Why Tech Companies Should Steer Clear of Non-Compete Agreements

Tech companies are constantly innovating, so their desire to maintain a level of secrecy to protect their innovation is understandable. There are several ways of ensuring a company’s successful methods are not prematurely leaked and a popular one is the non-compete agreement. These legally binding documents prevent employees from working in competing technical companies for a specific amount of time, typically ranging from a few months to several years. While your confidentiality may be secured, there are several reasons that these agreements are counter-productive:

1) Discourages innovative prospects: When beginning the search for talented IT professionals to join your team you want the best of the best. Luring these innovators to your team is imperative but thousands of other companies are looking for IT talent too. If your position is stacked against others, the non-compete agreement may be what eliminates you from the lists of qualified candidates because you’re prioritizing what works best for your company over what works best for them. Imposing limits on innovators won’t entice them, it will send them searching for greener pastures.

2) A culture of fear instead of a culture of hope: Each soon-to-be-employee will have a moment just before signing where they review the agreement and flash-forward to the future. What happens if they don’t love the position? They’ll be stuck or they’ll get sued. While this statement might seem hyperbolic, it is the essential promise of non-compete agreements. If they are ready to move on to new opportunities, these employees will be limited in their search. Instead of looking at companies where their experience will be directly relevant, they’ll have to get creative with their searches and may end up unlucky or unqualified. However, if they choose to ignore the agreement and join a competing company, enforcing the agreement is only possible through legal action. This is a substantial chip to put on the shoulders of your employees right from the beginning. It will weigh on them throughout their time at your company and may result in a general feeling of uneasiness. Instead of absorbing all they can in hopes of continuing to enhance their career, you’ll find your office filled with unhappy employees who are fearful of the consequences should they choose to leave. Do you really want them to stick around and have their unmotivated performances drag down your entire IT team?

3) Your marketing team’s worst nightmare: Let’s face it, sometimes people just get fed up and need a change. Eliminating your competitors from their list of job prospects will make it harder for your former employees to find a job. The longer this lasts, the more frustrated they’ll get. This frustration may be vented to family, friends–both in and out of the IT industry–and, worst of all, social media. Ask anyone on your marketing team how difficult it is to overcome a bad reputation. Plus, as your company’s name begins to sour, your potential talent pool for future employees will rapidly shrink.

The best thing you can do to lure top notch IT employees is banish non-compete agreements from your company. Instead, implement confidentiality and/or non-disclosure agreements for specific projects that are particularly innovative and need to be kept under wraps. The best thing for you to do is try to be the employer everyone wants to work for, not the employer everyone wants to avoid. Why spend your time safe guarding against potential leaks when you can spend it creating an environment that will make your employees want to stay? Whether it’s offering a competitive salary, learning opportunities, growth potential, flex-time or even simple incentives like free food, you’ll win more innovative IT professionals with perks than restrictions.

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