
HR tip
Create a policy on internal poaching and communicate this with the managers in your organization. Emphasize the importance of everyone playing by the rules and encourage people to speak up when something bothers them or they notice anyone not playing by the rules.
Why does employee poaching happen & what is its impact?
Talent poaching often has several causes and has significant effects on both the originating and receiving organizations. Below are some common causes and effects of employee poaching.
Causes:
- Strong market demand for skilled workers amid a weak supply
- Economic factors, such as wage differences between competing companies
- Employee referrals — while not every referral involves an existing employee at another company, some do
- Technological advancements — developments in sourcing and recruiting make it easier for recruiters and hiring managers to scout for and engage with new talent
- Employee disengagement — disengaged employees are usually more open to being poached than those who are content with their jobs and employers.
Effects:
- Loss of knowledge, which happens almost every time an employee leaves a company
- Market dynamics may change, especially if companies poach high-profile personnel
- Potential legal implications — if the poached employee has a non-compete clause or a no-poaching agreement in their existing contract, there may be legal consequences for them and the company poaching them
- Financial implications — for instance, if a small to medium-sized company loses its top-performing salesperson, the business may suffer significant financial loss
- Risk of spreading insider information — when a competitor successfully poaches an employee, the risk of that employee revealing their former employer’s company secrets to their current organization arises.
While these effects are largely negative, as they affect companies whose employees are poached, it’s important to remember there are two sides to these effects. The companies responsible for the poaching will reap the benefits of the same effects, such as gaining knowledge and a competitive edge or improving their financial situation.
Is poaching employees illegal or unethical?
The ethics of employee poaching are debatable and often depend on the circumstances and how an organization goes about it. It also depends on whom you ask, though the vast majority of hiring professionals see it as par for the course. However, a manager who loses their top-performing customer service staff to poaching, for instance, would probably feel very differently about it.
Poaching employees is not illegal in most countries, meaning there is no specific law against it in the U.S. or elsewhere.
“In my opinion, as long as you don’t overdo it, ethical poaching is a smart, strategic recruitment practice, especially when conducted thoughtfully and respectfully. Employees at your competitors not only bring valuable industry knowledge but possess the skills that make them the complete package.”
Can you be sued for poaching employees?
While employee poaching is not illegal, it can have legal implications. These implications are most likely to arise if an organization poaches an employee from a competitor with whom the employee had signed a non-solicitation agreement but ended up breaking it.
A non-solicitation agreement, usually between an employer and employee, prohibits the employee from maintaining professional contact with the employer’s clients and customers upon leaving the company.
However, you should also note that some companies’ actions to prevent employee poaching, namely non-compete clauses and no-poaching agreements, have recently become illegal in the U.S.
Many employers include a non-compete clause in employment contracts to prevent employees from joining competitors for a specified period of time after leaving the company. A no-poaching agreement, on the other hand, is an agreement between competing companies not to poach each other’s employees.
In the U.S., the Department of Justice (DOJ) and Federal Trade Commission (FTC) have taken a strong stance recently and have filed charges against several companies that have made such agreements. In the EU, the European Commission issued a policy brief in May 2024, stating that it is likely to view wage-fixing and no-poach agreements as having an anti-competitive effect.
The FTC also issued a final rule banning non-competes nationwide in April 2024. The move was made to help “promote competition, protecting the freedom of workers to change jobs, increasing innovation, and fostering new business formation.” The FTC expects this nationwide ban to result in, among other things, over 8,500 new businesses a year and higher earnings for employees.
How to deal with employee poaching: 10 HR strategies
Poaching employees is an undeniable aspect of recruiting. In fact, 74% of hiring professionals admit to having poached employees, with 66% considering effective poaching a competitive advantage.
However, as an HR professional, you can still take steps to lower your organization’s chances of losing its employees to poaching.
Consider the following strategies:
1. Address employee needs
Happy employees are less likely to want to leave the company. Understand employees’ concerns and needs through regular pulse surveys, conversations with their managers, or stay interviews. Then, address these needs and concerns as quickly and effectively as possible.
2. Offer competitive compensation
According to a study by the Pew Research Center, the top reason people leave their jobs is low pay. Poor benefits also rank high on the list. Offer employees a competitive compensation package to increase the likelihood of them staying.
3. Provide career development opportunities
The same study revealed that a lack of advancement opportunities is the second-biggest reason employees resign. Consider implementing a career progression framework to give employees a visible career path and growth opportunities. This will help motivate them and strengthen their long-term commitment to the company.
4. Include a non-compete clause in employment contracts (outside of the US)
This is a more direct way to avoid employee poaching. A non-compete clause usually states that the employee cannot work for a competitor for a certain period (often a couple of months) after resigning from the company.
In reality, however, it often just postpones employee poaching instead of totally avoiding it. Recruiters still successfully poach employees who have signed such contracts — they then resign and go on garden leave at their employer’s instruction.
As mentioned above, the U.S. has banned non-competes, but they are still quite common in certain roles in the rest of the world. In Europe, for instance, they are deemed legally binding as long as their limitations are reasonable in terms of the geographical area and the time period during which the poached employee cannot work for a competitor.
5. Consider making a counteroffer
If a competitor poaches one of the organization’s top performers, you can consider making a counteroffer to get them to stay. This isn’t ideal for two main reasons: the employee’s co-workers may perceive it as unfair, and the company should have prevented the circumstances that caused the employee to want to leave. Still, in reality, many companies make counteroffers to retain top talent, and it sometimes works.
6. Have employees sign a non-solicitation agreement
This is a more indirect way to avoid employee poaching and is mainly used for salespeople. A non-solicitation agreement prevents employees from contacting their former employer’s clients. This means they must build their client base from scratch if they resign, which can discourage them from leaving their current employer.
Non-solicitation agreements are enforceable as long as they are reasonable, though what is considered reasonable may vary from one jurisdiction to another. An organization may want to engage an experienced attorney to determine what is and isn’t reasonable before proceeding.
7. Develop an incentive plan
A well-designed employee incentive program can boost retention and engagement, thus reducing the chances of talent poaching. Use these employee incentive ideas to help you implement a comprehensive, successful employee incentive program.
8. Foster transparency and regular communication
When managers are transparent and regularly communicate with employees, they’re more likely to thrive in their current company. They’re also more likely to tell their managers if any competitor tries to poach them.
9. Increase employee autonomy
Autonomy in the workplace increases employee engagement and motivation, in turn lowering turnover rates. Employees who have the autonomy to decide when, where, and how they want to do their work—to the extent that doing so is possible—are less likely to seek employment elsewhere.
10. Emphasize employee recognition
A study by Gallup and Workhuman found that companies that doubled their employee recognition efforts saw a 22% decrease in absenteeism rates. Creating an effective employee recognition program can help you minimize turnover rates and maximize retention rates.
Tips on how to deal with employee poaching
Despite your best efforts to retain employees, your organization is likely to experience employee poaching at some point. Here’s how you can deal with it:
Thank and congratulate outgoing employees
It’s important to be gracious towards employees who tender their resignation so they leave on a positive note. Congratulate them on their new job and thank them for their contributions to the company.
Give them a great offboarding
Offboarding presents a great opportunity to ensure employees remain on amicable terms with the organization. These employees are more likely to compliment the company and even return in the future. Check out our offboarding checklist to help you polish your offboarding process.
Determine why they are leaving
The exit interview is an integral part of the offboarding process. It enlightens employers on why an employee has decided to leave the company. It also informs them about the employee’s experiences during their tenure, giving them an opportunity to learn more and minimize the chances of poaching in the future.
Stay in touch
Ask leaving employees if they want to stay in touch. If so, add them to the company’s alum page on LinkedIn, include them in your talent pool, and add them to the alumni mailing list. This way, they will be updated on the latest news and developments within the organization.
How to poach employees ethically
As the stats reveal, recruiters do use poaching employees as a strategy to attract top talent to organizations, particularly when it comes to highly specialized roles. If your talent acquisition team uses this strategy, consider how you can do it ethically without burning any bridges.
Here are some steps you can take to poach employees ethically:
- Identify the right talent: Examine potential candidates’ online presence, such as LinkedIn profiles and industry-specific forums. Use advanced search filters to narrow down your options and compile a list of potential candidates. Attend networking events and industry conferences. These events can help you connect with professionals and observe how they engage with others in their field. Personal recommendations from current employees can also be a gold mine for identifying top talent.
- Initiate contact: Proceed with caution and respect. Begin by reaching out through professional platforms such as LinkedIn or industry-specific forums. Personalize your message to show genuine interest in their skills and experience. Avoid spamming candidates with generic messages, as this can damage your credibility.
- Respect the employee-employer relationship: Ensure your communication with potential candidates is discreet and confidential. Avoid pressuring them to make hasty decisions or disclose sensitive information about their current employer.
- Understand their career aspirations: Encourage open and honest discussions about their career goals and aspirations. Show empathy and understanding for their current commitments, and emphasize that your primary goal is to support their professional growth. By maintaining this respect, you build trust and credibility with each candidate and their current employer.
- Offer clarity during the recruitment process: Begin with a thorough and transparent interview process. Clearly explain the steps involved, from initial screening to final decision-making. Provide each candidate with a realistic timeline and keep them informed throughout the process. Avoid making false promises or exaggerating the role’s benefits. Be honest about the challenges and opportunities that come with the position.
- Prepare a compelling offer: Your offer should go beyond just salary; consider the overall value proposition. Highlight opportunities for growth, work-life balance, company culture, and any unique benefits your company offers. Provide examples of how current employees have thrived within your organization to make your offer more enticing.
- Be transparent: Transparency is key when presenting your offer. Clearly outline compensation packages, job responsibilities, and growth opportunities. Be prepared to answer any questions candidates may have to build trust and demonstrate your company’s commitment to their professional development.
“When considering poaching, never approach multiple members of the same team simultaneously. Colleagues talk, and discovering that multiple team members are being targeted can lead to a loss of credibility and potential reputational damage. Instead, focus on individuals who are the best fit for your organization.
HR tip
Be the best employer you can be so your employees won’t want to switch to competitors.
To sum up
While you cannot avoid employee poaching entirely — whether your company’s employees are the targets or your company is the one poaching competitors’ employees — you can prepare yourself for this eventuality in order to handle it as well as possible. From being attuned to employee needs to setting contractual obligations against talent poaching, you can minimize the potential negative impacts of poaching on your organization and its workforce.
FAQ
Employee poaching is the practice of actively contacting employees currently employed by your organization’s competitors to try to convince them to join your company.
This depends on how a company approaches poaching employees and whom you ask. Hiring professionals, for instance, will likely have no problem poaching employees as many of them consider it an important recruitment strategy.
The act of poaching employees itself is not illegal. In some cases, however, employee poaching can have legal implications (e.g., if the poached employee has violated a non-compete clause with their former employer by joining a competitor).
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