Poaching vs. integrity and non-competes

By Marshall Jones -- Industrial Distribution, 8/1/2005

This column is excerpted from Marshall Jones's president's letter in the May, 2005 issue of the Specialty Tool and Fasteners Distributors Assn.'s Trade News newsletter.

Through the years, I have enjoyed attending dozens of rap sessions. A topic often discussed is the use of non-competes with employees. As the economy has heated up over the last year, I have heard about STAFDA members "poaching" salespeople from competitors, and with those stories there seems to be more interest in non-competes.

When we discuss non-competes at the rap sessions, there tend to be three camps where the participants reside. The first are staunch advocates of non-competes who use and strongly defend them. (I fall into this group. My rationale is that we spend a lot of time and money training and paying people to manage relationships with "our" customers, and it is unfair for a competitor to get that value for next to nothing.) Camp 2 doesn't use non-competes typically for one of two reasons: "They aren't enforceable, so what's the point," or, the owner has a philosophical problem with binding an individual to the company. Camp 3 is neutral. They may lean toward one point of view, but haven't had to face poaching; don't have the time or understanding to move forward; or are afraid that going to their sales force with non-competes might drive some good people away.

There is great debate on the enforceability of a non-compete, and the answer varies widely by state, and ultimately, by judge.

There is one way that all non-competes could stand up, no matter what state, what judge, or what lawyer. The answer is for us all to not hire anyone who has signed a non-compete with a competitor.

Self-regulation seems like an impossible goal, but wouldn't it be nice? If we didn't have to worry about spending thousands on lawyers, we could instead invest in our employees who we feel confident would not use those newly developed skills to compete against us. It would be a major shift from business as usual.

Too many distributors take the easy way out by poaching instead of building. Many of those who hire competitors often get a lemon.

Marco Supply still hires people who have worked in the industry, but I am proud to say we make sure they don't violate their non-competes by changing their territory, waiting for them to start until their non-compete expires, or by getting an exemption from the previous employer. What we absolutely don't do is try to cheat the non-compete.

We strictly adhere to it for two reasons: there is no way I would feel comfortable attempting to enforce contracts with my employees and simultaneously subverting those from a competitor; and we have a core value centered on integrity.

I don't know how an employer can trust a brand new employee who pledged not to compete against his former employer and then violates that commitment. How could you believe the new employee will treat your customers, coworkers—or you—fairly and honestly?

Would you like to write a Straight Talk column? Contact Kimberly Griffiths at kgriffiths@reedbusiness.com.