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Margaret Heffernan Headshot

What's Wrong With Silicon Valley's No-Poach Rule?

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BUSINESS HAND SHAKE
kristian sekulic via Getty Images

The antitrust lawsuit, involving 64,613 software engineers, accuses Google, Apple, Adobe and Intel of informal collusion not to hire away each others' employees. The engineers themselves maintain that this cost them earning power up to a total of some $3 billion. No one denies that such informal "no poaching" agreements were in place between these companies. At issue is what it cost.

But why do such agreements come into being in the first place? It's alleged that the idea came into practice when George Lucas sold what was to be Pixar to Steve Jobs. The two men agreed not to poach each others' workers in order to avoid wage inflation which they believed neither could afford.

At heart, what's revealed in these arrangements is striking: a belief that, once you've hired someone, you have bought the power to control their future when they work for you -- even after they've quit. In other words, you own them.

Of course, the employees still fondly imagine themselves to be free agents. After all, isn't freedom supposed to be the compensation for insecure employment? But according to these deals, power remains entirely on the side of the employer who can determine who to hire, how long they stay and who they can work for after they're gone. To call this wage theft understates the case. It could be seen as career theft. In an industry that celebrates innovation and originality, this is an ancient idea with a poor pedigree.

More enlightened employers might think about this differently. When I hire someone, I hope that they will do a good job for me and also that I will prove a good boss. I would like to think that, working for me, their skills, talent and ambition will grow. I might -- or might not -- be able to contain that ambition and, if not, I would expect the individual to want to leave. I don't want to hire drones; I want to hire expansive, energetic people with drive. I certainly don't want people to stay because they have no choices.

When they go elsewhere -- whether to work for someone else or to start their own business -- my company's network and (I hope) reputation is enhanced. If my employees have had a great experience working for me, more people get to know that -- and more will head my way. Moreover, I now have alumni whom I can tap for talent too.

In other words, any business leader is, and ought to expect to be, an impresario -- identifying, nurturing talent and building a rich, responsive network of gifted people around the world. Not only do employees spread the reputation of a great boss; they also build the knowledge network into which each boss can tap. It's reciprocal -- or ought to be.

That mindset, however, sees employees as equals and as assets, not as widgets or chips to be played in a game. And that, at heart, is what lies beneath the class action suit -- the question as to whether employees and employers are partners or master and slave. It seems a bizarre question to be debating in 2014.

As long as employers believe in their dominance, they will send talent out of their companies. Consider the founders of Twitter. They left Google before their options vested not because they were poached and not because setting up their own business was the only way to escape anti-poaching agreements; they left because they sought their freedom.

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Margaret Heffernan's book on competition and collaboration, A Bigger Prizw , is out now.