Why I Banned Non-Compete Clauses From Our Hiring Practices - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Comments
Why I Banned Non-Compete Clauses From Our Hiring Practices
Oldest First  |  Newest First  |  Threaded View
TerryB
50%
50%
TerryB,
User Rank: Ninja
9/6/2016 | 1:58:32 PM
Product or Service matters
Appears you provide value to clients in the project mgmt area, although tough to tell from limited info here. Non compete becomes musch more important when you are creating products, especially highly engineered ones. 

Would you really let employee with deep knowlege of Skype's compression algorithms or Google's search algorithms go with no restrictions? I suppose if you had enough patent protection you could get away with it. 

But I certainly admire your stance and morals on the subject. While I'm an IT developer, the non-compete I signed protects against the secrets of the brass products we manufacture, nothing to do with IT itself. That seemed pretty reasonable to me. Maybe if I was metalurgist, limited by this to which companies I could work for, I'd feel differently. 
jries921
50%
50%
jries921,
User Rank: Ninja
9/9/2016 | 11:04:39 AM
Re: Product or Service matters
It seems to me that in the situation you describe, a confidentiality agreement is sufficient.  It does not justify turning employees into serfs.
TerryB
50%
50%
TerryB,
User Rank: Ninja
9/9/2016 | 11:19:13 AM
Re: Product or Service matters
@jries921, I suspect I misspoke and you are exactly right. For me, it is likely confidentiality. Not so sure about metalurgists, I'll have to ask next week. I know our top guy, a PHD, would be a huge boost to any competitor he joined. Don't think you can "confidential" away his tremendous knowledge and experience making what we make. But I will ask.

I ran into this non compete when I was consulting. Signed clause, which is very common, that I could not work for any clients directly or go private and take them with me for 1 (might be longer, can't remember) year. Even when this company went out of biz after Y2K I still had to get a release from them to go private and continue to service my 3 steady clients.

I kind of get that, seems like consulting company needs some protection from people poaching clients to launch their own biz. Or take to competitor. Not sure if this relates to what author discussing or not.
jries921
50%
50%
jries921,
User Rank: Ninja
9/9/2016 | 12:52:08 PM
Re: Product or Service matters
It seems to me that the term "poaching" is inappropriate.  Employees are not property and shouldn't be treated or regarded that way, ever.  Certainly requiring that people change careers whenever they change jobs (without the consent of their employers) is akin to serfdom (which is why I used the word) and flat-out wrong.  This is a rather sensitive point with me as my father's consulting firm was quashed by a "liberal" interpretation of a non-compete he had signed with his previous employer.  The knowledge and skills we acquire are what make us marketable as professionals and are personal traits no employer can legitimately claim to own.
TerryB
50%
50%
TerryB,
User Rank: Ninja
9/9/2016 | 2:24:08 PM
Re: Product or Service matters
I hear you, it is somewhat offensive to think we are treated that way. But in a consulting job for a consulting company (CC), we are also the product. Much of this clause is to protect the CC from a client just hiring away the CC's best talent. Think of money that would save a client also. And one with lack of integrity could just dump the hired consultant after "project" was over.

The other protection is the CC has a significant investment in the sales process of acquiring clients. Once the consultant gets in and makes impression on client, it's really not right for them to just take the client as their own and keep all the billable amount.

That's why this clause, which I'm pretty sure was a year (all the courts will let them get away with), offers protection against both. That's what is unique about hiring a CC. They may have great reputation as a whole but any particular client only gets the skills of whoever the CC assigns. They really have no idea if this is CC's best guy or their worst.

I was a terrible consultant from the viewpoint of CC, my expertise was getting job done very quickly. Clients loved it but it didn't generate maximum billable hours. My CC had this homegrown methodology they tried to sell to clients as "professional". But in reality, it was geared to generate maximum billable hours. Think of a waterfall over a waterfall. You'd spend 100 hours creating meetings and documentation and 10 hours actually creating code to make application work.

I've made a career out of getting to that 10 hours as quickly as possible. I started in days long before Agile. A term called Rapid Prototyping was the methodology I embraced. Get a working system in front of users as quickly as possible, then iterate until they got all the features they need.
jries921
50%
50%
jries921,
User Rank: Ninja
9/9/2016 | 4:37:14 PM
Re: Product or Service matters
From what I'm given to understand about Skype, there is little there that anyone would want to copy if he were starting from scratch (apparently, it's a bit of a kludge).  I do get your point and I'm not an absolutist on the subject (there are relatively few subjects on which I am), but I think that the legal enforceability of non-competes must be weighed against how much they are likely to tie someone to a current or former employer; or otherwise hamper one's ability to earn an honest living (which I deem to be a fundamental right).  And as a society we really should be asking ourselves and each other how much legally enforceable corporate secrecy is really in the public interest; I suspect it is considerably less than what we permit.  And under no circumstances should we allow non-competes or even confidentiality agreements to become de facto reserve clauses such as those that once were universally imposed on professional athletes as a condition of employment.

Long ago before I landed my first programming job I worked for several temp agencies and the rule against clients hiring temporary employees without paying off the agency for a year after the end the most recent assignment was standard; and I had no objections to it (though perhaps agencies that impose such terms should be required to guarantee a minimum amount of work time per month to afffected employees; perhaps 20-30 hours a week).  And I have no objection to non-competes (for a limited period) in conjunction with the sale of a business, *provided* it only affects owners and senior management (the people who actually negotiated the deal) and *provided* it does not seriously hamper anyone's ability to support one's self and family financially.  As long as we expect people to work for a living, we should put as few roadblocks to their doing so as we can reasonably manage.


2020 State of DevOps Report
2020 State of DevOps Report
Download this report today to learn more about the key tools and technologies being utilized, and how organizations deal with the cultural and process changes that DevOps brings. The report also examines the barriers organizations face, as well as the rewards from DevOps including faster application delivery, higher quality products, and quicker recovery from errors in production.
News
The State of Chatbots: Pandemic Edition
Jessica Davis, Senior Editor, Enterprise Apps,  9/10/2020
Commentary
Deloitte on Cloud, the Edge, and Enterprise Expectations
Joao-Pierre S. Ruth, Senior Writer,  9/14/2020
Slideshows
Data Science: How the Pandemic Has Affected 10 Popular Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  9/9/2020
Register for InformationWeek Newsletters
Video
Current Issue
IT Automation Transforms Network Management
In this special report we will examine the layers of automation and orchestration in IT operations, and how they can provide high availability and greater scale for modern applications and business demands.
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll