The Undivided Life Blog


Noncompetes, Human Dignity, and True Value Creation

company culture leadership mindset undivided life May 06, 2024

With the recent FTC ruling to ban noncompetes nationwide, some organizations are scrambling to find other ways to scare current and former employees from operating in the same industry. The biggest shame of it all is that these companies will spend an enormous amount of money and effort to make employees feel trapped when their current job is no longer a good fit for the next part of their careers. When these tactics are deployed, the impact is felt throughout the employee’s entire family.

As one of the co-founders of my previous firm, I can remember the advice that I was getting from the marketplace about our employment structures - -

“Without noncompetes and non-solicit agreements, your company will never be able to make any money.”

“You need to make sure your salespeople start off strong and sell to everyone they know quickly so that you can keep their customers as they run out of steam and either quit or get fired and then lock them out of competing.”

This advice made me sick to my stomach. Why would I want to design an employment structure that would ultimately serve as the demise of another human being just because they needed to move on to other employment at some stage of their life? What would I say if I ever met their spouse or children to explain that the company we were building needed to take legal action against their mom or dad if that person tried to work in the same industry after years of dedicated service?

Thankfully, my co-founders shared my views of noncompetes. These views were antithetical to many in the deregulated energy space, and I faced plenty of backlash from energy brokers whom I had worked with on deals previously who now viewed our practices as radical and dangerous. But our approach was working, and many of the best and brightest in the industry wanted to work for an organization that put people over profits and built value for all stakeholders rather than using scare tactics and legal maneuvers only to build value for shareholders.

With our lack of noncompetes and our success in building a great team, I found myself in meetings where industry leaders attempted to intimidate me with big-name law firms, I was threatened physically, and I was even told that a friend could no longer hang out with me per the instructions of his boss. But we stayed the course with courage, fortitude, and a fundamental belief that our business existed to help people, including current and former employees.

The results speak for themselves. Veterans from across the industry came to our company proactively, often landing in our lap after years of watching how our company put money and effort into value creation rather than into fearmongering and legalese. The company grew in employee count, client count, and profitability each year because the foundation was set on principles like the common good and magnanimity.

What about intellectual property (IP) protection? Great question.

We honored the IP of our competitors when new employees joined our firm, and we had our own IP paperwork that was simply designed to protect trade secrets, including non-public client data. Having solid IP protection in no way harms the employee or their family when someone needs to leave your firm.

So, how do we keep salespeople on board? Better yet, how do we continue to serve a client who was brought to the firm by a specific salesperson long after that person leaves the firm?

Start with purpose.

Figure out why your company exists and what purpose it serves. If the purpose is to “make money,” then you are probably building a shallow enterprise, and that’s why you rely on legal mechanisms to ensure “success.” As described by the Conscious Capitalism movement, companies should exist to serve a higher purpose, and the result of success should be profits and growth. Part of that higher purpose should be the investment in empowering, training, and challenging employees to become the best version of themselves.

Work was made for man, not man for work. It is through our work that we are acting as co-creators to contribute to the common good. According to St. Pope John Paul II, work that is rightly ordered and done to the best of our abilities is both dignified and formative. With that mindset and belief, you can build company cultures that unlock the highest potential from employees without using systems of fear and control. You can create a company culture where the entire team says they “get to” go to work and it becomes commonplace to hear them say, “Thank God it’s Monday.”

Once you’ve established a high-performance, team-based culture, the value provided to clients becomes second to none. Clients come to expect the type of proactive, friendly, innovative, and impactful service that you offer and usually decide to stick with your company even if their initial salesperson has moved on to a competitor. By creating real value for every stakeholder, you can accelerate the sales engine faster, experience cost reductions through the owner-mindset of the team members, and create an ROI that far surpasses the scarcity approach of those using noncompetes and scare tactics.

It is my sincere hope that the fall of noncompetes leads to the removal of many other anti-competitive structures in the marketplace. But even if that never happens, I love seeing the good guys continue to win by focusing on building organizations where true value is a first principle.

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