Curb Your Employees' Freedom Of Movement And You Curb Innovation writes, Enrique Dans

if people choose to stay within a company it should be because they want to, not because they can’t go elsewhere.

Silicon Valley’s capacity for constant innovation is usually put down to an ecosystem that includes top universities, an ability to attract the best and the brightest, offering them an appealing lifestyle, along with companies able to convert all these ingredients into new products and services that the world wants. It’s proved very difficult to replicate in other places, in large part because Silicon Valley is the result of a careful balance of those ingredients: tampering with them can actually curb innovation.

The recent court ruling requiring companies like Google, Intel and Apple to pay some 64,000 employees more than $400 million as part of a class action law suit brought against those companies for the no-poaching agreement they had established between them, brings to mind an earlier ruling banning non-complete clauses in the same state: if you work for a company in California and decide to leave for whatever reason, that company is forbidden by law to try stopping you from going to another firm or from setting up your own, even if it is in direct competition to your former employer.

Both situations are about employers trying to put their interests over those of their employees. In the first case, by artificially distorting the market: talented employees are prevented from taking advantage of offers of better pay and conditions from other companies, effectively meaning that they must stay where they are. In the case of con-compete agreements between companies, it’s not just about employees being unable to do what they want to do or what they do best: society loses out because innovation is being restricted.

Innovative ecosystems depend on people, and protecting their rights over those of business is essential to maintaining the delicate balance that allows talent to innovate. But it’s also true that power tends to favor large organizations over individuals. At the same time, innovation depends not only on individuals’ ability, but on their belief that they are not going to be ripped off by the system, and, that they have clear incentives to continue developing their skills, and that the market will reward them, whether they work for themselves or otherwise.

In California, if you have an idea and the talent to develop it, you know there are plenty of companies close by you can go to. Equally importantly, you need to know that if, for whatever reason, you’re not happy in that company and another comes along with a better offer, or if you decide that you’d rather work for yourself, that there are any number of venture capitalists on hand prepared to talk to you.

The decisions made by California’s courts make the state different to other places precisely because they reflect an interest in attracting and supporting innovative talent so that, despite the huge negotiating power of the big companies, people can feel that their talent is highlighted. On the one hand, it’s about protecting workers, on the other, it’s about making business see that if it wants to hold onto its workforce, it needs to offer real incentives, such as treating them well, providing them with an environment they will want to stay in, and of course paying them in accordance with their talent, rather than hiding behind obscure laws that restrict people’s options. In short,  if people choose to stay within a company it should be because they want to, not because they can’t go elsewhere.

Forcing a collection of companies to pay a few tens of thousands of workers with the equivalent of something like $6,500 each is an interesting move: and while it may not have much impact on those companies’ bottom lines, it could prove fundamental in continuing to make the technology environment attractive to innovators and entrepreneurs. But above all, it can teach us a lot about these two factors. In a truly innovative company, people want to stay because they feel comfortable and can express their talent better than in other places, not because they are being held hostage.

As Sting used to say, “if you love somebody, set them free.” Does your company try to hold on to talent through restrictive practices, trying to close the door by any means to avoid people leaving? Or does it instead try to do so by creating the best working environment possible, making you feel comfortable? The environments created by these two opposing strategies are completely and radically different, as of course, are the results.

 Source: Forbes