Color Within the Competition Lines to Save $$$ in Business and at Work

Sue, an accomplished and savvy local HR executive here in SmAlbany, has been my dear friend for nearly 15 years. Our friendship / colleagueship means a lot to me – so much so, that I periodically forget how we first met. Sue never forgets – I made quite the impression on her.

It was right around Y2K:  the year 2000, and the accompanying  IT configuration crisis that involved, among other challenges,  converting all software to register the year as 4 digits (2000) instead of 2 digits (00), for those of you too young to remember that lunacy.  The overall unemployment rate locally was less than 2%; and the IT unemployment rate was essentially zero. It was frustrating enough that Sue had hired away our long-tenured Network Manager; however, it was even more frustrating that both Sue and our former manager were actively and systemically recruiting every one of our Network Engineers.   Sue’s active recruitment of our IT employees was salt in the already touchy wound of hiring and retaining RPG programmers. RPG is an esoteric and rarely used programming language, and at the time, there were about 4 local companies who used RPG, and a pool of about 7 RPG programmers locally.  We 4 companies would play recruiting musical chairs, hiring these same 7 RPG programmers away from each other.  Financially speaking, the RPG programmers made out quite well from this game of RPG musical chairs.

So I was clearly a bit irritated when I called Sue and introduced myself.  Sue was her wonderful friendly self; I was carefully neutral, not wanting to downshift into my Queens / NYC upbringing, a.k.a., come out swinging. “How can I help you, Deb?” Sue queried. I took a deep breath. “Well Sue, I understand that you’re actively recruiting all of our IT employees.  With our Y2K goals, that’s causing us a bit of angst.”  Sue took a brief pause.  “I’m sorry to hear that we’re causing you a problem,” Sue replied.  “However, I did double-check with your former Network Manager, and he doesn’t have any agreement from you preventing him from recruiting his former employees.”  I nodded (even though Sue couldn’t see me, as it was pre-Skype). “Absolutely true,” I replied. “However, there’s also nothing stopping me and my recruiting team from actively recruiting all of your employees. And I don’t mean to brag – but I’m a good recruiter, and I’m great at selling our company.” Sue took another brief pause, and then did something unexpected. “I’d love to meet you – why don’t we have lunch?” I was disarmed. “Sure, I’d love to have lunch!” And so we had lunch, and that’s how our friendship began. However, we never agreed to stop hiring each other’s employees.  And over the years that followed, as often happens in SmAlbany, we periodically have had the opportunity to exchange references on past employees; or help each other place good talent in key positions.

Subsequent to that conversation with Sue, over the years I’ve periodically been in the position to enforce noncompete agreements signed by former managers where they could not recruit their former employees from our company for a set period of time (legal in New York state, under clearly defined circumstances); yet those managers did not abide by that signed noncompete agreement, recruiting their former employees anyway. It’s never a pleasant conversation or written exchange, in the neighborhood of dunning calls to collect past-due bills.  It’s all part of the HR biz.

So in Silicon Valley, California, where noncompetes are illegal and the competition for talent is more than fierce,  this past week online auction company eBay settled a lawsuit filed by the U.S. Department of Justice for $3.75 million.  The DOJ’s lawsuit accused eBay of working with financial software maker Intuit to agree not to hire (poach) each other’s employees.  The companies had been accused of violating antitrust law by agreeing not to poach each other’s employees, but did not admit wrongdoing in the settlement.

Quoted in CNBC’s report, Bill Baer, the assistant attorney general in charge of the department’s antitrust division, pointed out the problems with poaching restrictions.

“eBay’s agreement with Intuit served no purpose but to limit competition between the two firms for employees, distorting the labor market and causing employees to lose opportunities for better jobs and higher pay,” said he said in the release. “The proposed settlement resolves the department’s antitrust concerns and ensures that eBay will not engage in similar conduct in the future.”

From an overhead standpoint, $3.75 million is a painful hit to the bottom line no matter how large or small your company may be.  And the stigma of an anti-trust allegation, from a reputation standpoint, pretty much negates any perceived benefit from an anti-poaching agreement.

How will you color within the competition (compliance) lines to save your company bottom-line dollars this week, in business and at work?


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