As a veteran of the online employment world, I've long heard a concern from job seekers about confidentiality - They don't want their employer to know they're looking for a new job. The assumption (theirs and ours) was always that they risked being fired by their boss, but is it really worth worrying about?
The topic came up in an HBS case discussion about LinkedIn a couple weeks ago, in the context of LinkedIn's competitive advantage (in the employment space). The argument is that job seekers are safe to look for a job on LinkedIn without risking the wrath of their bosses because LinkedIn's networking can be explained away as "catching up with friends" or networking on behalf of your current employer to find new customers, partners, etc. Posting your resume on a more explictly career-focused website cannot be explained away so simply. Therefore, the "cover" that LinkedIn provides keeps job seekers safe from getting fired.
While there is certainly a perception that posting a resume is risky, I suggested in class that job seekers are more concerned about this than they should be. In my half-a-decade at TheLadders, we only saw a small handful of job seekers fired for looking for a new job. During that time, we helped millions of job seekers, so I'm pretty sure such firings are not common. (It's also possible that our confidentiality features kept job seekers safer than they might otherwise have been, but let's set that aside for this post.)
A VP from LinkedIn was sitting in on our class, and I discussed the issue more with him later. He pointed out that there are negative repercussions to getting caught by your boss, even if they don't fire you. You might be held back from a raise or a promotion or a new project as punishment for your disloyalty - or more likely, as a hedge against your possible departure.
I didn't think of it until later, but you may be just as likely to have positive ripples in the wake of getting caught. Instead of sneaking around as you look for a job, talking things over with your boss might help solve some of the problems that are pushing you out the door in the first place. Maybe the company will move up a postponed raise or promotion in order to keep you. Maybe your complaints about that overbearing teammate will finally be addressed.
I don't think you can categorically claim (as did the LinkedIn VP) that getting caught looking for a job by your manager is a bad thing.
A new twist on this problem, however, is a bit trickier. Our LinkedIn guest came to the conclusion that getting caught by your direct reports was even worse than getting caught by your boss. You can't be an effective leader if your team thinks you've got one foot out the door. How can you possibly get them motivated to take the next hill if they don't think you believe enough in the company vision to stick around?
Getting caught looking for a job by your subordinates is absolutely a problem, but as I've reflected on it over the last week or so, I don't think it's worth worrying about. Think about the scenario that would have to be true in order for your resume posted on TheLadders or Monster or HotJobs to be discovered by your team:
(1) Your team would have to be hiring
(2) ...doing the online resume searches themselves, rather than outsourcing it to your in-house recruiting function or an external recruiter
(3) ...and searching broadly enough that your resume is coming up when they're searching for people two levels below you. (If you're a VP and your Director is hiring a Manager or individual contributor, that's 2-3 levels lower.)
Based on that collection of events, I just don't think it's likely that subordinates are going to stumble across their manager's resume posted to an online job board/career site.
Wrapping things up here, I believe that job seekers' desire for confidentiality in their online job search is irrational. But the argument is academic. The fact that job seekers are worried about confidentiality means that people like TheLadders and Monster have to worry about it, and someone like LinkedIn can take advantage of it.