To compete or non-compete. That is the question.
I received this email from a reader who had a genuine concern about a non-compete contract that her employer was forcing her to sign:
Jeffrey, After six years of employment, I am being forced to sign a non-compete agreement. Is that legal? And how can I be an independent contractor working under a non-compete? Sherry
Being both an employer and a salesperson, I tried to take a fair look at this from both perspectives. As an employer, would I ask my employees to do this? As a salesperson, would I want to sign this? Keeping that in mind, I wrote the following response:
“Sherry, It’s totally legal – just not moral or ethical. If your boss is so paranoid that he or she is making you sign a non-compete, he is afraid they will lose you to a competitor. Or worse, they think you are in the process of job-hopping. Most courts will uphold non-competes if the restrictions are low. The higher the restrictions (the more it prevents you from doing work and earning money), the less likely the court will find in favor of the employer. HOWEVER, future employers tend to stay away from potential litigation of non-compete. If it were me, I would tell the employer to “stuff it.” But that’s only what I would do. You may not be in a financial position to take that risk. Or you may love your job and want to stay. Jeffrey”
I could not have predicted what followed. E-mails from employers rattling their sabers about disloyal salespeople and small business protection. Salespeople raising their beer glasses (or in my case, Coca-Cola glasses) and screaming, “Don’t sign it” in favor of Sherry. And even several lawyers getting into the act sending me (unbillable) legal advice that ranged anywhere from I was right, to I was wrong and even that I shouldn’t practice law without a license.
So I think it’s proper that I respond with a more well thought out solution for both employers and employees in what I will call, “The Gitomer Fairness Doctrine.“
Here’s the employment situation: After the salesperson is employed, their employer will share internal strategies and methods with them in order to win accounts. They will also, to some degree, train the salespeople and support the salespeople. In short, they will invest in their salespeople and their sales effort. They will also invest in lawyers who will write contracts often called employment contracts that contain a clause of non-competition within. This single clause alienates and threatens every single salesperson in a manner that they begin their term of employment with a negative feeling toward the employer. “This guy doesn’t trust me and I haven’t even stepped foot inside his building.” This feeling of animosity deepens when some form of employment termination occurs. Other lawyers begin huddling as to the enforceability of the non-compete clause, and business once again reduces itself to the low life, “My lawyer can beat up your lawyer.“
In case you can’t draw a clear picture from my philosophy, let me take you back to New Jersey where I saw a billboard erected by a man who’s farm with wild animals was being taken over by the government against his will. He had erected his own billboard on his land and had hand painted the title: “Definition of a Lawyer.” Depicted was a cow that two farmers were fighting over. One farmer pulling on the head. One farmer pulling on the tail. And the lawyer, underneath the cow, milking it. (Hey, what’s the use talking about lawyers without at least including one lawyer joke.)
Here’s my solution that I believe is fair for all:
The employer should require that if the salesperson for any reason leave, that:
1) He or she not discuss internal trade secrets or divulge company strategies.
2) He or she leave all documentation, computer databases, and anything pertaining to the company, the product, or its customers behind.
3) Any of the company’s existing customers or those in the current pipeline (especially those being worked on by the salesperson) be untouchable.
It’s simple. If you leave, or are asked to leave, leave your employers stuff and his customers alone.
With my solution, the salesperson can go seek gainful employment in any field of endeavor, even direct competition. And his former employer has no jeopardy of trade secrets revealed, or customers pirated away.
Now before you go jumping up and down about my idealistic, utopian solution, please know that I’m a child of the `50s, who was raised (and can’t remember several years) in the `60s, and I still believe that doing the “right” thing, and the “ethical” thing, are the only way to do business. Not all people are like me. And this distinction does not know the boundary line between employers and salespeople.
I would ask both employers and salespeople to seek out a way that both are protected, and that there is mutual respect at the beginning of their relationship so that the end result matches their beginning expectations. If the first thing a salesperson has to sign is the, “I don’t trust you clause,” then the last thing the employer is going to get is the undying loyalty that they are hoping for.
I expect another barrage of emails and that’s fine, but I also expect employers and salespeople to gain a better understanding and respect for one another so that the end result will be what they both desire: more sales.
Ethics and fairness begin with your philosophy. Do you have one? Perhaps if I shared mine, it would give you some incentive to create yours. Go to www.gitomer.com and enter the word PHILOSOPHY in the GitBit box.