Companies will eventually be punished for acting irrationally, but, in the short term, they can be rewarded quite handsomely.
This reminds me of an old trick I've heard used on multiple occasions. We've all read the Hack News posts about how no amount of programming can compensate for a poor personality. Image that you're looking at an applicant and their former employer tells you:
"He was a good coder, but he had a serious anger management problem. You should do code reviews over the phone if you don't want books thrown at your head."
You're probably not going to hire this candidate.
Now, imagine that you're a manager who has a great, professional programmer who is leaving your organization. When other companies call for a reference, you could tell the truth, causing your competitors to hire her and their business to improve. On the other hand, you can make up a story about poor inter-personal skills and keep this talented worker out of the workforce. If you can't have her, no one can. On the reverse side, you give glowing recommendations to your worst coders so that their terrible practices fill your opponents sites with massive security holes and performance bottlenecks. As an added bonus, when your current employees figure out that they'll have a hard time finding a new job after working for you, you can keep their salaries below market rate.
Now, this won't work in the long term, since you'll eventually gain a reputation as a liar and your recommendations will be ignored. However, as long as you remain small, it will take you quite a long time to get this reputation. Is the CEO of FerriDyne systems honest or a liar? Meanwhile, you can keep a promising employee out of the job market for six months until they come crawling back for their old job at a fraction of their old pay.
This technique also makes recruiting difficult, since your employees won't recommend their competent friends for new positions. On the other hand, you can just get in the habit of hiring other people with large gaps in their record. If they're incompetent, then you let them go and recommend them to your competitors. If they're good, you hire them on at a discount since they haven't been able to find a job in six months.
Granted, I'd never do this and I'm sure you wouldn't either. It's underhanded and, ultimately, irrational. Lying leads to a breakdown of trust that weakens the whole financial system. However, if you're leading the charge towards that collapse, you can make a lot of money on the way.
I think not common, at least not in the US. The risk of liability is too great. My company has a strict no-comment policy, and won't affirm anything beyond dates of employment and job title. This seems to be the norm for corporations.
Smaller business who don't have their own HR and legal departments protecting them may be a bit more forthcoming, but probably not much.
Big companies find other ways to do it though. Don't believe for a second that nut job managers won't do everything they can to screw your career if they feel slighted.
This reminds me of an old trick I've heard used on multiple occasions. We've all read the Hack News posts about how no amount of programming can compensate for a poor personality. Image that you're looking at an applicant and their former employer tells you:
"He was a good coder, but he had a serious anger management problem. You should do code reviews over the phone if you don't want books thrown at your head."
You're probably not going to hire this candidate.
Now, imagine that you're a manager who has a great, professional programmer who is leaving your organization. When other companies call for a reference, you could tell the truth, causing your competitors to hire her and their business to improve. On the other hand, you can make up a story about poor inter-personal skills and keep this talented worker out of the workforce. If you can't have her, no one can. On the reverse side, you give glowing recommendations to your worst coders so that their terrible practices fill your opponents sites with massive security holes and performance bottlenecks. As an added bonus, when your current employees figure out that they'll have a hard time finding a new job after working for you, you can keep their salaries below market rate.
Now, this won't work in the long term, since you'll eventually gain a reputation as a liar and your recommendations will be ignored. However, as long as you remain small, it will take you quite a long time to get this reputation. Is the CEO of FerriDyne systems honest or a liar? Meanwhile, you can keep a promising employee out of the job market for six months until they come crawling back for their old job at a fraction of their old pay.
This technique also makes recruiting difficult, since your employees won't recommend their competent friends for new positions. On the other hand, you can just get in the habit of hiring other people with large gaps in their record. If they're incompetent, then you let them go and recommend them to your competitors. If they're good, you hire them on at a discount since they haven't been able to find a job in six months.
Granted, I'd never do this and I'm sure you wouldn't either. It's underhanded and, ultimately, irrational. Lying leads to a breakdown of trust that weakens the whole financial system. However, if you're leading the charge towards that collapse, you can make a lot of money on the way.