One of the latest trends occurring within workplaces is the increased use of non-compete agreements. These agreements in the past had predominately been done with executives or with workers who worked in contracted environments but now many different types of workers such as fast-food workers or janitors are having to sign agreements.
Employers see these agreements as a means to help organizations remain competitive and to aid in development and expansion. It also helps to retain already trained workers instead of having increased turnover and associated costs.
When employers use non-compete agreements they may require employees to remain confidential about specific practices or they may require employees, if they leave, not to do the same or similar work within a certain jurisdiction. These agreements can have particular time frames such as one, two or more years.
The increased use is being driven by the need for specific skills or to prevent employees from leaving and going to competitors.
What this really sounds like is employers are more concerned about losing trained help and don’t have enough confidence in their abilities to be able to overcome the competition or they can’t come up with new ideas to be competitive. This practice keeps employees from being able to improve their livelihoods. Employers want the skills employees provide but sometimes refuse to recognize them through monetary gain or by allowing them a voice in the workplace.
Non-compete agreements not only hurt employees but they also hurt the organization. These type of punitive actions usually don’t help or convey the type of positive values an organization has. It gives the impression the organization is more concerned about itself and not the people that work there. Consider finding out on the first day of work you have to sign an agreement that prevents you from working elsewhere that could better your career. Imagine having to stay in a job that doesn’t offer you upward mobility whether that be in pay or work status. Think about the overall message that conveys from employers to employees.
Eventually, organizations cease to be competitive with non-compete agreements. An organization needs to look at new ways of doing things or look at new ways to provide customer service. New products, services or processes can be stifled through the use of non-competes.
Employees need to feel valued and a part of the organization. When that happens, employers can see benefit. In addition, allowing employees to have a voice in every day decisions and to come up with new ideas can greatly improve an organization’s ability to be competitive. It helps increase productivity. Certain costs can be reduced. Overall gains can be made. And people stay not because they’re being forced but because they WANT to. There’s a huge difference in that.
We have blogged many times about the company that has had great success with a joint employer-employee safety committee. The owner of the company was ready to shut down because of the costs associated with accidents and injuries. While he didn’t use non-compete agreements, he did use many other methods that failed. But when he established the safety committee, he saw positive results within a relatively short time because the people who actually performed the job were able to have a say in safer processes. This same owner who was ready to shut down his business has now expanded his business and has provided more money and benefits to employees. Never once did he decide to do non-compete agreements.
The other day at one of our breakfast meetings we have throughout the year, we heard one employer increased wages by $7 an hour because he needed the skills and didn’t want to lose employees. The employer didn’t stop his employees from leaving by using a negative approach. He used a positive approach that encouraged existing employees and not one that forced them to stay.
Non-compete agreements hurt everybody because the overall economy is impacted. Employees that have an ability to start their own business are restricted because of a possible requirement from non-compete agreements that say the same or similar work cannot be done within a geographic area. That can eliminate job opportunities for others.
The concern businesses have about employees taking trade secrets or customers with them to new jobs is legitimate but it also should encourage businesses to be more innovative. Amazon was one that had non-competes and decided to stop using them. It hasn’t stopped their ability to come up with other ideas or be successful.
We all have heard and read about the division that has been going on in politics these days but the idea of limiting or eliminating non-compete agreements has gained bipartisan support because it doesn’t allow employees the ability to improve their livelihoods.
When it comes down to it, this is a practice that is only driven by fear. That fear seems to be more a part of power and not wanting to grow and change. Customers and their needs change. If companies are not willing to change their ways for existing or new customers, they will not exist. Employers and employees working together can make those necessary changes that strengthens workplaces.