Why Lock People In?

Under a new Federal Trade Commission ruling (FTC), noncompete agreements will become unenforceable in America, with exceptions for senior executives in policymaking positions.

This is an understandable backlash to the proliferation of noncompetes that have become commonplace from the front line, right up to the executive ranks. The following anecdote was captured in a recent The Wall Street Journal story on the topic: 

“After her employer was acquired by manufacturing firm 3M in 2019, Christine Grogan lost her job as a marketing leader. Her two-year noncompete agreement that she’d signed years prior blocked her from accepting other offers, she said.

The time without work took a financial toll. Grogan patched together consulting assignments, refinanced her San Antonio home and borrowed money from her mother-in-law, while her husband took on work as a handyman.”

There are so many similar stories of the noncompete principle becoming a millstone to personal freedom/employment choice. They are often misapplied as leverage by employers, and usually as a lazy way to get people to stay. Under certain circumstances, there’s a place for noncompetes, but not as a ubiquitous tool to address retention. 

While changing jobs and organizations is stressful, there certainly are cases of job froggers who leap from one opportunity to another. However, most people want to dig in and stay a while at an organization so long as compensation is fair and personal growth is abundant. 

A key message to employers based on this new ruling could be: Invest in conditions that encourage people to stay, contribute and flourish, rather than legislation or tools to force them to stick around. Who wants a workforce where people are compelled or afraid to leave, versus one where people stand in line to join? 

When I was the CPO of a substantial financial institution, I used to invite outside recruiters in to offer our employees opportunities (much to the chagrin of some executives). And frankly, sometimes they did leave. Way more often, people chose to stay and were even more appreciative of their ever increasing value in the market through their development in our organization. 

Invite people to thrive, rather than fence them in a pen. Oink! 

Think Big, Start Small, Act Now, 

- Lorne 

One Millennial View: I’d like to hear the main concern about losing noncompetes, or the security/peace of mind attached to having one. I suppose we all wish we were so good that no clients or customers would be stolen from us. Maybe the goal is to be impervious to poaching. 

- Garrett