You Empower What You Fear

Non-compete agreements are the topic du jour.

Frank Byrt, in Financial Week, writes that “Companies are blocking more execs from jumping to competitors.

Jay Shepherd continues the discussion with The Rising Noncompete Tide in his blog “Gruntled Employees.” He’s a Boston lawyer with a big specialty in non-competes within employment law. He’s done some original research that indicates a pretty major increase in non-compete litigation in the last several years.

More blogs jumped on the topic: the irrepressible Maureen Rogers at PinkSlip has a compelling first-hand take on the subject.

Here’s my take—I can’t back it up with research, so write in and tell me if you can support or deny it.

Non-compete agreements are the manifestation of sick management thinking. They are symptomatic of failed people management. They give the lie to many companies’ claims that they care about their employees. But worst of all—like throwing water on a grease fire—they produce more of the very thing they were designed to prevent.

They are a poster child for the concept that you empower what you fear.

If you fear employees will rip you off, and set up spying processes—you will get ripped off.

If you fear employees will steal from you, and institute lie detector tests—they will steal (see The Perversity of Measuring Trust)

If you fear your employees will talk to search firms, and tell the receptionist to screen calls—they will talk.

If you fear your employees will take your secrets to a competitor, and force them to sign non-competes—they will try to take secrets to a competitor, and if they can’t do that, they’ll bring on a whole lot of other nasty side effects.

You empower what you fear.

Fear may manifest itself as simple paranoia about losing money. Understandable, but it still drives bad behavior.

It may show up in the form of resentment, or vengeance, or of seeking recompense against someone’s perceived act of “disloyalty.”

I worked for two small firms: one did not have non-competes, and in 25 years never had an employee lawsuit of any kind. The other did use them, and on average was involved in two suits per year with its employees.

The first firm had its own problems, but it did one thing right—it treated people issues as management issues. The second firm treated them as legal issues.

People live up—or down—to expectations. You see it in kids. You see it when you approach a dog—if you fear the dog, it will growl and bark; if you approach in a friendly manner, you get the tail-wag response. In this regard, ich bin ein canine, and so are most other people.

What’s the alternative? Simple.

  • If you really care about the employee who left, then be happy for him/her. If you’re not happy for them, then cut out the crap in your website where it says you believe in people development, because you don’t—you believe in the development of "human capital," an oxymoron. People know the difference. Capital doesn’t.
  • If you’re happy for them but wish they hadn’t left, then find out why they left and fix it before the next one leaves. If you don’t want to fix it, then go buy a lottery ticket. The odds of effectiveness are about the same.
  • Make alumni of the people who leave. Your college didn’t go all resentful on you when you graduated; they didn’t make you sign a non-compete about getting a master’s from another university. And when your college phones you to contribute to the fund years later, you still do! (And if you don’t, it’s because your college needs to read this blog). Think of people who leave as graduating advocates of your company—not as disloyal double agents.
  • Let everyone know that you run the company on the basis of rules 1 through 3 above. And tear up the non-compete forms.

There are of course some valid exceptions, mainly in the hard sciences and tech businesses. But the rest? Marketing execs? Consultants? Bankers? Please.

You empower what you fear.

A basic lesson of trust is that if you trust people, they respond by being worthy of your trust.

Substitute trust for fear. It works.

0 replies
  1. Ann
    Ann says:

    Thank you for crystalizing this universal truth.  As someone who grew up in professional service firms — some that managed by distrust and non-competes as well as some that managed by trust and respect — I have always felt this to be true, but could never have articulated it as well as you have here! 

    Reply
  2. James Bullock
    James Bullock says:

    ourselves to take care of each other’s interests, as long as we are involved together, and as long as that works for both of us." The problems happen when either party starts wanting to advance their interests at the expense of the other’s. Then out come the big guns. The problems happen when either party gets scared enough to try to protect themselves vs. realizing that they are inevitably taking a chance. The problems happen when either party is so desperate for a deal that they’ll deal with someone they feel they have to protect themselves from. There may be a time and a place for deals where you bring your thugs, and I bring mine to the deserted parking garage late at night. Such folks are unsavory long-term partners.

    For me, in addition to conducting ourselves well as a company, company representative, employee or consultant, there’s some education that also helps. Some folks don’t understand what "conducting ourselves well" might mean. Implicit agreements are notoriously ill-understood. Better to work them out, and actually write them down. That’s particularly important with junior people in an industry that lacks the guidance of being a real profession. Indeed, I think you owe it to each other to lay out what concerns you, and what you expect. But, a big restriction of the "You can’t do this for a year." variety is the last resort – and ought to be compensated. Adding ". . . you can’t do this or we’ll sue your brains out." substitutes a stick for a carrot. Dumb. "This is what I need to make this deal work for me. I’m trusting you to provide it, and to tell me when you can’t do that any more." Better.

    I wonder what would happen if the parties actually sat down and talked about what information should be held close, and what shouldn’t, simply as part of the deal. Or if they walked through all their expectations of each other’s future behavior while they are working together and after. Wouldn’t that turn the HR / manipulating BRU’s mind-set on it’s head. "I expect an ongoing opportunity to develop my skills, which may eventually lead me to specialties that you don’t really need." How true is that? How often – as in all the time – are we required to leave that out of the job conversation? This is Handy’s "shamrock organization" again, where professionals have a primary relationship to their profession vs. the company. It’s one kind of being employed. Line me up for the rewards of being an insider and I may make the company my primary affiliation vs. the profession. Don’t and I’d have to be dumb, or dishonest to tell you the company comes first for me. Yet we ask that all the time, and in both directions. "Act like the company comes first, but we won’t reward you that way." or "Act like you are concerned with my development and growth, but I’ll only give you the minimum to not get caught cutting corners."

    It seems to me that the need for big, hairy non-competes is in part a symptom of "the Sheryl Crow problem." The lyric to one of her early hits goes: ". . . lie to me. I promise I’ll believe." Or course the company at some level knows the lying is going on, and puts the big litigation gun in place because of that. So do individuals most of the time. That’s the problem with deals that involve lies – both parties are involved and most of the time they both know there’s a con going on. The saying from grifting applies: "You can’t con an honest man." The folks who get stung by non-competes are usually trying to work their own angle. The companies that get stung likewise. I’ve also actually encountered organizations that routinely uses a "non-disparagement clause." Dude, if the folks you lay off are telling tales, the truth is a complete defense. If what they say is true, maybe you ought to conduct yourself so that the truth isn’t so embarrassing. We aren’t all celebutants where our product is our misbehavior.

    I’ve written elsewhere about balanced deals that work. I didn’t say it plainly then, so I’ll be plain now. Whatever the mechanics, un-balanced deals come from a failure of courage. Specifically, it’s the failure to have enough courage to offer what you really can, risking that it may not be enough, and ask someone what they really want, risking that you can’t deliver it. I am baffled that this is such a problem in business. I’ve just described dating. Since the human species continues to multiply we seem to be able to get over that courage problem at least some of the time. Maybe that’s the secret, actually. Fall in love a little bit with whomever you’d like to make a deal with.

     

    Reply
  3. James Bullock
    James Bullock says:

    Meta: Thanks for the kind words. It looks like I did some not-so-brilliant munging of the beginning of my previous (long, I know) post. Here’s the missing stuff leading up to the rather abrupt beginning from 9-March including leading summary paragraph.

    Beginning of Comment Post from 9-March:
    So, here’s the thing. It’s not the what, but the how. There’s a better way to address the legitimate issues a non-compete tries to cover. It is really a failure of courage. People go for the big hammer either when they don’t want to realize the conversation they are having, or are afraid their own offer isn’t enough. The rest of this develops this thought.
     

    Non-compete agreements actually embody something that matters to both the employee and the company. Not shopping secrets around to other folks is a big deal. Not getting a similar job in the same industry for a while may be a legitimate consideration of employment. For some jobs you can’t help but learn a bunch of stuff that shouldn’t be in a competitor’s hands, and some jobs you can’t help doing without using that information. Not for most jobs, but for some. Not jumping ship when you’ve been "placed" by a broker even has some legitimacy. They have to make their money somehow, and you wouldn’t use them if they didn’t do something good for you. (The blood sucking leeches that often turn up in that business aside.)

    It’s not the what, it’s the how. The big hammer of "You can’t do anything like this or we’ll sue your brains out." is a poor package for an important part of the agreement. As broadly stated as can be is worse, which is what happens when you get the lawyers involved. And the side consequences of: " . . . BTW, even if we don’t win the action will bankrupt you personally not to mention the damage to your reputation forever more." just make it ugly. Are you anticipating this becoming an adversarial relationship? Trying to get a jump on that? That’s good to know. Can I play, too? I have a list of stuff for you to agree to. Sign here.

    What you’re talking about (Charles) is really *how we’ll conduct ourselves" and it is a deal with two sides. "We’ll conduct ourselves to take care of each other’s interests . . ." <Pick up at 9-March>

    Meta:

    And now we’re up to the beginning of what got there on 9-March.

    Infernal machines.

    Reply
  4. Howie
    Howie says:

    Hi. I agree. We must empower our fears. We can’t succeed if we have fears that we don’t confront. There is always a good lesson to learn from empowering our fears.

    Reply
  5. Barb
    Barb says:

    I agree to Howie. Fears are just failures and giving in to them will only not lead you anywhere. The best lessons are indeed learned from overcoming our fears.

    Reply

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