The subject of poaching employees from the competition made big news in 2015, as four top tech companies settled a massive class-action lawsuit related to their agreement not to recruit one another’s employees. Apple, Google, Intel, and Adobe were accused of limiting employee mobility and wages with this no-poaching agreement--and together, the companies paid more than $400 million dollars to settle the case. With the events of Silicon Valley on one end of the spectrum, employers are still left to wonder about the other end: is it ethical to lure employees away from your competition?
According to an ethics study co-authored by a Vanderbilt graduate business school professor, poaching employees is indeed ethical--when it’s done correctly. The report contemplates that hiring from rivals is actually good, because it encourages competition in the marketplace.
However, the study authors note that there are several ethical issues surrounding poaching that must be addressed. First, know that poaching from your rivals may cause ill will; remember, your competitors have lost an employee and the investment they’ve made in that individual. Also, employees who are subject to non-compete agreements should not be recruited, as this will have legal ramifications. Similarly, hiring an employee from a competitor simply to obtain trade secrets or inside information is also unethical. Finally, deliberately deceiving a potential employee or using proprietary documents, such as a rival’s company directory, are also unethical behaviors.
As a business owner or manager, what does this mean for you in practical fact? First, avoid attempting to hire anyone with a non-compete agreement, which helps employers ensure that confidential information remains protected and that former employees don’t use that knowledge to the benefit of another employer. Such agreements may prohibit an employee from working for a competitor; luring customers; or disclosing information. These agreements are typically governed by state law. As a general policy, don’t attempt to test them.
Next, recognize that when you’re luring an employee from a competitor, the balance of power between you and the candidate has shifted. A recent article in U.S. News & World Report reminds managers that they may need to be more flexible in terms of their timing when hiring from the competition--and that dynamic extends to other areas. You are the pursuer, and you need to do an even better job than usual when selling your organization and the position to your candidate. You also may lose some negotiating leverage when it comes to compensation and benefits. Again, remember, you are asking someone to leave a position in which, as far as you know, he or she was satisfied. You will need to make it worth their while.
Finally, be judicious. Don’t poach regularly, and to the best of your ability, don’t target the same competitor over and over. Your reputation in the marketplace is important, and routinely stealing employees will reflect poorly upon you in the long run. To learn more about employee recruitment and compensation, visit us at HR360.com.