Job poaching occurs when a company hires an employee from a competing company. Job poaching often happens in growing industries that require employees with high-demand skills.
Find out why job poaching happens, who it benefits, and what companies do to limit it.
What Is Job Poaching?
Job poaching is the intentional action of one company to hire an employee or group of employees currently employed at another competing company. Poaching talent from another company is a corporate move that can bolster a company's workforce while simultaneously depriving a competitor of talent. The term "poaching" is a reference to illegal hunting, but job poaching is not illegal.
- Alternate names: Employee poaching, talent poaching, employee raiding, lateral hiring
How Does Job Poaching Work?
Poaching is common in industries where employers need workers with high-demand technical skills, such as programming, software development, or data analysis. Employees with in-demand skills are highly sought-after, and recruiters may offer better wages and benefits to entice them to switch companies, bringing their talent with them.
For example, a smart, qualified engineer at a top software company may receive a phone call from a recruiter at a competing firm. The recruiter may offer the engineer higher compensation or other incentives if they resign from their current firm and take a role at the competing firm. If the engineer agrees, they have been "poached" from their current job by the competing company.
Switching jobs can net considerably more money for workers, especially if they're looking for a job while they're already employed and can afford to wait for an offer that's financially attractive. This is sometimes called “job hopping.”
Not only does job hopping potentially lead to fatter paychecks in the short term, but in the long run, it can also benefit workers by providing them chances to learn new skills, earn promotions that lead to better job titles, and acquire more prestigious employers to list on their resumes.
Job hopping isn't without its risks, of course; switch jobs too often, and you run the risk of appearing disloyal or lacking in professional focus. But the ability to change jobs when you need to is important for career growth.
To combat job poaching, many companies instituted no-poaching agreements with their rivals, agreeing not to hire or recruit their competitors' employees. These agreements eliminated the competition for employees, which in turn deprived the employees in those labor markets of the ability to pursue better opportunities and negotiate for higher salaries by using competing offers.
Not just tech companies instituted no-poaching agreements; fast-food companies also tried to limit the ability of their workers to leave and work for someone else, even though those employees were not the type of knowledge workers or highly skilled workers traditionally considered as targets of job poaching. Such no-poaching agreements severely curtailed the ability of those workers to work at other franchises or restaurant locations.
Because no-poaching agreements eliminate competition, the government generally considers them to violate anti-trust laws.
The federal government has frequently stepped in to advocate for workers affected by no-poaching agreements and has also issued guidance warning human resources professionals of the likelihood of running afoul of antitrust laws if they use no-poach agreements.
Without these agreements in place, workers can change jobs as often as they choose in order to increase their earnings and pursue better opportunities.
Alternatives to Job Poaching
While no-poaching agreements are (for the most part) illegal, non-compete agreements are another story. A non-compete agreement or non-compete clause (NCC) is a contract between employee and employer. It states that the employee will not enter into competition with the employer after they terminate employment. This usually means the employee cannot work for the company’s competitors or start their own competing business.
The purpose of a non-compete clause is to prevent a former employee from taking trade secrets to a competitor after terminating employment. It can also be used to prevent an employee from opening up a competing business.
What companies cannot do, however, is to prevent workers from working at a competing company indefinitely. Non-compete clauses generally cover a set period of time, often a few months, to prevent workers from jumping directly from one employer to a competitor after the termination of their employment. But companies cannot ask workers to promise not to work for a competing company for the remainder of their careers, or for a period of time that would impact their careers. That would unfairly affect their ability to earn a living in their chosen career.
Non-compete agreements typically include the effective date on which the agreement will begin, the reason for enacting the agreement, the dates when the worker will be prohibited from working with a competitor, the location of the agreement, and details about compensation in exchange for the employee agreeing to the NCC.
If you're asked to sign an employment contract containing a non-compete clause, your best bet is to seek legal counsel. Each state has its own laws regarding the enforceability of non-compete agreements; some states, such as California, don't enforce them at all.
Employers might try to prevent employee poaching in ways other than a non-compete clause. For example, an employer might provide workers with incentive plans. An incentive plan might offer employees bonuses that are tied to the future success of the company. This can provide employees with a monetary incentive to stay at the company, as well as encourage workers to contribute to its success.
Some employers also try to limit poaching by finding ways to help employees feel connected to the company. They might do this by creating a morale-boosting company culture, or by organizing initiatives or activities to make workers feel like they are part of a team. The hope is that this will make employees less likely to leave the company for another job.
- Job poaching occurs when one company recruits an employee away from a competing company.
- Job poaching increases competition for top talent and helps skilled employees increase their earnings and career potential.
- No-poaching agreements may violate antitrust laws by eliminating competition.
- Instead, companies can reduce poaching by offering attractive incentives to their employees.