There is an outbreak of irritability in many corners of the tech sector. Highly infectious, and resistant to even the best of news, it has spread to companies and individuals alike, unsettling all but the most bubbly of outlooks. Symptomatically, the infected appear uncomfortable, moody, easily agitated and at times, even a tad irrational. As one was heard warning to anyone within buckshot, “We’ll kick you in the private parts, Litigation is where we’ll start”.
And kicking they are, as evidenced by recent developments in the ebb and flow of executive talent. Last week it was reported that Softchoice Corporation is suing former employees along with their new employer, En Pointe Technologies for breach of everything. Well, perhaps not everything but pretty close. As one article detailed, the firm has sued for ‘breach of non-solicit and/or non-compete clauses, as well as clauses related to confidential information, by soliciting former customers as well as removing confidential company information before their departures’. Softchoice is irritated that its employees and customers are leaving and it is accusing its competitor of systematically stealing them. As Softchoice’s legal counsel stated, “Their model has permitted En Pointe to reap the benefits of an experienced, knowledgeable sales force without making the investment of time and resources required to develop such a sales force”. En Pointe Technologies has counter-sued, ostensibly because they don’t think Softchoice should be able to sue them for all those things (‘improper business practices’ is the specific term they used), and because it seemed like the appropriate parry to Softchoice’s legal thrust.
On the same theme, Motorola recently sued a former executive for violating the non-compete clause in his contract. The firm is seeking to stop the employee (who is now Vice-President of worldwide sales for iPhone) from working at Apple for two years and to stop him from recruiting other Motorola employees (he has already recruited two).
Employment contracts are generally pretty mundane stuff. The exception is those sections pertaining to the competing interests of employee freedom to work and move with the rights of a company to protect the fruits of its work, including its intellectual property and ideas. The ensuing muddle of non-compete, non-solicit and non-disclose type clauses, are almost always contentious in their enforceability. What is never contentious however is the legal threat they promise, for words like ‘interlocutory injunction’, whatever they mean, reek of billable hours and legal migraines which most people want nothing to do with. As a result, these clauses are a mainstay of most executive level employment agreements.
For organizations struggling in the marketplace, taking action for breach of a non-compete or non-solicitation agreement can be an effective short-term business tactic. A beleaguered corporation such as Motorola fires a loud lawsuit across the bows of both employees and competitors as a warning that defections and their solicitation will be expensive, if not painful. Such litigation freezes the market, buying time for the company to regain its competitive composure. At least one major competitor has responded by issuing an internal directive against recruiting Motorola employees.
Litigation can also be a questionable tactic for organizations, as in the case of Softchoice. Clearly flustered and frustrated by En Pointe’s success in recruiting its sales staff and customers, Softchoice issues a legal stop order temporarily freezing the exodus. But large scale defections do not happen just because En Pointe wants them to. Clearly the Softchoice employees were willing. Did they leave because of dissatisfaction with Softchoice and if so can the firm really force them to stay? Or were money-motivated sales people simply bought by En Pointe and if so, how sustainable is that for En Pointe? Hopefully it is not simply a compensation issue, for by its actions Softchoice has announced that it prefers to throw money at lawyers than at its own employees in an effort to retain them. Surely someone at the company sees some irony in that.
Interesting and irritating times indeed with lots of wild kicking going on…cover up!
Looking for a dynamic HR role? Stay away from the entrepreneurial tech sector.
January 1, 2012
In a recent survey of HR graduate students, the technology sector rated among the most coveted destinations to ply their trade. It is viewed as a world of innovative people, technologies and approaches where progressive talent management, OB/OD and related HR work awaits.
The Cry to Replace RIM's CEOs – A Truly Dumb Idea
October 13, 2011
Leaving aside the recent service outages, the shellacking of RIM in the press is a tad surreal to behold.
For the few Luddites not familiar with the firm, Research in Motion is the successful Canadian smart phone pioneer with revenues of $20bb per year, no debt and cash in the bank. They manufacture products that remain popular around the world and continue to boast technological innovations unmatched by any competitor. Their most recently launched smart phone devices have been well reviewed and appear to be selling well. And though the company's first version of its new tablet, the Playbook, has room for improvement, it is a promising piece of technology.
Context: When Companies Confuse Start-up Experience for Start-up Experience
October 7, 2011
I had the occasion this week to chat with an entrepreneur still licking his wounds from a stalled startup venture. His tale is a reminder of how easily companies misunderstand organizational context when hiring. For startups, such a misunderstanding can be fatal.
The CEO Hiring Practices at HP
October 3, 2011
The press tells us that Hewlett Packard is the largest technology company in the world with revenues of $126bb. Impressive as those numbers may appear, they do not seem to impress HP's Board of Directors. You see they do not believe that any of the firm's 324,600 employees are capable of leading it. Not one person. Not this year or last year when CEO changes were made. In fact they were apparently not capable six years ago or even eleven years ago when CEO changes were also made. But before summarily indicting the firm's succession planning/leadership development programs, it is useful to consider the track record of the external candidates who were considered better choices than the firm's internal candidates. This analysis decidedly shifts the spotlight to the competence of Hewlett Packard's Board of Directors.
The Folly of Believing What You Read
September 19, 2011
Some time ago we posted a blog titled ‘So you REALLY want to be a CEO?' which looked at the human costs of climbing the upper rungs of the management ladder. The blog was based on a series of articles immediately following the ‘resignation' of Pfizer CEO Jeff Kindler. All of these articles presented a cautionary tale of life in the fast lane, the long hours, the extensive global travel, and the shareholder pressures that accompany an uncooperative stock price. They also spoke poignantly of the physical and emotional toll that such unrelenting pressure took on the Pfizer CEO who eventually resigned in order to attend to his family and health. As it turns out however, much of this narrative may not have been true
Before sending us your resume (and then getting frustrated with us) ask who we work for
July 25, 2011
A friend of mine is a trustee in bankruptcy. As his title suggests, he and his firm serves those contemplating the ‘cleansing' process of personal bankruptcy. Potential customers compare service providers, select one, and then pay the chosen firm a fee to initiate and manage the ensuing process on their behalf. However, as soon as the relief-seeking customer signs on the dotted line, the trustee's allegiance shifts to the creditors for whom they then seek to maximize debt recovery. This shift in who works for whom must be a tad unsettling for people who already have a heap of problems and stress on their hands.
What Dating Services Can Teach Companies About Hiring
June 1, 2011
Executive-level hiring is a decidedly aspirational endeavor. Organizations idealize their workplace cultures, select for attributes that will fit into those romanticized environments, and then immerse unsuspecting hires into their ice-cold reality of their works-in-progress.
How to Survive a Startup - by Jill Ram
April 20, 2011
If you're an executive and you're thinking of joining a start-up, know what stage of a start-up to join. If the company is in its first year or so, don't expect to make significant changes. If you join after the company is somewhat established and mistakes have been made and learned from, you'll likely be more successful from the outset. If the founder has stepped aside, well, by then, the company is likely not considered a start-up anymore. It won't be functioning like a big company yet, and it won't have all the structure in place that it needs, but it will be run with more practicality and with less emotion. Timing is everything so choose it well.
Good News for the Old, Overqualified and Overlooked
March 18, 2011
It is expected that a significant percentage of the baby boomer generation will drive right past the Freedom 55 highway exit. For many the goal of early retirement will have proven to be unattainable hype, while for others the ups and downs of working will appear more attractive than the prospects of working up and down the local lawn bowling leadership board.
Pressed for time? Blame those Benedictine Monks.
February 24, 2011
It is among the principal reasons candidates tell us they are open to consider a change in employers. They are tethered to it, yet somehow it still flees. It is time, the most precious of resources, and for many harried executives they want some of it back.
Though their relationship with time may be strained, it is worth pointing out that it was not always this way. In his fascinating book Time Wars, Jeremy Rifkin chronicles the evolution of our modern relationship with time. He points out that in traditional agrarian and pastoral cultures, time was a very naturalistic notion maintained in cyclical, repetitive, biological and even sacred terms. The ‘passing of time' was cued via the changing seasons, biological lifecycles and lunar patterns and thus, the cadence and tempo of those societies were finely tuned to the cyclical rhythms of their physical environments. As he states, "Our early ancestors coveted the circle, perceiving time as eternal return, a ceaseless repetition of an endless cycle of birth, life, death, and rebirth". Since these cyclical rhythms could neither be accelerated, nor altered, the cadence of these societies' was natural and harmonious.
Non Compete, Non Solicit, Non Sense
July 6, 2008