In Business, Only Bad Eggs Prevent Poaching

Matt Love-Smith • January 29, 2015

The long-running poaching dispute between four global tech giants and more than 64,000 of their employees may finally have reached it’s conclusion after Apple, Google, Intel and Adobe offered to settle the lawsuit for $415 million (USD).

The lawsuit claims the companies had made formal agreements not to recruit each others employees. One email exchange cited in the class action reportedly shows Eric Schmidt, former CEO of Google, telling Steve Jobs, former boss of Apple, that any Google recruiter who solicited an Apple employee would be fired. All four deny any wrongdoing.

Litigants say the pact limited job mobility, undercutting the ability of workers to receive full compensation for their skills and resulting in $3 billion in lost wages. Had the companies lost the case, damages could have run to as much as $9 billion under U.S. antitrust laws.

The case – which bears striking similarities to a 2010 lawsuit concerning Pixar and LucasFilm – has reheated the public debate on no-poaching agreements.

In New Zealand, such activities are prohibited by The Commerce Act, which aims to promote competition in business. The law states that “prohibiting a person with ‘substantial market power’ from taking advantage [of that power] for an anti-competitive purpose” is subject to fines in excess of $10 million.

Eye-watering penalties aside, what’s so bad about trying to prevent losing your best employees to competitors? Put simply, these practices have the same stifling effect on competition as price-fixing (also covered by The Commerce Act). Substitute ‘employee’ for ‘customer’ in the communications between Jobs and Schmidt and few would dispute the obvious illegality.

No-poaching pacts clearly benefit companies at the expense of employees, increasing the market power of the former while restricting it for the latter. In the world of commerce, where the power balance is already stacked in favour of big business, upholding the modest leverage available to employees and small businesses is not just about giving people a fair go – it’s vital for New Zealand’s economic growth.

There are two key factors determining wages: productivity and bargaining power. Productive employees generate greater profits, but how much of that they can command for themselves depends on their bargaining power. Methods such as no-poaching agreements and variations on the so-called ‘inevitable disclosure doctrine’ impede this bargaining power, unfairly restricting employee mobility and causing wage stagnation.

The type of collusion practiced by Apple et al is an inexpensive way to retain employees. It’s also unethical and illegal. Employers should be creating opportunities – not eliminating them. Instead of forming alliances with other employers, identify grievances among your work force and address them. It may mean paying a higher salary or offering incentives like retention bonuses dependent on a certain number of years in service.

The boring bottom line is this: be the more attractive option. Invest in employees, treat them well, pay them better and foster an appealing, vibrant company culture. Create opportunities at your company and you won’t need to eliminate them elsewhere.

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Temp & Contract Recent Trends

May 1, 2024

The economic conditions are influencing the contract employment landscape in several ways. Here are some of the trends Talent Hive has seen recently. Demand Shifts NZ firms facing economic headwinds are hesitant to commit to FTE hires but with projects and deadlines still to deliver on, there is likely to be more reliance on temporary and contract solutions to manage workloads in the coming months. Available Talent Although not widespread, layoffs and restructures in the Tech sector could lead to a larger pool of candidates available for temporary and contract work, and Talent Hive has seen an increase in enquiries from people looking to understand how they might set themselves up for contract engagements. This has the potential to increase competition but could also provide businesses with access to qualified talent on a flexible basis. Tech Sector Specifics We are seeing an increase in demand for contract staff recently, particularly Software Developers, Integration and Solution Architects, and Business Analysts. This upswing in demand is reflected in the recent Seek job listings data. There are 207 Contract IT/Tech roles advertised on Seek today and 23% of those contract roles have been listed in the last 7 days. 52 of the 207 contract roles advertised are for Software Eng/Developers with 30 listed ads for Contract BA’s. Wage Control In Stats NZ’s latest update, New Zealand's salary rates actually increased by 4.1 percent in the year to March. That labour cost growth slightly outstripped inflation, which was sitting at 4 percent. Contract hourly rates in the Technology sector have stabilised in recent months as hiring demand has decreased and we may even see hourly rates come back a little, particularly for role types where there is an oversupply of contract talent. Hybrid Work Trend One trend we are certainly seeing in the contract market are fewer remote work opportunities. Increasingly there is a requirement for contractors to have the ability to work some of the week at a designated office and this is restricting the opportunities contractors are able to go for. Full remote work options aren’t completely gone but they are significantly reduced. Contract candidates must be open to in-office work for at least some portion of their engagement. Overall, the current climate creates a complex landscape for both businesses seeking talent and professionals exploring temporary and contract opportunities. Success for Contractors will depend on adaptability, flexibility around rates, and contract length. Talent Hive's Value Talent Hive's understanding of the current market dynamics, along with our strong network of skilled professionals, positions us uniquely to support both clients and candidates Addressing Uncertainty: For businesses navigating hiring uncertainty, Talent Hive offers flexible staffing solutions. We have access to contract talent that are ready to fill immediate skill gaps and help organisations manage fluctuating workloads. Beyond Just Tech Skills: We understand that finding the right technical expertise is only half the battle. Talent Hive's strong connections within the contractor talent pool allow us to identify professionals who are not only technically capable but also a strong cultural and organisational fit for our clients. This approach ensures smoother onboarding and a positive impact for both the contractor and the employer. We would like to share some of the contractors we’re working with at the moment. Click below to view some of the great IT talent we're working with to find roles at the moment.