Why your company’s competitor won’t hire you

-January 28, 2013

Recent news from Silicon Valley court rooms brings to mind the hit song “Hotel California,” released in 1977 by American rock band the Eagles. Lead singer Don Henley has said that the song is about excess but its famed “you can check out any time you’d like, but you can never leave” lyric is ringing true this month when it comes to employment in tech. 

By now you’ve heard about the emails and documents opened up by a case that alleges technology companies including, Apple, Google, Intel, and several others violated antitrust laws by entering into formal or informal agreements to not recruit each other’s employees.

In short, emails like the below from the late Steve Jobs to Google’s Eric Schmidt are being produced as evidence that some companies adopted "no-hire" policies in which they agreed not to hire one another's top talent, in some cases even if the employee was not being poached and was actively seeking new employment.

The case comes after a separate 2010 settlement in which the Justice Department said some tech companies kept do-not-call lists to avoid competitive recruiting, and that such agreements restrained competition and hurt employees.

And it’s reminiscent of a case that revolved around Mark Papermaster, an engineer who in 2008 was sued by his former employer, IBM, when he moved to Apple. IBM claimed he violated “non-compete” agreements he signed 26 years prior when accepting the IBM job that said he would not work for a Big Blue competitor for a year after leaving the company.

In the end, a ruling came down that stated IBM and Apple were competitors, even if their products played in entirely different fields, because both companies worked on devices that incorporated MPUs. In 2009, Papermaster was allowed to work at Apple, but not until six months after his IBM resignation and with a ball of other strings attached.

All of these non-compete dealings, be they behind the curtain handshakes or legal documents engineers are forced to sign for mere employment, harken the mind back to some pre-union work era where you signed up at a company to make enough to feed the family and stayed there until you retired (or died, whichever came first).

You can almost picture a sinister looking character from HR, twirling his handlebar mustache with one hand and holding a non-compete agreement in the other, saying, “You can check out of the company anytime you like, but you can never leave for other employment at a company we see as a rival.” And if IBM, focused on large-scale electronics, got away with claiming consumer-oriented Apple was a rival, any tech company could be considered another’s competitor. Cue the guitar solo.

What makes these court room unveilings even more disturbing is that Apple and Google, the two biggest names in the suit, are among the most pioneering and powerful companies in California, if not the world.
Allowing for different surroundings and environments can inspire new ideas and innovations. Hindering employees’ abilities to move to the best positions for their skills will hinder their growth, not to mention make for a slew of bitter employees. 

How much more innovation could be occurring if employees and their ideas could move more fluidly from company to company, from industry pillar to start-up, from competitor to competitor?

The argument Apple and the like will surely make is that keeping top talent in-house allowed them to create a steady stream of innovation while maintaining shareholder growth and overall value.

Instead, such agreements force stagnancy upon companies looking to bring in new blood and cause employees locked into their present companies to mentally check out of their jobs, sticking around for the paycheck. Any ethical HR person will tell you a dead weight employee is not great for business, nor co-worker morale. Those who do manage to make it to the door, like Papermaster, remain weighed down by their former shackles for some time.

Extinction of non-compete and no-hire policies may be considered bad for business, but that could do wonders for engineering – not to mention for engineers looking to climb the career and salary ladder. And, while this is an oversimplification, when engineers and innovation grow, so does business.

What do you think? Share your thoughts on such agreements in the comments box below.

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