Employee Poaching (Employee Raiding)

Definition

The term employee poaching is used to describe practices that involve companies hiring employees from their competitors.  Employee poaching oftentimes occurs in high-growth industries that rely on employees with specialized skills.

Explanation

Also known as employee raiding, employee poaching is the practice of aggressively recruiting talented employees from competitors.  The term gained notoriety in 2010 when it was revealed that a number of companies attempted to suppress the recruitment of their high-tech employees.  Some of the better-known parties to the High-Tech Employee Antitrust Litigation include Apple, Google, Intel, Intiuit and eBay.  These companies subsequently agreed to no longer engage in no-poaching agreements.

When an employer loses employees to competitors, they incur a number of expenses; this includes recruiting, retraining, as well as sign-on bonuses.  Companies can attempt to legally suppress employee poaching in a number of ways:

• Non-Compete Agreements:  a contract between the employer and employee stating the employee agrees not to work for competitors for a certain period of time after resigning from the company.  Unfortunately, non-compete agreements are frequently found to be unenforceable in a court of law.
• Long-Term Incentive Plans:  provides employees with compensation that is tied to the future success and performance of the company.  Not only do these plans afford employees with a monetary incentive to remain with their employer, they also make the employee feel they play a vital role in the success of their business.
• Employee Engagement:  a measure of the emotional connection an employee has with their company.  Employers will oftentimes sponsor programs or develop annual initiatives aimed at increasing employee morale and engagement.

Related Terms

affirmative action, applicant pool, job hunter, networking, retainer search firm, contingency search firm, cronyism, employee referral program, executive recruiter