Are those “No-Recruit” Agreements Good for Business?

Adobe, Google, Apple, Intel and Pixar had entered into “secret” agreements that prohibited cold-calling and attempts to recruit each other’s employees. In 2010, the Department of Justice determined that these agreements restricted competition for workers within the industry and were therefore anti-competitive and illegal under federal antitrust laws.

The involvement of the U.S. Department of Justice, civil lawsuits and the publicity have resulted in most firms refusing to enter into these agreements. However the fact remains that many companies still enter into discreet “no poach” agreements with competitors and customers. There are still legal entanglements for recruiting a competitor’s employees.

The following explores whether these “no recruit” agreement are good for business. First, we should ask if they really work? There are several ways to get around these agreements. A confident and determined employee may simply quit or may take brief employment elsewhere instead of going directly to the competitor since these agreements normally do not include ex-employees. Third party recruiters can be hired because they are not normally subject to these agreements. Last, firms can simply ignore these agreements until the other party complains.

Restricting recruiting and hiring practices can have unintended internal consequences. Artificially decreasing turnover may give rise to the false presumption that employees are content and do not require better compensation, benefits or work environments. Trust may be damaged when employees learn that their freedoms are restricted without their permission and your top performers may leave simply because of this practice. Top talent may be lost due to stagnation if there are no positions into which they can be promoted.

If your company is unable to recruit well-trained, experienced talent, there must be systems in place to train and retain those more entry level, inexperienced employees. The ability to hire top talent who brings in new ideas and best practices may become limited.

Competition for talent is very fierce in most industries with limited top performers. Experienced top performers with a track record of industry specific success are some of the best recruiting targets. Executive recruitment firms specialize in researching and presenting your top level executive search opportunities to the best of your industry. JK Consultants has more than 30 years of industry specific experience and is connected with those highly sought A level players. Learn more about recruiting executives from competitors in our free video series.

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