The FTC noncompete ban means companies need to totally rethink their people strategy: ‘You’ve got to convince employees to stay’
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The Federal Trade Commission’s ban of noncompete agreements earlier this week was a shot heard by employers across the country. The ruling, if it survives legal challenges, will void the clause that prohibits an estimated 30 million working Americans from seeking employment among competitors.
Legal and workplace experts I spoke with say they’re expecting companies to unleash a tidal wave of other legal safeguards, including nondisclosure and nonsolicit agreements, in an attempt to make up for losing the noncompete clause. But they added that an overlooked factor in mitigating the risk of staff departures isn’t quite so legal minded: revamping people strategy is essential to retaining employees. With less control over the flow of workers, management will have to think of new ways to convince their staff to stay.
“Whether it's with engineers or scientists, those people aren't getting poached every single day. They got poached when they've either reached the end of the line at a company, have a pay dispute, are not treated well, or a larger equity opportunity comes up,” Peter Rahbar, an employment attorney and workplace expert, tells Fortune.
Jennifer Tosti-Kharas, a professor of organizational behavior at Babson College, says that listening to workers' demands will be instrumental in moving forward. She adds that rather than just higher salaries, workers often want benefits like flexible schedules, opportunities for promotions, and a positive work culture.
“[Employees] are saying, ‘I really want more flexibility and autonomy,’” Tosti-Kharas says. “It could be things like continuing education and professional development. Because, increasingly, you've got to convince employees to stay.”
It’s too early to tell for sure, but the FTC noncompete ban may act as a catalyst for companies to focus more on employee well-being. If workers have the resources and support from their bosses to flourish within an organization, they’re more likely to stay, and concerns of top talent job hopping to rivals and sharing trade secrets goes out the window.
“The dream for companies who are facing a war for [talent], is that you have employees who are good enough to get hired anywhere, but they choose to stay at your company,” she says.
You can read more about how employers are responding to the FTC’s noncompete ban here.
Emma Burleigh
emma.burleigh@fortune.com
This story was originally featured on Fortune.com
