Do Non-Competes Stifle Performance?

Posted by Benjamin I. Fink on

In addition to keeping our readers up to date on recent case law and legislative developments in Georgia and elsewhere with respect to non-compete and trade secret issues, we also try to occasionally address the business and policy implications of non-competes in this blog.  To that end, a recent article in theHarvard Business Review caught my attention.  In the article, the authors, On Amir and Orly Lobel, conclude based on research they have done that “subjects in simulated noncompete conditions showed significantly less motivation and got worse results on effort-based tasks.”  The authors conclude that “limits on future employment not only dim workers external prospects, but also decrease their perceived ownership of their jobs, sapping their desire to exert themselves and develop their skills.”  The authors further conclude the drop in performance that results from this de-motivation may be more damaging to companies than the actual loss of the employees would be. 

While it is difficult to say whether the conclusion reached by these researchers would apply to all employees who are subject to non-compete agreements, this is something that should be considered when making the decision whether to use non-compete agreements in your business.

Here is a link to the complete article:  http://hbr.org/2014/01/how-noncompetes-stifle-performance/ar/1.