Kirsner's column emphasized the technology sector,
his expertise. While my clients are more traditional
product and service businesses, the issue is the
same: What is the real price of protecting your
business from innovative or
entrepreneurial-wannabe employees with
wanderlust?
Kirsner clearly believes that ideas that are stifled by
limiting employees' mobility is innovation lost, a
reasonable conclusion if we look at just one side of
this coin. However, if we flip the coin and look at the
small business owner's concerns, we see a very
different picture.
Let's consider a typical scenario in the small
business community: You have worked very
hard for 10, 15, or 20 years to build your business.
You have very likely forgone salary in the beginning
years, have sometimes paid yourself less in order to
hire that rising star sales manager, have worried
about cash flow, signed personal guarantees for
office space and a line of credit and lost sleep during
slow sales and no growth periods.
In other words, you have invested heart, soul and
sweat equity and taken substantial personal risk to
start and grow your business.
Along the way, you have hired some talented people,
sometimes fresh out of college, eager to learn and
advance. You have paid them well and provided
great benefits. You have introduced them to your
clients and mentored them as they grew in their jobs.
And one Friday, one of those stars walks into your
office, drops a letter of resignation on your desk, and
tells you simply that he is moving on.
All fine and good, until come Monday, that same
former employee drives across town to your
competitor and joins the payroll. Or, rents a small
office down the street, hangs an "open for business"
sign out front and begins to call your clients.
Believe me, now is NOT the time to start
thinking
about a non-compete agreement… it's too late!
But what if you already had such an agreement in
place… would this scenario end
differently? Maybe.
Scott Kirsner clearly believes unrestricted
competition is good for an innovative
economy… not an unreasonable position for a
journalist. But unfettered freedom for innovative
employees means someone else pays the price, and
that someone might very well be you… with
no warning and no recourse.
So-called non-compete agreements cover a very
broad spectrum — from asking an
employee not to solicit current employees, customers
and advisors, to flat out prohibiting an employee from
joining the workforce of a client or competitor. All for a
"reasonable period of time."
"Reasonable," of course, is the key word here, and
relates to time, place and other restrictions, none of
which should prevent an employee from making a
living anywhere in the world for an extended period
of time. The business owner who seeks to enforce
that type of agreement will find it cut back or struck
down by an unsympathetic judge who leans on the
side of the employee needing to make a living.
But for the reasonable entrepreneur who
invested time and money, who worked hard, who
took the risk, who hired, mentored and rewarded key
employees, why shouldn't they be able to reasonably
protect all that investment? The answer is, of
course, that they should!
So, where is the middle ground? Here's my take:
- For the employee concerned about a
non-compete. Ask lots of questions and
understand what you are signing. Employment,
particularly at the level where you will be asked to
sign a non-compete, is a negotiation. Remember, no
one forced you to accept that employment…
you accepted because you saw a better title, a bigger
paycheck, a more rewarding job, an opportunity to
learn. With that final offer, however, came an
obligation… clearly detailed in a written
document which you were given the opportunity to
read before you accepted the job. It's now time to
honor that written agreement as you move on.
- For the employer concerned about a potential
conflict when a key employee leaves the
company. Communicate, upfront, before your
potential employee joins you, exactly what is
expected in terms of loyalty and avoidance of
conflicts both during and after employment. Make
sure your agreements are clear, specific and
discussed with the key employees you expect to sign
and honor these obligations. Make sure the potential
employee knows why you have such an agreement
to protect certain assets and goodwill of your
business. During the exit interview, be sure you
remind the departing employee — orally and
in writing — of the agreement entered into all
those years ago. Then, wish them well, monitor the
situation for a year, and move on.
In summary, communication — on both
sides — is key. From beginning to end of
employment, communication will go a long way
towards breaking down the barriers between the
employee and the business owner. Because in the
end, both sides have reasonable concerns, and with
a clear, upfront, written agreement, the needs of both
can indeed be met.
Do you think Scott Kirsner is right? Am I? Is
there a middle ground? Click "reply" to send me your
thoughts now.
