Compete with noncompetes
Noncompete agreements are legally binding workplace contracts preventing an employee to work for a competing company after the employment period is over. These agreements commonly prohibit the employee from sharing proprietary information to other parties during or after employment.
In the US, the FTC is proposing new rules with important changes to noncompete agreements. Studies such as the one from the Economic Innovation Group share how as of the year 2014, 1 in 5 employees were covered by a noncompete agreement. Here’s a few of my thoughts on the impact of noncompetes to market dynamics:
- Talent mobility is hampered. Noncompetes limits key talent movement from company to company. This is particularly evident in engineering and scientific roles, but also applicable to many other functions like Sales and Marketing.
- Employee engagement is reduced: For that talent that takes the risk and moves to other companies, they living in constant fear of potential legal consequences. This is a serious problem for motivation and happy employees. Noncompetes introduce hesitation and reduce trust.
- Knowledge sharing hesitation reduces team collaboration: one of the biggest characteristics of dysfunctional teams, is the lack of open communications and reduced collaboration. When knowledge sharing is limited, or secretly shared, collaboration is directly reduced, extending time for when things get done.
The main conclusion here is that Noncompetes hurt innovation, operational efficiencies, and corporate strategy. This was recently highlighted nicely in a February 7th HBR article that I highly recommend.
Happy limitless competing!