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.
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.