Everybody hates theft, and theft of ideas might be the most personal form of them all. Non-compete clauses exist to limit how much of your business’s knowledge an exiting employee can take with him or her and potentially use against you in the future. Are such practices really practical though? In an article for InformationWeek, Jordan Cram, CEO of Enstoa, discusses why he decided to get rid of non-compete clauses.
For starters, enterprise value is not defined exclusively by the quality of its individual employees. It is defined by the ways in which employees interact and the culture that emerges from it. Attitude is a large part of why businesses succeed. After all, Google does not make a secret of most of its business practices, and yet not every business is transforming into a Google-level success by watching their example. Thus, the risk of letting employees go to whatever job they want after leaving your business is probably nominal in reality.
Another thing about non-compete clauses is that they are difficult to uphold. Do you really want to waste all of the energy and resources to hamper a person’s life by forcing him or her away from a job that could be a great next step in a career path? Cram goes on to say this:
We’d rather spend our time and energy on value-creating activities. [It creates less stress] in the minds of employees. It’s hard to see how that pressure helps anyone. I like the people I work with (currently and in the past) and have no interest in creating unnecessary stress for basically no benefit.
It is easy for individuals to feel they are on the losing end of the value exchange with a former employer. No leader wants disgruntled or begrudging people in their alumni network who can use LinkedIn, Twitter, Facebook, and other powerful outlets to voice their discontent.
He also claims that discarding non-compete clauses has helped their hiring process, so the benefits abound. You can view the original article here: http://www.informationweek.com/strategic-cio/team-building-and-staffing/why-i-banned-non-compete-clauses-from-our-hiring-practices/a/d-id/1326736