Vanderbilt Business

Poaching Allowed?

The ethics of lateral hiring

Inside Business, Spring 2010 | Comments | Print Print |
Tim Gardner

Tim Gardner

It is generally accepted among business leaders that “poaching” or hiring a competitor’s employees violates an unwritten rule of business and may be unethical. A new research paper concludes that as long as their actions are not deceptive or illegal, companies that intentionally identify, contact and offer employment to a rival firm’s employees are within the bounds of ethical behavior.

In “The Ethics of Lateral Hiring,” which was published in the latest Business Ethics Quarterly, Associate Professor of Management Tim Gardner suggests that the practice of poaching other companies’ employees should be an accepted or even encouraged form of business competition.

Companies that declare an ethical breach following the loss of an employee to a rival are claiming ownership of employees in a way that hearkens back to feudalism and indentured servitude, says Gardner, who co-authored the paper with Jason Stansbury of Calvin College and David Hart of Brigham Young University.

“When my colleagues and I started this project,” Gardner says, “the first questions we tried to address were: Where did employers get the idea they owned their employees’ energies, efforts and human capital? And why does that line of thinking continue today?”

Based on a review of historical and contemporary accounts of employment relationships, the authors concluded that modern employers don’t generally believe they “own” their employees. But by suggesting, even subtly, that lateral hiring is unethical, employers are misusing ethics to try to prevent rivals from using a common, fair and competitive business practice, the study says.

Instead, responsibility for entertaining or rejecting an outside offer rests with the employee in question, the authors suggest. Only employees can determine whether, for example, a current employer provides a collaborative environment or whether they have reaped the benefits of educational and training opportunities and owe their current employers more time.

poaching-newhire

“Another tactic is the so-called ‘gentleman’s agreement’ among firms that discourage lateral hiring. That is not much different from gas stations on the same street corner agreeing to keep the price of gas high,” Gardner says. Informal agreements not to hire each others’ employees benefit the colluding employers to the detriment of the employees. Since the employees are not party to these agreements yet are affected by them, the practice is clearly unethical, the authors say.

Gardner and his colleagues point out such agreements might also be illegal. In June 2009 the U.S. Department of Justice opened an investigation of Google, Yahoo!, Apple, Genentech and others for allegedly agreeing not to target and recruit each other’s employees.

photo credit: Dean Dixon

illustration credit: Michael Hogue, mct

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