Re:White House urges ban on non-compete agreements for many ...
by koheripbal on Wednesday October 26, 2016 @05:41PM
(#12800906)
Sales oriented companies derive a majority of their accounting book value from their client list. When a salesman leaves, they can solicit clients and thereby the value of the company can rapidly diminish. Fair is fair, right? What's best for the customer is best for the economy, right?
...well, now imagine an industry where sales oriented companies have essentially no stable book value. They cannot get loans securitized by the value of their book, and therefor cannot invest in growth or innovation. In the end it is a race to the bottom.
A reasonable balance exists whereby employees are bound by a 2-3 year non-compete clause that prevents them from stealing clients. Markets are still competitive within 2-3 years, and since everyone has these clauses, employee value is retained.
...well, now imagine an industry where sales oriented companies have essentially no stable book value. They cannot get loans securitized by the value of their book, and therefor cannot invest in growth or innovation. In the end it is a race to the bottom.
A reasonable balance exists whereby employees are bound by a 2-3 year non-compete clause that prevents them from stealing clients. Markets are still competitive within 2-3 years, and since everyone has these clauses, employee value is retained.