At first glance, arguing that non-compete agreements have their place in the IT landscape would seem to be a hopeless cause. After all, we don’t have indentured servitude anymore, do we? Isn’t a non-compete agreement just a medieval relic of the days of unenlightened management?
Sed contra, I’m going to argue that there are times when it is perfectly appropriate for companies to ask some of their employees to sign a non-compete. This isn’t true for all companies, or even for all employees within a company. Further, there are lots of horror stories about companies using such agreements in a punitive and arbitrary way. Still, that doesn’t change the fact that a non-compete agreement is sometimes justified.
“Enough about you, let’s talk about ME!”
If we’re going to talk reasonably about this subject, you’re going to have to change your thinking. Just for the next five minutes, try to look at this from your company’s point of view. While lots of IT pros go above and beyond the call of duty for their employers, too many of us seem unable to look past our own narrow self-interest.
We even see that here at TechRepublic. While most you are able to look at the “big picture” when it comes to IT issues, we also hear a lot of “ME, ME, ME, ME.”
Listening to some IT professionals, you’d think that the employer’s role should be limited to:
- Paying a premium price to hire IT talent
- Giving them the best hardware and software money can buy
- Going off somewhere and dying quietly, leaving the IT department alone with its toys
It never seems to occur to some folks that employees have responsibilities to their employers that go beyond just punching the proverbial time clock every workday.
If this doesn’t apply to you, look over the cubicle wall. Odds are, it applies to some of the folks you work with.
There’s still no such thing as a free lunch
One of the biggest complaints IT pros make is that their company doesn’t value their contributions. In fact, many IT professionals say that what they really want is to be considered a strategic player in the company and not just treated like an internal vendor.
While some firms are still pigheaded about their IT assets, the truth is that more and more companies realize that their investments in IT systems, and (yes) people, give them a competitive advantage in the marketplace.
However, if you want to be considered a player in your organization, that implies both rights and responsibilities.
Top sales and marketing people have long dealt with non-compete agreements, as have research scientists. For that matter, so has senior management.
This makes sense. If you’re the chairman of the board of a publicly traded company, are you going to want to hire a new president, give him or her access to all your company information and strategy—then sit by and watch as he or she goes to the competition?
In today’s economy, more than ever before, knowledge is power. We shouldn’t be surprised when companies try to hold on to the knowledge they’ve learned about their business practices. As you know, acquiring that kind of knowledge is expensive and time-consuming.
The fact is, no company will, or should, hand you its crown jewels without making sure you don’t walk them down the street to its competitor. There’s just no such thing as a free lunch in this world. If you want to sit at the big table, you’ve got to ante up.
Be careful what you ask for: You just might get it
Ironically, the whole issue of non-compete agreements for IT professionals just proves that companies are more attuned to the importance of their IT investments. If senior management didn’t care about IT, they wouldn’t bother to try to get non-compete agreements in the first place.
And to a certain extent, IT pros are acting as if they preferred the good old times, when no one cared about them.
You simply can’t have it both ways. You can’t ask your employer to be deeply appreciative of your contributions to the organization when it comes to things such as compensation, benefits and options, and public recognition, and at the same time be completely unconcerned about what damage you could do if you went to a competitor.
OK, now that I’ve said that non-competes are sometimes acceptable in theory, what about how such agreements are actually structured and enforced in the real world? Here are some reasonable principles for non-compete agreements that work for both parties:
- Non-competes shouldn’t apply to everyone. Often, a VP for Sales might have a non-compete, while individual account reps will not. In the same way, not every IT employee should be covered. Companies should limit the number of IT staff they cover with non-competes.
- Tie the agreement to stock options. Instead of making a non-compete a condition of employment, many companies are tying it to participation in the employee stock ownership plan. This is a better approach. For example, most of these plans already have vesting components, which tend to keep employees tied to the firm, or they risk losing their options.
- Keep the term narrow. Firms used to have draconian time periods on their non-compete agreements—five years wasn’t uncommon. In today’s world, that’s far too long.
- Limit the focus. Instead of trying to prevent an employee from working for a competitor, many firms have prohibitions against taking trade secrets or customer lists to new employers. Another reasonable restriction is a ban against recruiting current employees for a specified length of time.
Non-compete agreements can be abused, but that doesn’t mean they have no role in the enterprise. If you climb the corporate ladder, don’t be surprised to run into this issue again and again. Also, don’t be surprised if you find your attitude as a manager is different from your attitude as an employee.