TOUGH CALL: The Non-Compete Conundrum

By / 7 months ago

TOUGH CALL

January Tough Call

Your company has just completed a banner year, marked by strong sales and healthy margins. There are a number of reasons for your success. But in your mind, without question, the number one reason for your company’s success is your people.

A big believer in ongoing training, you’ve made sure that everyone on your team gets the training they need to be at the top of their game. You also pay them well, and strive to make your company a “Best Place to Work.” For all of these reasons, you’ve enjoyed low turnover, and have been successful in your recruiting efforts.

As good as 2016 turned out to be, you have something in the works that could make 2017 even better. While you’ve got top performers on your team, the undisputed #1 salesperson in your market, Fred Midas, works for the competition. Builders are fiercely loyal to Fred, and you’re confident that getting him on your team would have an immediate, profound impact on your bottom line.

You’ve gotten to know Fred through some shared community service activities. Late last fall, while working side by side on a local Habitat for Humanity project, the idea of him coming to work with you came up in conversation. Looking back, you’re not even sure who brought it up, but you recall clearly that the idea appealed to you both.

In the time since, you’ve been quietly exploring the idea together to see if there are any obstacles that can’t be overcome. Miraculously, so far, everything from compensation, account assignments, benefits, and company policies is a fit. But since nothing is ever perfect, there is one problem. Fred shared that he recalls signing a non-compete agreement with his current employer. He doesn’t remember the specifics, but he seemed to think it wasn’t going to be a deal-killer from him joining your company.

At your company, you don’t use non-competes for a couple of reasons. First, you’re a firm believer in taking care of your people, to reduce the odds that they’ll want to leave—instead of using legal means to tie them to your company.

Second, you know enough about non-competes to know that their enforcement is wildly unpredictable. After all, what right does a company have to stop someone from plying their trade to earn a living?

You may not be a big believer in non-compete agreements, you know what can happen to a company when it doesn’t take legal agreements, and the inherent threat of legal action, seriously. Fred doesn’t think his current employers would try to enforce it. But if they do, you could be in for a long, costly legal battle. What would you do?

1. FORGE AHEAD. The upside from Fred joining your team is so overwhelmingly positive, it is well-worth the risk of a battle with his current employer.

2. WALK AWAY. Even if Fred’s current employer doesn’t fight back, its not right to poach good people from other companies. That’s not how you do business.

3. SLOW DOWN. Before jumping headfirst into potential danger, have an attorney study Fred’s non-compete to see what it covers. Then make an informed decision.

4. BIDE YOUR TIME. What’s your rush? Given time, things have a way of working out. Focus on your business and your current team, and let Fred’s situation run its course.


What would you do?

Something else?

See how your judgment compares with others in the industry at LBMJournal.com.
Final results will appear in The Buzz section of the March 2017 issue.

Rick Schumacher

Rick Schumacher is the editor and publisher of LBM Journal, and has more than 24 years experience covering the industry. Rick@LBMJournal.com