{"id":58287,"date":"2022-01-22T09:53:54","date_gmt":"2022-01-22T13:53:54","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=58287"},"modified":"2022-01-24T09:10:44","modified_gmt":"2022-01-24T13:10:44","slug":"employee-poaching","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/employee-poaching\/","title":{"rendered":"3 Best Practices to Prevent Employee Poaching"},"content":{"rendered":"\n

Are you worried that another company will poach your best employees? How can you convince employees to stay with your company?<\/p>\n\n\n\n

Netflix CEO Reed Hastings wrote in his book No Rules Rules <\/em>that there are three ways to prevent employee poaching: paying top-of-market salaries, eliminating performance-based bonuses, and giving raises that reflect market value. Some of these methods may be difficult but it’s important to remember that good employees are investments, not tools.<\/p>\n\n\n\n

Here’s an overview of each of the three methods.<\/p>\n\n\n\n\n\n\n\n

Prevent Poaching<\/strong><\/h2>\n\n\n\n

Once Hastings cultivated a high-performing workforce at Netflix, his new challenge was how to retain it\u2014 having a pool of stellar performers meant that other companies always threatened to poach Netflix\u2019s employees.<\/strong> Hastings thus implemented three measures to prevent employee poaching.<\/p>\n\n\n\n

1) Pay Top-of-Market Salaries<\/strong><\/h3>\n\n\n\n

The first safeguard from poaching that Hastings implemented was to pay more than any other company offered\u2014even if it was more than the employee asked for.<\/strong> By contrast, most companies count on job candidates to undervalue themselves, which allows companies to pay people below their value. However, as employees\u2019 skills grow and they become more valuable, it\u2019s often inevitable that they\u2019ll get job offers with higher salaries. Even if workers love their jobs, research shows that most people will change jobs for more money. As a result, this model ultimately decreases an organization\u2019s concentration of talent by creating an environment that encourages employees to leave for better-paying jobs. <\/p>\n\n\n\n

Other Perspectives on Determining Salaries<\/strong>

While Hastings believes in paying top-of-market rates to retain staff, Ray Dalio of Bridgewater Associates thinks you should just pay \u201cnorth of fair.\u201d<\/a> In Principles<\/em><\/a>, Dalio recommends paying employees just enough so that they don\u2019t have to worry about money and can focus on their work, but not so<\/em> much that they\u2019ll become complacent\u2014they should still be motivated to work hard and earn more. 

\u201cJust enough\u201d may be relative, but Gravity Payments CEO Dan Price seems to have found the magic number<\/a> for his employees: He cut his own salary so that he could afford to raise the minimum wage at his company to $70,000 a year, which was enough to allow employees to quit working multiple jobs<\/a> and better take care of their families. Since raising Gravity Payments raised their minimum wage, the company\u2019s revenue grew and more employees were able to pay off debts, buy homes, and start families.<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Paying Top-of-Market Is Difficult, but It\u2019s Worth the Investment <\/h4>\n\n\n\n

To pay top-of-market salaries, Hastings says that managers at Netflix must know their employees\u2019 market values. Additionally, Netflix relies on employees to know their value.<\/strong> Hastings and the rest of the executive staff even encourage their workers to take headhunters\u2019 calls and interview for jobs to find out what their skills are worth. Employees are then instructed to share the information with their managers.<\/p>\n\n\n\n

What to Do When You\u2019re Blindsided by a Resignation<\/strong>

Few companies encourage the same level of transparency as Netflix does when it comes to employees\u2019 other job prospects, so an employee\u2019s resignation may come as a surprise. To deal with unexpected resignations,<\/a> experts give the following tips:

Don\u2019t take it personally. <\/strong>Do your best to manage your emotions<\/a>, then have a conversation with the employee about their reasons for leaving. While you often won\u2019t be able to change their minds, the discussion might reveal information and options that weren\u2019t available before\u2014for example, you may discover that they\u2019re resigning for personal reasons and that a flexible schedule or an extended leave will enable them to stay.

Invite them back after a year. <\/strong>Experts say that immediately presenting a counter-offer is counter-productive because it\u2019s difficult to trust someone who has already decided to leave. Instead of convincing them to stay, maintain a relationship with them and consider recruiting them again in a year. 

Communicate with other employees. <\/strong>Use it as an opportunity to find out if anyone else is interested in learning and taking over the resigning employee\u2019s responsibilities, and to discuss career paths. If other team members will have an increased workload, assure them that it\u2019s only temporary and that you\u2019ll find a replacement as soon as possible.

Wish the resigning employee well. <\/strong>Have a party to acknowledge the person\u2019s contributions and to send a message to your team that they\u2019re valued.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

Encouraging Employees to Window-Shop Promotes Transparency<\/h4>\n\n\n\n

It may sound risky to encourage employees to window-shop for other jobs, but fostering transparency gives Netflix an opportunity to keep its workers. Meyers writes that if managers discourage employees from talking with recruiters, employees might simply feel that they have to sneak around. Then, if an employee receives an enticing offer, she\u2019s more likely to accept it before telling her manager that she\u2019s leaving. By contrast, at Netflix, the employee can feel comfortable coming to her manager with another job offer, <\/strong>which gives the manager an opportunity to raise the employee\u2019s salary and fight to keep her. <\/strong><\/p>\n\n\n\n

How to Make Employees Stay When You Can\u2019t Afford Top-of-Market Salaries<\/strong>

Netflix pays top dollar so that employees won\u2019t be lured by other companies and accept enticing offers and to ensure that it can offer raises to poached employees\u2014but what if you can\u2019t afford to give your star performers a big raise? Experts say that you can retain high-performing employees<\/a> by: 

-Communicating how their work makes a difference in the company to make them feel like they\u2019re making an impact<\/a>
-Providing career development support through training and mentoring
-Showing your appreciation for your employees and celebrating their accomplishments
-Offering other benefits aside from cash, such as better health and dental insurance
-Respecting that they have a life outside of work\u2014for example, allowing more flexibility for new parents<\/a> <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n

2) Eliminate Performance-Based Bonuses<\/strong><\/h3>\n\n\n\n

Hastings writes that the second safeguard from poaching that Netflix implemented was to reject bonuses and instead put that money into larger base salaries. The move paid off, as Hastings discovered that job candidates prefer guaranteed money over the possibility of earning bonuses.<\/strong><\/p>\n\n\n\n

Many big companies pay employees a salary and incentivize workers to achieve more by offering annual bonuses for reaching predetermined goals. However, Hastings argues that the bonus system assumes that managers can accurately predict which achievements will be most valuable to the company in the year ahead\u2014but those metrics may change. <\/p>\n\n\n\n