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The ethics and etiquette of employee poaching

Employee poaching, while ethical, may not always be legal. It involves recruiting employees from direct competitors or former employers, often leading to non-compete clause issues. Companies can handle these issues by ignoring them, waiting out the clause, or thinking beyond direct competitors.

Is employee poaching ethical? Yes. It is ethical, but it might not always be legal.* Here is why:

* This post does not impart legal advice. It won’t help you cover your ass, but it could help you kick your competition’s.

‘Employee poaching’ is a misnomer

‘Employee poaching’ sounds like an illicit animal hunt. The simple act of asking whether employee poaching is ethical reveals how deep into our psyches we let the animal metaphor creep. Unlike animals, people can make choices and cannot be owned. Given this fact, employee poaching isn’t an ethical dilemma. It’s a misplaced metaphor.

Unlike elephants, employees aren’t an endangered species who can be unfairly captured. And unlike cattle, employees don’t belong to their employers. (Even if they sign non-compete agreements.) Employees are independent people with autonomy, agency and personal responsibility. That makes them free to wander off to another employer whenever they want. And that’s a good thing, for everyone. Because the threat of losing employees keeps the labor market purring and incentivizes employers to treat (and pay) people well.

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Dealing with the reality of non-compete clauses

‘Poaching’ usually refers to the practice of targeting (and taking) the employees of direct competitors or former employers. These approaches are fraught with non-compete clause problems. Many employees are required to sign non-compete and non-solicitation agreements as a condition of their employment, and these contracts can restrict employees’ mobility (or hiring choices) for a year (or more) after they leave their employer.

Non-compete clauses are designed to stop free labor markets from becoming free-for-alls. They encourage transparency within companies and can boost retention rates. But they may stifle wages and impact labor mobility. Regardless of their broader effects on the economy, non-compete agreements are a reality for many employees companies want to hire.

People who already have jobs are usually pretty good at them. That’s why recruiters prize ‘passive candidates’ who aren’t actively looking for a new job, but who could be persuaded to ditch their current one, under the right conditions. Sourcing passive candidates is sometimes referred to as ‘poaching’ too, especially if a company hires multiple people (or teams) away from another company.

When it comes to dealing with non-compete issues, companies have a few options:

  • Ignore them and take the risk: Nobody ever gives people this advice. But it’s the gutsy, legally-gray-area approach, for employers are employees alike. Many non-competes are unenforceable and you can weigh the likelihood of a lawsuit before taking the leap. If this suits your risk tolerance levels, it could pay off for a key hire in a tight competitive market. But, it’s a risk that you will have to weigh against its potential reward. If the employee in question is alluring enough to recruit regardless, it may be a risk worth taking. But you will be responsible for the consequences, if they come back to bite you.
  • Circumvent them by waiting a few years: Keep an eye on departures at competing companies and take note of their non-compete clause (and vesting incentive) timelines. This can help reduce your risk, if you’re OK with delaying future gains. This approach plays a long, risk-averse game – which may or may not be appropriate for you, given your industry and growth goals. But it could keep you nice and safe.
  • Avoid them by thinking beyond your direct competitors: This is the easiest way to avoid non-compete clause problems. Think beyond the obvious poaching grounds of your direct competitors and previous employers. Ask the people you would otherwise want to poach for referrals, and focus on industry-agnostic skills that your company needs to succeed, instead of relying on industry-specific people. This is the most creative way to source and hire people who may end up disrupting your industry and fueling your future growth. There’s a risk in hiring good new people though: other companies will try to poach them from you.

Is employee poaching polite?

Yes and no, depending on your frame of reference for etiquette. You don’t have to be a stone-cold free marketeer to poach people. You just need to weigh your risks and remember that being polite is relative.

If you feel the need to be seen as a company (or person) who plays nice within your industry, then poaching your industry-friends’ employees away from them won’t be something you’re comfortable with.

But, if you feel the need to deliver results to your shareholders, hire good managers for your employees and offer other companies’ star employees new opportunities for growth, then it’d be impolite not to poach people.

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