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A Case for Poaching

June 1, 2010
Related Topics: Retention, Strategic Planning, Featured Article, HR & Business Administration

If there’s one thing corporate executives almost universally dislike, it’s having their workforces poached by a competitor that uses various wiles to laterally hire prized talent out from under them.

For an employer suddenly confronted by a gaping hole in the organizational chart, it’s hard not to see the departed worker as disloyal, if not outright traitorous. Poachers, in turn, tend to be reviled as ethically bankrupt modern-day personnel pirates.

It’s little wonder that poaching victims frequently respond with lawsuits—that is, when they’re not brokering their own clandestine and questionably legal “gentlemen’s agreements” with other companies to keep their hands off one another’s staffs.

To Vanderbilt University associate professor of management Tim Gardner, co-
author of a newly released study on the ethics of poaching, the animus is unjustified. It’s also considered harmful—to workers, the economy and ultimately to the aggrieved employers themselves.

In “The Ethics of Lateral Hiring,” which has been accepted for publication by Business Ethics Quarterly, Gardner and colleagues David Hart of Brigham Young University and Jason Stansbury of Calvin College analyze the history of employer-employee relationships, from medieval statutes restricting worker mobility and colonial indentured servitude to recent allegations of secret agreements among Silicon Valley companies.

They conclude that while employers may feel betrayed by departures, workers are legally and ethically entitled to pursue opportunities that arise elsewhere.

The study makes the case that by attempting to block poaching, companies in effect are transferring wealth from employees to themselves, since they obtain employees’ labor at a lower price and deprive the workers of higher earnings elsewhere.

“There’s a temptation to look at poaching as something unethical,” Gardner says. “But that implies a certain ownership of employees and their skill sets. You don’t own them. To the contrary, companies that try to prevent lateral hiring of employees are actually the ones being unethical.”

They also may be violating the law. Some legal analysts say that gentlemen’s agreements with competitors to prevent workers from changing jobs may violate federal anti¬trust laws.

While some executives may think poach¬ing is practiced by only a few corporate pariahs, the researchers say lateral hiring—a euphemism for poaching—is widespread. Federal Reserve Board economists estimate that of the 4 million workers who change jobs in a typical month, 80 percent are recruited by their new bosses. That suggests lateral hiring may provide a way for human capital to flow most efficiently to the places it is needed, helping drive economic growth.

At the same time, Gardner recognizes that employers have an interest in retaining critical talent and insists there are ethical ways to thwart poaching.

“What they really should be thinking about is what sort of relationship they have with their employees,” he says.

In particular, they should concentrate on promoting more symmetry—that is, in addition to expecting workers to be loyal, they should be more loyal to workers. Two key types: relational loyalty, which results from better bonding between workers and managers, and ideological loyalty, in which the employer and the workforce feel joined by a common purpose.

Workforce Management, April 2010, p. 3 -- Subscribe Now!

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