July 28, 2005 4:00 AM PDT
Poachers encroach on tech-talent turf
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Oracle. And also in the late 1990s, SAP cried foul that 27 of its key executives walked out for rival Siebel Systems.
There are signs, including a revived start-up scene, that competition for employees in the tech world is heating up. But it's difficult to find hard numbers on the practice of actively tempting workers at rival companies.
If anything, the amount of talent snatching in the software field has declined from a decade ago, said Jack Cage, senior client partner at executive search firm Korn/Ferry International.
Cage, who specializes in the software and tech services arenas, said one factor is the consolidation of the software industry during the past 10 years or so from some 500 public companies to fewer than 100. He also said companies aren't as likely to raid one another when there are so many people looking for work--such as the thousands laid off after the Oracle-PeopleSoft merger.
The dispute over Google's hiring of Microsoft exec Kai-Fu Lee follows a long history of tech companies taking talent away from one another other.
through the ages
In 1999, Wal-Mart sued the online retailers, alleging they had hired Wal-Mart execs in order to get at trade secrets. The dispute was settled later that year.
In 2001, former Microsoft employees hired by the business application developer stepped down after Microsoft sued, saying the execs were still bound by noncompete agreements.
In 1997, the company filed suit against Microsoft, saying the software giant had tried to cripple the business by recruiting 34 Borland employees.
In 1997, the database software company asked a court to impose a restraining order on Oracle after 11 of its software engineers left for the company.
In the late 1990s, the business software developer complained after 27 of its key executives left to work for rival Siebel Systems.
"If resumes are flowing, there's a perception of talent out there," he said.
Farrelly suggests the greatest amount of recruiting among tech rivals these days is in the field of network security, an area that's become hot, given the rise of phishing and other computer threats. "There's a lot of (employee) swapping going on in that industry," he said.
Farrelly says noncompete agreements lasting a year or more are commonplace for upper-level tech employees in sales, but that doesn't keep them from moving to a similar company.
"All my sales guys have noncompete clauses, and they all jump ship," Farrelly said. "(And) when they jump ship, nine times out of 10 they're going to competitors."
By contrast, Korn/Ferry's Cage thinks employees have gotten more careful about abiding by agreements at a time when executive shenanigans can quickly make headlines. "Everyone is just much more open because they realize eventually there's going to be a document trail or some disclosure," he said.
Check the fine print
Even so, employers would be wise to ask their potential hires about previous employment agreements, attorney Jonathan Segal suggested in an essay earlier this year.
"While employers probably have no affirmative duty to ask about restrictive agreements, they do have a duty to take corrective action if they learn that an employee is subject to a binding restrictive agreement," Segal wrote in the essay, published by the Society for Human Resource Management. "Employers that become aware of, but ignore, post-termination restrictions can be held liable..."
Segal said employment contracts can include prohibitions against competing with the former employer for a specific period in a specific geographic area; soliciting business from the prior