Case Study: Employee Poaching
Why are overseas-funded companies offering lucrative salaries to poach employees?
A sudden wave of resignations recently hit the sales department of a publicly listed company, raising questions about the underlying reasons. Within just three months, two employees from the same team, both responsible for the same product line, tendered their resignations. The situation appeared highly unusual, prompting suspicion of an imminent issue. The company’s CEO instructed the legal intelligence department head to consult private investigative services for assistance in uncovering potential risks.
However, without concrete evidence of illegal activities, law enforcement agencies or government investigation units were unable to intervene. Questions arose: Where are these former employees currently employed? Are they engaging in activities that might harm the company’s interests? The company decided to discreetly hire Lex Solution Investigations, a private detective agency, to gather information on the former employees.
The CEO emphasized that the investigation must remain confidential to avoid internal leaks. The HR department provided the necessary data directly to the CEO, bypassing standard communication channels. Based on the detective agency’s recommendations, the investigation focused on tracking the activities of the two resigned employees for two weeks. The findings left the company’s top executives deeply concerned.
The private investigation revealed that the former employees had joined a direct competitor, an overseas-funded enterprise. During this period, the ex-employees maintained contact with a current employee who had already submitted their resignation. They were even seen accompanying the resigning employee to the competitor’s office, raising suspicions of potential recruitment or onboarding. This alarming development left the CEO and management team worried about the implications for their upcoming board meeting.
The competitor is a well-funded overseas entity, and the poached employees were senior sales managers responsible for key client accounts. These managers had a thorough understanding of the company’s product strengths and weaknesses. This knowledge, if leveraged to secure large contracts, could significantly harm the company’s competitive position. Furthermore, Lex Solution Investigations discovered that the former employees’ compensation at their new roles ranged from 1.5 to 2 times their previous salaries, with additional perks, such as high-speed rail travel allowances.
The motive behind such lucrative offers became evident: to secure key clients and high-value contracts.
While the competitor’s strategy is aggressive, the local company is left to rely on restrictive covenants like non-compete agreements or potential legal action for intellectual property breaches to safeguard its interests. Faced with this significant challenge, the company can only hope for a favorable resolution.