What is staff poaching and is it a good idea?

By Robert Half on 30 August 2016

Poaching staff from a competitor can appear to be a smart business strategy, simultaneously boosting your prospects while stealing talent from a competitor.

It might be good for the bottom line today, but is it a sustainable strategy?

On the plus side, there’s potentially a boost to revenue, sales, customers and leads when one of your competitor’s employees joins your team bringing their experience, client list and reputation.

At least that’s what you’re thinking when you make the bold move to buy your opposition’s trade secrets and expertise. 

But have you considered what are the inherent risks of poaching employees, particularly from competitors?

Is poaching staff ethical? Is it legal?

Many believe that, at best, the practice is unethical. At worst, you’ll find yourself entangled in restraint of trade clauses that restrict who the employee can work for and how much of their knowledge they can share.

The good news for those determined to poach is if you’re prepared to go to court, restraint of trade clauses are not always binding. In some cases, the courts have found them overly restrictive of an employee’s work opportunities and struck them out.

The bad news is that it doesn’t happen often. It’s more likely that your new employee will find themselves in court, and if you help fund the case, you might come in for judicial attention as well.

Damages awarded to former employer

And there’s more bad news waiting for the firm that poaches. A new employee parachuted into a position doesn’t perform as well as someone promoted from within. Management professor Matthew Bidwell also found that ‘external hires’ are paid up to 20 per cent more than internal candidates, and they’re more likely to resign.

Avoiding the pitfalls of poaching employees

Despite the many negatives associated with poaching employees your competitors, you may be faced with no alternative – perhaps a key employee has left or there’s been a boom in sales.

You can avoid some of the pitfalls by carefully checking the potential employee’s contract and obtaining legal advice. It may also be a good idea to prepare your existing staff by explaining your decision and being sensitive to any concerns they may have.

But for the future, a useful exercise could be to identify roles and skill sets within the organisation that are vulnerable if you lose key staff. Based on that information, a succession plan that includes staff training and planning other risk-management activities may help to keep you prepared.

More From the Blog...

How to say no to your boss

While your boss is not always right, it's not easy for some to express this out of fear of repercussion. Knowing how to say no to your boss though,...

Read More