Building a work team isn’t so different from putting together a sports team. As a recruiter or manager, you look for new hires who can play their own position and play nice with existing team members.
If you’ve found top-quality workers, other businesses and recruiters might take notice. And they could even try to recruit your best employees.
Job hopping and high turnover rates are common in today’s labor market. In 2022, 46.6 million workers quit their job during the Great Resignation, and 46% of workers plan to switch jobs in 2023 in search of better pay, benefits, and work environments.
If your business isn’t taking care of employee needs, your workers could be tempted by a new job offer, even if they weren’t on the hunt for one. Let’s explore more about employee poaching, its potential impact on your business, and how to keep your talent from giving in to poachers.
What does it mean to poach someone?
Job poaching, also known as employee raiding or employee poaching, is when an employer, hiring manager, or recruiter seeks out employees from competing organizations to apply for a job at their company. This can happen over email, on LinkedIn, or through personal networking.
Around 73% of potential candidates for a job are passive job seekers — people who aren’t necessarily looking for a job but are open to hearing about new positions.
They’re prime candidates for job poaching because they could be enticed by attractive pay or benefits. It’s a high enough percentage that more of your employees might be considering a new job than you think.
Why do people poach?
People poach already employed workers from other companies because their skills are already proven. If they’re thriving in their current position, they can use those same skills in a new one to benefit a different company.
Generally, job poachers look for workers with a specific skillset in competitive job markets. For example, a company that hires an agency to design a new app may try to poach the programmers who built their product.
Is poaching employees illegal?
No, there are no poaching laws to prevent workers from switching jobs. Employees aren’t their employers’ property. They’re free to move from one job to another, unless they’ve signed a contract saying otherwise — sometimes known as a non-compete agreement.
A non-compete is a clause where an employee agrees not to work for competitors for a set period after leaving their current position.
As of 2011, state laws and regulations determine the validity of non-compete agreements. It depends not only on where an organization is but in what state an employee accepts a new position.
For example, if an employee moves from a state where non-compete agreements are allowed to a state where they aren’t, the agreement becomes null.
Hiring practices that include non-compete clauses might affect a potential new employee’s decision. Including this clause in their contract sends the message that their employees might not be happy working there and want to leave.
Whether it’s because career growth is limited or the company culture is toxic. They could think twice before taking the job and look for more confident employers.
The Federal Trade Commission (FTC) proposed a new rule in 2023 that could ban non-compete clauses, but the rule is in its early stages.
Are no-poaching agreements legal?
A no-poaching agreement is when an organization formally agrees with a competing company not to poach each other’s employees. And they’re sometimes considered illegal, depending on the state.
The U.S. Department of Justice’s Antitrust Division has begun to pursue employers with no-poaching agreements. It cites that such restrictive covenants unlawfully block workers from their right to a diverse and competitive labor market.
What are the consequences of losing employees to poaching?
Companies use lots of resources to source great talent and keep employee retention high. When their best and brightest leave, it can have the following consequences:
1. Loss of knowledge
If a job poacher seeks out an employee with a specific skill set or explicit knowledge of an industry, you could lose valuable intellectual capital.
You need to be conscientious about properly documenting and storing explicit knowledge so you don’t lose important information if an employee leaves. For example, if one employee is the only one who knows how to use a certain computer system, you’d run into trouble if they leave on bad terms.
2. Risk spreading insider information
If they didn’t sign a non-disclosure agreement (NDA), employees might end up sharing sensitive data that helped your company differentiate itself from the competition.
For example, a marketing analyst with unique insights on their audience’s ins and outs could bring that information to a new role, even if it was costly for their previous employer to acquire.
3. Loss of competitive edge
Human capital is among your most valuable resources as an employer. When you build a talented set of employees, you increase the potential for innovation and creative success. Competitive poachers could go straight for your most creative assets and funnel innovation away from your organization and into theirs.
4. Employee domino effect
Job poachers might not stop at taking just one employee. If the salary range, job benefits, and work culture are more attractive at the competing organization, a poacher might enlist the new hire to spread the word and encourage old colleagues to come with them.
How to deal with employee poaching
You should be careful about dealing with employee poaching. If an employee is leaving for a new opportunity, analyze why they were tempted to leave in the first place. Do you have a toxic work environment? Are your compensation and benefits too low? Conduct an exit interview to get their honest opinion.
Plus, employees switch jobs for many reasons. Not all of them reflect negatively on your organization. If an employee decides to leave for a new job, keep it friendly and show gratitude.
For some businesses, however, it could be more valuable to protect intellectual property or a customer base. If you’ve worked hard to train employees for a specialized role, you might not want to lose them to the competition.
Here are two ways to safeguard your business from poached employees:
A non-solicitation agreement blocks an employee from using the organization’s clientele, customer, or contact list in a new position if they leave the company. They can still use their skills, but they can’t take old clients and customers with them when they use those skills somewhere else.
This is a common employment agreement for highly specialized organizations in niche markets. Imagine a designer at a marketing firm who quits and decides to start their own design business. If they bring clients with them, the marketing firm loses its whole customer base.
An NDA requires an employee to protect sensitive or confidential information. Employees who sign an NDA can’t use company information for their own benefit, whether it’s sharing with competitors or starting their own business.
The contract should outline exactly what information can and can’t be shared and over what period of time.
For example, the NDA might only protect information for five years after an employee leaves and could include trade secrets, proprietary processes, information about clients or vendors, and business strategy.
How to prevent employee poaching
There are no definitive ways to stop employee poaching. But if you’re consistently losing employees to the competition, it’s time to take a serious look at your employee value proposition.
Here are a few ways to incentivize employees to stay with your organization:
1. Focus on employee engagement
According to the Harvard Business Review, 90% of employees are willing to take a pay cut for a job that feels meaningful. Likewise, an estimated 80% of workers would rather have a boss who cares about their success than a pay increase.
Meaningful work means different things to different people. But in general, workers who are engaged with their company, valued as people, and feel that they’re more than a number in the system are more productive and likely to stick around.
Consider how you engage your workers both on the job and outside of it. If you don’t already, try offering career development opportunities, team-building exercises, and employee recognition.
2. Keep up with industry standards
While you should ensure you’re providing competitive salaries, don’t forget about benefits and other incentives. Healthcare, paid time off, and sick leave are as significant to an employee’s quality of life as their pay.
In fact, 88% of employees consider benefits when looking for a new job. If you offer great benefits at your company, employees might be less inclined to leave.
Assess employee benefits packages after they’ve spent a few years at the company. Pay adjustments to match inflation or merit increases show you’re committed to matching industry standards and keeping them around.
3. Ask your employees what they need
Even if it’s a difficult conversation, ask for feedback from your employees. Human resources should perform regular audits to understand how employees feel about the quality of their work and the organization. Add these questions to quarterly or performance reviews.
According to a Gallup survey, only 25% of the American workforce feels like their employees care about them. The survey also found that when workers feel taken care of, they’re 69% less likely to search for a job actively and five times more likely to advocate for their company to potential hires.
Having the humility and care to ask employees to be honest about their employee experience sends a powerful message. It shows that you care, want to build trust, and are committed to keeping employees happy.
So you want to steal an employee…
Poaching people from their current job is a common recruiting practice, even if it’s often frowned upon. If you’re set on poaching an employee from another organization, here are some steps you can take to do it the right way.
1. Don’t cross boundaries
If you’re planning on poaching someone’s best employees, make sure you aren’t doing business with them. The benefits of poaching probably won’t outweigh the consequences of losing a client or vendor.
Likewise, if you have a friendly relationship with a competing business, stay away from their employees.
Imagine you’re running a startup in the technology sphere, and a more experienced CEO is mentoring you. If you poach from that CEO’s employees, you’ll lose their information and guidance — and you’ll probably lose the chance to learn from them in the future.
2. Be wary of non-compete clauses
Many companies have non-compete clauses, even if it’s not a recommended practice. If you suspect that a worker you’re poaching has signed an agreement that prohibits them from working for competitors, seek legal advice to understand whether the clause is enforceable.
If you’re unsure, stay away and avoid the consequences.
3. Ask your employees for referrals
Instead of poaching candidates, rely on word-of-mouth to get top candidates to come to you. Ask employees to refer previous colleagues from their network. If you offer a good work culture and incentives, employees might even do this without asking.
A strong employee value proposition will sell itself without aggressive poaching strategies.
To poach or not to poach
There’s no escaping employee poaching. If you’ve done a good job of bringing talent on board, it’s natural that your competitors will want to hire them, too.
While you can’t force your employees to turn down offers from competitors, you can invest in them so they want to stay with you. Take a look at your organizational culture, salary package, and benefits.
Check-in with employees about whether you could be doing more. It could be the key to keeping your best players on the field.