Want Great Employees? Steal Them

Last Updated Apr 15, 2010 2:19 PM EDT

Employee poaching gets a bad rap. But far from being unethical, soliciting and hiring someone who's already employed is a good thing -- for the employee, the consumer, and even the company the employee is leaving behind. That's the argument Vanderbilt professor Tim Gardner makes in his soon-to-be published paper on lateral hiring. In fact, he says, managers should be encouraged to use this tactic. I spoke with Gardner recently about the benefits of poaching, how to do it well, and how to prevent it from happening to your employees. BNET: What's so great about poaching?

Gardener: Competition for employees is good for the labor market and, in turn, good for consumers. A company that has been the victim of a poaching is more likely to improve wages and working conditions for the remaining employees to reduce future poaching.

BNET: Are you focusing on the ethics of the hiring company or the ethics of the poached employee?

Gardner: Typically, when people think of the ethics of poaching, they consider the actions of the hiring firm: is it acceptable for an outside firm to identify, solicit, and hire someone who's not looking for a job? In the paper, we argue that this is nearly always ethical as long as there's no deception, hiring only to obtain trade secrets, or violation of standing employment contracts. There's nothing inappropriate about contacting employed people and sharing better opportunities.

Instead, it's the actions of the employee that must be evaluated as ethical or unethical. And it's very rarely unethical for an employee to leave a current employer for higher pay, better benefits, and greater opportunity. Nearly all employees are employed at will -- U.S. employers require them to sign agreements acknowledging that they may be let go or choose to leave for any reason. Unless the employer and the employee have made mutual commitments of loyalty, the employee may leave without ethical qualm. A rare exception might be a small firm where the owner and employee have made strong commitments regarding the future.

BNET: What should a manager do before reaching out to an employee at another company?

Gardner: Chances are that the employee's current employer knows more about the person than you do. The result could be that you make an offer, prompting the employer to make a counteroffer. So, you should have better information about the person than the current employer -- perhaps because you previously worked with them or because they're a friend of a friend. Lots of companies give bonuses to new hires for sharing information about high performers at their previous company. The trick is to find out what the person is unhappy about in their current job. Headhunters have a term for this -- it's called 'pounding the wound.'

BNET: If your company has been poached, what can you do to prevent a continuing talent exodus?

Gardner: Identify other employees who are vulnerable to poaching and make it worth their while to stay. To do this, determine the key component of your business model and which employees are most instrumental in executing it. When it comes to offering benefits that build loyalty, the concept of 'embeddedness' is important. For example, when an employer offers programs that help employees buy houses, the employee-homeowner becomes more embedded -- in both the community and the company. The same happens when you give employees time off to volunteer, or even give them the opportunity to play on the company softball team. The idea is to make it more costly, in ways that go beyond mere salary, for them to leave the company.