What Employers Need To Know About Job Poaching

About 73% of all qualified candidates for any job are passive job seekers. These are individuals who are currently employed yet open to exploring new opportunities. This makes them a goldmine for recruiters — especially your competitors.

Right now, other companies may be eyeing your star employees, or attempting to lure them away with promises of greener pastures. Silicon Valley tech companies know this tactic all too well. It’s called job poaching, and it's neither illegal nor uncommon. It also poses a more significant threat to your organization than you may realize.

In an era where talent is such a hot commodity, job poaching has become an art form for some companies. This tactic isn’t limited to tech jobs, either. It’s prevalent across all industries. But countering the job poachers isn’t all that complicated. By implementing effective HR policies and retention strategies, you can shield your workforce from job poaching.

Let’s take a closer look at what employers need to know about job poaching and how you can protect your talent from your competitors.

What Is Job Poaching?

Job poaching (also known as employee poaching) is a strategic move where a rival employer actively seeks out individuals from your organization and entices them to join their ranks. This often occurs with high-demand employees in industries where top-tier skills require advanced education.

Consider this scenario: You have a rockstar employee in your research and development department with expertise in cutting-edge fields like cloud computing or artificial intelligence. With a master's in computer science and real-world experience, this individual is essential for driving innovation at your company. Maybe they also manage complex systems that set your company apart from the competition.

Now, imagine your top competitor messages them on LinkedIn, offering higher pay, better benefits, or a more prestigious position. Your invaluable employee might very well jump ship unless your company provides a more compelling reason to stay.

While job poaching may feel akin to "stealing" employees, this isn’t entirely accurate. Unlike poaching an endangered animal, job poaching isn't universally illegal. Employees have the freedom to explore alternative opportunities, and companies have considerable leeway in how they attract new talent.

It isn’t necessarily unethical, either. If your organization falls short in compensating or engaging employees, why shouldn't competitors step in with a better deal?

The Effects of Job Poaching

When a competitor recruits one of your employees, the repercussions can impact your business in many ways. However, there are ways to soften the blow.

• Loss of Capacity - Losing an employee also means losing their work, and therefore some of your workforce’s capacity. This void is more keenly felt in smaller teams, where every member plays a crucial role. You’ll need a solid position management strategy to closely monitor your organizational chart, which can help you backfill critical duties.
• Loss of Knowledge - When key employees leave, they often take essential knowledge with them. For instance, they may have been the only one who understood a certain process or knew a legacy system. You can recover from this more quickly by documenting processes and workflows in an accessible system to ensure continuity after an employee’s exit.
• Trade Secrets Revealed - Key employees may hold unique insights that set your company apart. If they join a competitor, they may share this sensitive information with their new employer, potentially eroding your competitive edge. Non-Disclosure Agreements (NDAs) are a legal safeguard against leaking proprietary information, but their power is limited.
• Cultural Damage - A highly valued employee’s exit can severely damage team morale, especially if they leave for a competitor. To other dissatisfied employees, this can look like a “safety net," luring even passive candidates to leave as well. The best way to prevent this is by improving retention. Often that means offering better pay, enhancing company culture, and addressing your employees’ needs.
• More Burden on Recruitment - Employee departures often create a ripple effect. This puts intense pressure on the recruitment team to backfill a lot of vacancies right away — especially if a competitor is actively poaching your employees. You’ll want to strengthen your recruitment process to handle churn effectively, especially during challenging economic periods.

Is Job Poaching Illegal?

In short, no. Job poaching isn’t usually illegal. However, there are some cases where Sometimes job poaching can be illegal, depending on the situation.

For example, former Google executive Anthony Levandowski was sentenced to 18 months in prison for stealing key secrets about self-driving cars. In a separate (but related) ruling, he was also convicted of illegally poaching engineers from Waymo, Google's autonomous vehicle division. This stemmed from a breach of prior agreements with Google. Had these agreements not existed, there may have been nothing illegal at all about Levandowski’s recruiting methods.

So job poaching can cross into illegality when individuals violate existing contractual obligations. In Levandowski’s case, these likely included non-compete clauses and similar terms in employee contracts.

Noncompetes

Noncompete (or noncompetition) agreements are fairly common among employers trying to prevent job poaching. However, unless you have a legal team like Google’s, these agreements probably won’t be that effective.

With all things considered, a noncompete isn’t a great way to prevent employees from leaving and exploring other opportunities. The legal power of these agreements is already diminishing, and in some jurisdictions, they are outright illegal. Plus, the Federal Trade Commission (FTC) is aiming to ban them entirely, as of 2023.

But even if you're intent on  pursuing legal action against a departing employee, the odds are stacked against you. Engaging in a legal battle is a significant headache, and you’ll probably end up losing the employee anyway. Is the potential legal fallout really worth the effort?

Plus, imposing restrictions that prevent employees from working elsewhere can have detrimental effects on engagement and performance. Talented individuals who have honed their skills within a specific industry may resent feeling confined. This can have cascading effects on your company culture overall.

Non-Poaching Agreements

Non-poaching agreements are less common, but still practiced, especially in contracts for higher level employees. If you’re truly afraid of someone sharing trade secrets or enticing others away from your company, a non-poaching agreement may be an option. However, tread carefully. Non-poaching agreements are also illegal in certain states. Some government agencies also frown upon them due to the perceived impact on the job market and employee freedom.

The Real Problem With Job Poaching

Forcing employees to stay against their will is a recipe for disaster. At its core, job poaching is really a retention problem. Instead of relying on legal constraints or lawsuits to prevent poaching, the more effective approach is to be a highly competitive employer.

Outdo other companies in how you compensate and treat your employees. Create an environment where employees want to keep working, and are genuinely engaged and fulfilled in their roles. If you foster a workplace culture that thrives on loyalty, mutual respect, and continuous growth, you’ll be surprised at the competing offers your employees turn down.

6 Strategies to Prevent Job Poaching

If you want your company to survive in the long term, you need to safeguard your workforce from being recruited by your employers. Here are 6 proven strategies that, together, go beyond traditional retention and recruiting approaches to enhance your defense against job poaching.

1. Offer Competitive Pay and Benefits

Your first line of defense is a great compensation package. Money talks, and so do health insurance, vision coverage, dental plans, 401Ks, and additional paid time off. The more comprehensive your offering, the more you’ll entice top talent in your industry to stay.

Compa-ratio is a great way to measure your company’s competitiveness. This metric compares your employees' current salaries to the industry average, so you can see if you're keeping pace with the market.

In challenging economic times, increasing employee wages can effectively deter job poaching. It demonstrates your commitment to fair compensation and serves as a powerful recruiting tactic. Word travels fast in professional circles, and a significant pay increase for a comparable role will likely attract attention.

However, while competitive pay is a great motivator, it won’t keep all of your employees committed. If money alone were enough to drive retention, industries like oil rig work or waste management would have unparalleled loyalty. So, what else can you do to fortify your workforce against job poaching?

2. Improve Engagement and Culture

Are your employees satisfied in their roles? Are they engaged with their work? Do they feel connected to your culture? If you don’t know the answers to these questions, it’s important to find out now. You can learn a lot by simply asking your employees what they need to be satisfied and engaged.

Poor engagement can stem from various factors, including:

• Lack of transparency
• Poor communication
• Inadequate reward systems
• Toxic work environments
• Bias/lack of diversity
• Sexual harassment
• Warped power dynamics

These can have serious effects on engagement, and no amount of compensation can counter the weight of a toxic company culture. If your company grapples with internal issues, it's time to tackle them head-on. A competitor with a healthier environment may be much more appealing to your workers.

To combat this, grow greener grass than the job poachers. Make your company a great place to work, where professionals feel supported and validated in their goals. Cultivate an atmosphere where they feel satisfied with their work and part of a community with a meaningful purpose. Provide the right resources and guidance to help everyone succeed.

3. Improve Internal Mobility

If your company struggles with advancing people into new positions, it can make job poaching that much easier for your competitors. The allure of new opportunities will beckon talented employees away from your organization.

People crave progression, both in skills and titles. The chance to climb the ladder or simply explore diverse roles is a must-have for many employees, especially younger ones. When organizations stifle internal mobility, engagement issues follow.

To foster internal mobility, provide clear pathways for career progression. Offer training programs to help employees learn new skills, and create a culture that encourages employees to explore new skills. The goal is to transform your organization into a landscape of opportunities, where individuals can chart new trajectories within the company.

4. Some Agreements Are Reasonable

While noncompetes aren’t the ideal solution, some employee contract agreements can help protect your company's interests. To be clear, these agreements won't totally stop employee poaching, but they can mitigate certain repercussions.

NDAs

Non-Disclosure Agreements (NDAs) can shield against the dissemination of critical trade secrets. While these agreements can't prevent job poaching directly, they can deter former employees from freely sharing your proprietary information. In fact, if you’re concerned that ex-employees will replicate your unique products (e.g. software, tools, technological innovations) for new employers, an NDA might be necessary.

However, NDAs can be hard to enforce. To take legal action against someone, you’ll need to provide tangible evidence that they leaked proprietary information. Even then, it’s difficult to trademark or claim ownership with certain types of industry knowledge.

Non-Solicitation Agreements

Non-Solicitation Agreements are designed to impede former employees from poaching your client base. While it doesn’t stop someone from poaching your employees, it can help preserve customer relationships, deterring ex-employees from actively luring clients to their new business. However, they aren’t always enforceable. In states like California, for instance, Non-Solicitation Agreements have serious legal limitations that make them less effective.

5. Conduct Exit Interviews

Some departures are inevitable. People may leave for better opportunities, and if you can’t give them a compelling counteroffer, you’ll need to (respectfully) say goodbye.

However, this is a good opportunity to learn more about why the employee is leaving. That’s why it’s important to make thoughtful exit interviews a regular practice in your organization. In addition to expressing gratitude for the employee's contributions, these interviews can provide a lot of insight into their journey with your company.

In these interviews, openness and honesty are key to extracting meaningful insights. Encourage the employees to share candid feedback. You may unveil valuable perspectives that aren’t obvious in day-to-day operations. Over time, the data you get from these exit interviews can help you implement long-term HR strategies to improve retention. In some cases, the feedback may even present opportunities for last-minute interventions. A quick pay raise or a promotion may keep your most valuable employee from jumping ship.

6. Get a Jump on Recruiting Top Talent

Sometimes, the job poachers win. However, you can prepare by proactively improving your recruitment strategies.

You don’t need to wait for competitors to make the first move, either. While we can’t entirely condone poaching employees from your competitors, you can tap into the extensive networks of highly-desired professionals in your industry (and abroad). They are often well-connected and can help you gain access to a broader pool of talent.

Engaging with them may reveal hidden gems you wouldn’t normally consider in your recruiting process. With a more diverse range of candidates from various industries, you can create a well-rounded team with a variety of perspectives and skills. A team like this is more resilient to changing tides due to a stronger sense of community and engagement.

There are many more ways to improve your recruiting strategy. The goal is to get ahead of your competition on finding top talent. You can strategically position your organization to attract, engage, and retain the best talent moving forward.

Final Thoughts

In today’s competitive talent market, your competition likely isn’t losing sleep over “stealing” your employees. Strategies to combat job poaching can actually help companies improve overall — better retention, better engagement, and better culture.

Your HR team is at the center of job poaching prevention. Modern HR professionals need technology that can help visualize employee engagement, internal mobility, pay rates, and much more. But you also need a solution that fits into your existing system and workflows to allow for agile teamwork across departments.

Criterion delivers enterprise HCM functionality with a user-friendly interface. Our HCM is designed with real HR professionals in mind to help you tackle your most unique HR, payroll, and talent engagement challenges. Nurture all of your employees from beginning to end with custom recruiting, hiring, onboarding, and ongoing training workflows. Streamline processes like interviews, background checks, performance reviews, 1:1 meetings, and company-wide communications all in one place.

With Criterion’s completely configurable setup, you can generate custom reports for any field within the system, and even create custom fields to track the metrics you want. With abundant self-service options and single-sign-on features for multiple entities, Criterion can be the central hub where your entire workforce engages with your company.

Book a demo to learn how Criterion can help you build and manage your workforce like never before.

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