The Art of Breaking Non-Solicitations to Recruit: Lessons from Mastercard vs Nike...

I see you.

You think you're cute when you change companies.  But I know the truth.  

It's like one of my favorite scenes from Fight Club, where Ed Norton (known as the Narrator) meets Tyler Durden for the first time, and Tyler reacts to Norton talking about his single-serving friends on the road: Clever

Narrator: Tyler, you are by far the most interesting single-serving friend I've ever met... see I have this thing: everything on a plane is single-serving... 
Tyler Durden: Oh I get it, it's very clever. 
Narrator: Thank you. 
Tyler Durden: How's that working out for you? 
Narrator: What? 
Tyler Durden: Being clever. 
Narrator: Great. 
Tyler Durden: Keep it up then... Right up.  

You think you're clever when you change companies and in order to not violate your signed non-solicitation agreement, you tell someone else in your new company who the best people are that they should recruit.  Hell, if those people just elect to apply, how could you be held accountable, right?

Well, my friends, it's all just a mirage.  The only protection you have in that circumstance related to non-solicitation agreements you signed is avoiding pissing someone off. 

Recently, Nike pissed Mastercard off, and it undoubtedly will have some ramifications in big companies you work for.  More from Venture Beat:

"MasterCard’s decision to go to federal court last week and sue Nike for $5 million because it hired away several IT security people may force the courts to remap the boundaries of corporate recruiting.

At issue are so-called non-solicitation agreements, which are routinely included today in hiring letters. These agreements try to prohibit someone from recruiting fellow employees when they leave the company.

In the MasterCard case, some former employees left to join Nike and help improve its security operations. The rub involves what constitutes “recruiting” and, most critically, how one defines “indirect recruiting,” which is what the MasterCard letter banned.

The topic gets complicated when it’s not an issue of the executive calling former colleagues and asking them to join, nor when it involves instructing someone else to make such calls on his behalf. (Those are clearly banned under non-solicitation agreements.) The issue is when the action is limited to telling a new boss about who some of the best security talent in the industry is — and offering general ranges of salary needed to attract such talent.

Does such behavior constitute indirect recruiting? And if so, is it practical to try and prohibit such behavior?

One thing I learned a long time ago related to non-competes and non-solicitations is that you can think they don't apply all you want, but at the end of the day, if a big company with money to spend wants to go after you, they can make your life hell and at some point, the adults in the company come in and say, "what the hell went on here?"

More from the MasterCard/Nike rumble:

"The lawsuit that MasterCard filed (.pdf) was vague as to exactly how the former MasterCard executives were supposed to have recruited their former colleagues. (Nike has yet to respond in court, but it told the Wall Street Journal yesterday that it regards the lawsuit as “without merit.”) Those execs — William E. Dennings, former MasterCard Chief Information Security Officer (CISO), and Ryan Fusselman, former senior business leader at the payment card company’s IS department, “in charge of security engineering” — apparently recruited at least one employee through LinkedIn, the filing said, but it’s unclear if it was a generic message sent to all of the execs’ LinkedIn followers or something much more specific.

The lawsuit said that Nike hired “at least seven additional” MasterCard managers or employees, beyond Dennings and Fusselman, within six months, all to build out Nike’s security IT department.

In an apparent attempt to suggest that the two former execs knew they were doing something wrong, the filing said that employees were asked to lie to MasterCard about why they were quitting.

An example of the lies told to MasterCard, according to MasterCard? One employee “claimed that she was resigning to relax and to focus on her family and health.” Fusselman himself said, according to the lawsuit, “that he was accepting a job with an aerospace company in California.”-solicitation agreements altogether."

So go ahead and say that those non-competes and non-solicitation agreements aren't worth the paper they're printed on.

You're right, until you try to get clever and you piss someone off with power and budget to do something about it.

At which point someone in your company will ask you: "How's that working out for you?"  (what?)  "Being Clever.


When The Talent That Works for You Has Their Own Side Projects...

It's complicated.  End of story.  I don't have a solution.  Sometimes people who work for you are going to have side businesses they're trying to build.  Who owns the product if they work on it during the day?  How much of that do you allow if you're getting great results from the person and you don't want to chase them away?

Better buckle up cowboy.  If you don't address it, you're heading for a train wreck.  If you do get in front of it and start some dialog around it, you're causing a train wreck.  

Which is to ask the following related to side projects outside your business your employees work on:  When would you like the train wreck to happen?

On my mind related to to the following snippet from a Business Insider profile of Kevin Rose, founder of Digg:

"Bored with Digg, he began working on a number of side projects—some of which gained some serious traction. The members of Digg's board, who wanted the savvy Rose around to help run the company he cofounded, were livid.

In summer 2007, Rose began working on a "secret" startup that would go on to become Pownce, a file-sharing application that presaged Dropbox. Digg's board insisted that Digg shareholders should have a piece of Pownce, given that Digg's founder and a top designer, Daniel Burka, were working on the project.

This was not helping morale at Digg, and that led the board to tell Rose he wasn't allowed to have any more side projects. Rose's design abilities were obviously a key asset to Digg. But if he was going to be this distracted, Digg would be better off finding someone else.

Rose took even more money off the table when Digg raised $29 million in its third round of funding in 2008, according to one colleague—with Adelson's approval.  "Adelson counseled us, saying, if you are offered those kinds of deals, you should take them because it's a great way to mitigate your risk," a colleague said.

But if Rose started another side gig, the board threatened to fire him, according to one colleague.  That didn't stick. Rose decided to begin work on WeFollow, a Twitter directory, in early 2009 without telling anyone. He unveiled WeFollow at the South By Southwest conference in 2009.

Once again, Digg's board was pissed, and asked Adelson to fire Rose, but Rose and Adelson had negotiated a mutual protective clause. Neither could be fired without the other's consent."

When do you want to the train wreck to happen?  Go read the whole article, lots of talent lessons in there....


SLIDESHOW: The 5 Hiring Biases Most Managers Display - And They're All Legal...

It's official - your hiring managers are the worst you've ever seen.  Full of bias, they make hiring decisions for all the wrong reasons.

Don't believe me? Methinks you've just settled into complacency, then.  You've got your big protected classes that are covered by Title 7, then you've got all the polluted biases your managers bring the table that aren't covered by anything.

Check out the slide below from a webinar Tim Sackett and I did a year or so ago.

I posted yesterday about CEOs of startups hiring young, blonde females for HR leadership roles.  It wasn't my ideal, but I had enough email coming back at me that I wanted to share the slides below again.  Whether it's attractiveness, height, weight, alma matter or likeability, bias (and legal bias at that) is in play at your company.

The real question - do attractive, tall, thin, likeable people really get more done because of those factors, or do they represent hiring misses when the knowledge, skills and abilities aren't there to back those factors up?

The answer to that question is more complex than most of us would like to believe.

(email subscribers click through for slideshow)


Our New Employee Handbook: THE KINETIX CODE...

My last post was a link to "The CYA Report", my podcast where I usually bring in my trusted friend and resident HR ****-stirrer Tim Sackett to help me wax poetic about an issue of note and interview someone from the wide world of HR.  Good times.

On the last podcast, we interviewed Tom O’Dea, co-founder of Rocket Whale and the employee handbook platform called Blissbook.  

If you want to see the latest version of our employee handbook at Kinetix, click on this link to see the handbook we call "The Kinetix Code".  It's an interesting take and while I wrote a good bit of the copy, we had a pretty good team of 3-4 people at Kinetix that really drove the look and the feel of the project.  I think they did a great job.

Click here to see "The Kinetix Code"... (picture appears below, but it doesn't do it justice since the handbook is interactive in nature)

Screen Shot 2013-12-16 at 12.47.44 PM


The Common Sense Solution to Unpaid Internships...

So common sense it will never happen, mind you.

Cue the big budget movie voice-over voice: "In a world where the FLSA has deemed that the only unpaid internship that can exist is one where the intern in question can't actually be exposed to real work, a challenge has risen in the Southeast..."

Here's your common sense solution to unpaid internships.  Rather than write bad guidance (only Interns internships that don't include real work can be unpaid) and keep people guessing on whether they're going to get sued or not, write into law the following regulations on interns, which are pro-business and pro labor:

1. There will be such a thing as unpaid internships.

2. Create a classification similar to non-exempt and exempt for interns.

3. Create a schedule based on company size (either revenue or number of employees) that shows exactly how many unpaid internships a company can have.  Example - a company can have 1 unpaid internship a year lasting for 12 weeks for every 500 employees in the company.  Make the number less than the estimated number of unpaid internships that go on now, but still pro-business.

4. Establish a hefty fine that will be charged to a company for every unpaid internship uncovered beyond what is legally allowed - something like 20K.

5. End crazy ### language that says a company can have unpaid internships as long as they don't perform real work, which is the type of guidance you get when you don't solve the problem.  The only unpaid internships that can exist fall under the guidance above - no other exceptions.

5. Let all the other labor law guide everything else from an employment perspective.

Want to know why that would work?  Because you are legally defining what's acceptable from an unpaid internship perspective, and you're allowing the unpaid interns who fall under this guidance to actually do real work and get real benefit from it.  You're also protecting the labor side by attempting to close loopholes that create gray areas that don't make sense.

Let's make a certain number of unpaid internships legal and attractive.  Watch the competition for these spots if you went this route - it would be unbelievable, and it's actually something the government could do that would be incredibly career-development focused.

Imagine if you allowed every small business to have a 12 week internship that provided real work experience to college grads or people looking for experience in an industry.  

Why are we bullsh**ing about unpaid internships by talking vaguely about the type of work they can do?  Let's just limit the number that can exist and make it totally visible.


Chivas USA: When Your HR Manager Sues For Discrimination, You Might Want to Strap In...

When your HR Manager files discrimination charges after credible employees do, you know:

1. There was probably some validity to the orginal charges, 

2. You likely have a renegade executive doing whatever the hell they want, and 

3. FYI: You are hosed. H-O-S-E-D, I say.

Backstory- Chivas USA is a major league soccer franchise located in Los Angeles.  You've heard of the LA Galaxy with Beckham, right?  Chivas USA is in the same league.  They play in LA too.

Jorge Vergara, a former part owner, gained full control of the team in November 2012 and allegedly began harassing non-Latino employees. Vergara also owns a Mexican team called Chivas de Guadalajara, which is famous in part because it will not sign non-Mexican players.  The recent charges and a bunch of other coverage claims he wanted to bring his 100% Mexican playbook to Chivas USA, including youth feeder programs in addition to the professional club.  

Problem is, Chivas USA is located in...well, the USA.  Thus the name.  So a policy including 100% Mexican players is a bit of a problem.  

First, 2 coaches filed discrimination charges.  Read something I did over at Fistful of Talent for that rundown.  Ugly.

Then, the HR Manager files similar charges.  Oops. Ugly times 2.  More from the Daily Breeze with a h/t to Deadspin

"The suit charges that, starting in January, Chivas hired four coaches from Mexico even though they were not authorized to work in the United States. According to the suit, HR Manager Cynthia Craig was told to add the coaches to the payroll but she refused, and team executives instead routed them money through other means. (The complaint states the coaches received visas in April.)

Craig, who is black, said in court papers that she was harassed by team owner Jorge Vergara and team President Jose David because she was not Latino and could not speak Spanish. Craig left the team in July after a period of prolonged harassment, the complaint states.

Her suit also charges that, starting in January, Chivas hired four coaches from Mexico even though they were not authorized to work in the United States. According to the suit, Craig was told to add the coaches to the payroll but she refused, and team executives instead routed them money through other means. (The complaint states the coaches received visas in April.)

In her suit, Craig said Vergara began one of his first staff meetings speaking in Spanish and then said, in English, “If you didn’t understand what I just said, then it is time for you to get a job down the hall.” (Chivas shares the StubHub Center in Carson with the Los Angeles Galaxy, another professional soccer team.)"

When the HR Leader is filing charges against you, you probably need to put on your helmet and seatbelt.


Is Negative Recruiting Against Companies with a High Percentage of Gay Associates In Our Future?

There's obviously lots of movement in our society toward workplace equality for LGBT individuals, and this post isn't meant to be a debate on whether you agree or disagree with that.  With so much activity pointing to the fact that equality is going to be legally defined to a greater extent soon, this post is simply about one aspect of what might be coming with that future.

One fallout you might see from the change: Negative recruiting against companies/departments/teams/managers that are open LGBT-friendly may occur at the street-level of talent acquisition. Geno kim 

Why in the hell is this on my mind?  I recently saw a piece by ESPN's new ombudsman that led me to an old article from ESPN The Magazine talking about homophobia in women's sports.  Here's a taste:

"On every top recruit's college visit, there comes the moment of the final pitch, when the head-spinning hoopla finally gives way to the business of basketball, when the high school girl steps away from the rah-rah of all the games and the ego-stroking of all the VIP intros to sit down with the head coach. During one teen's big moment, a heart-to-heart with Iowa State's Bill Fennelly, the decorated coach of 23 years sang an insistent refrain. "He kept drilling that 'this would be a family,'" says the player, who asked not to be named. "'You should come here,' he said, 'because we're family-oriented.'"

To the recruit, those seemingly comforting words cloaked a deeper meaning. Two of the four schools she was considering were purported to employ lesbians on their staffs. Her stop in Ames, in fact, was on the heels of a trip to one of those allegedly "gay programs." There, coaches avoided discussing anyone's off-court lives. Iowa State, in contrast, pushed the personal hard. "They threw it out constantly," says the player, who became a Cyclone. "'Iowa has morals, and people who live here have values, wholesome values.'" The implication, to her and to another former Cyclone who confirmed her account, was that at other schools, "there's something going on you don't know."

Now before you go bashing Iowa as a whole, you should know that the state usually shows up on the LGBT-friendly chart related to equality legislation, so it's more about the program and less about the state.  But that illustrates a long term trend of negative recruiting on LGBT issues in women's college sports:

"Why, exactly, depends on whom you ask. Gay rights activists, coaches and players speak at length about what they see as a longtime and underhanded recruiting tactic in women's sports: Pitches emphasizing a program's family environment and implicit heterosexuality are often part of a consciously negative campaign targeted at another program's perceived sexual slant. In a survey of more than 50 current and former college players, as part of The Magazine's seven-month look at women's basketball recruiting, 55 percent answered "true" when asked if sexual orientation is an underlying topic of conversation with college recruiters."

You should go read the entire article, because it's pretty alarming and insightful at the same time.  The article goes on to talk about multiple situations, even going on to identify the reason two of women's basketball biggest programs (UConn and Tennessee) don't play each other is because one (UConn) deployed negative recruiting, accusing the other (Tennessee) of being a safe haven for lesbians.  

So back to the future. One reason negative recruiting on LGBT issues in corporate America won't happen is that as society finds acceptance to a greater degree, fewer people will care, and more will accept the concept indiviually.

But thinking there won't be a backlash of negative recruiting is probably idealistic at best.  After all, those that are fervently anti-gay have never really been faced with a society that openly accepted LGBT issues.  As that acceptance grows, you can expect those who are anti-LGBT equality to activate to a greater degree, and deploy negative recruiting behind the scenes - with coversations like the one outlined above as the low-risk, high impact way to engage.

I don't see negative recruiting in play at the enterprise/company level.  I do see it coming into play on a position by position, hiring manager by hiring manager basis as LGBTacceptance grows, and with Freedom of Religion as the backdrop, I can almost guarentee you that you'll see it in LGBT discrimination case defense strategies.  You can already see it, right?  

"I told the recruit that we have a family-oriented team and obviously we want someone who fits that."

Then, the defense wonders aloud why the defendant in question doens't have the right to talk about his religous beliefs?

Negative recruiting around LGBT issues - coming to a Supreme Court decision near you in 2020.


YOU MAKE THE CALL: Are You Responsible For Knowing That This Executive Hire Was About to File Bankruptcy?

Let's say you're leading a CEO Search for a company that does $48 Million in Revenue and prints $24 Million in Net Income annually.  Are you responsible for knowing the hire you made was in financial trouble?

Is that your responsibility?  Is that your business?  Would the Board of Directors expect that level of vetting?

A company recently missed along these lines, getting surprised by their CEO filing for bankruptcy just months after he was hired.  Whether you agree with it or not, I'm thinking there's no way the company makes the hire if they knew their candidate was carrying such heavy financial woes.  Here's the details of the CEO's situation, which are public record:

"_____ recently filed for Chapter 7 bankruptcy, and documents filed today in federal court show that he has only some $1.2 million in assets, compared to more than $25 million in liabilities. He's making $850,000 as part of his 10-month contract to _____, so it would appear ______has quite a long-term problem here.

He has just $300 in cash on hand and $500 in his checking account, the bankruptcy documents show.

_____ estimates the only real property he owns as worth $2,000 from a "1/4 interest in deceased parents real estate — 8 acres in Iona, Idaho worth $8,000.00 (total).

The latest court filing shows the extent of those difficulties. The biggest claim against him is $20 million from Terra Springs LLC, in Louisville. Republic Bank and King Southern Bank in Louisville claim $2 million and $902,000 respectively. American Express is claiming $10,810.

Chapter 7 bankruptcy is used to liquidate debts. Among the other assets ____ lists are: $5,000 in home furnishings, $2,500 in memorabilia rings and watches, $900 in books and pictures, $950 in clothing and accessories and $200 in golf clubs and a shotgun."

Hit me in the comments and tell me two things:  1) Was it the lead HR exec's responsibility to know this data about the candidate, and if they knew, should they have made the hire?

PS - the CEO in question is embattled Arkansas football coach John L Smith.  Click here for details.


Here's What an Anti-Employee Poaching Legal Letter Looks Like.. (With No Visible Case Behind It)

You know I'll rip something from the headlines anytime it makes sense.  Here's an anti-employee poaching from Groupon (daily deals provider) to a firm called Top Hat Monocle.  The jist of the argument here seems to be "you've recruited our Groupon salespeople, and now you're using our former Salespeople to poach more Groupon employees to your company."

Note the industry is non-competitive, so the non-compete doesn't apply, and they're not saying that.  They're saying that you hired Susie, and then you engaged Susie to call 5 of her friends at Groupon to join her at Top Hat.

Easy to say, hard to prove.  What's Groupon after here?  They'd like Top Hat to blink and stop hiring Groupon salespeople for awhile.  If you think non-competes are hard to enforce, try a non-solicitation.  Hard to prove.  Top Hat has a couple of choices based on the letter below:

1.  They can stop recruiting Groupon employees cold.  This is what Groupon wants.

2.  They can tell the Groupon employees they've hired that anyone interested in a job at Top Hat needs to apply directly.  Once they've applied, Top Hat is more free legally to have conversations with the former Groupon employees they've hired about the other Groupon folks who have applied, including asking them to help interview, follow up, etc.  "How did you learn about this opportunity?" is the key question here...

3.  They can keep doing what they're doing, which may be what Groupon suspects or it may be closer to what I described in #2.

What would you do?  Enjoy the legal eagle-ing.

Groupon's Letter to Top Hat Monocle


BIZZARO: The Obama Administration's NLRB Gives "Guidance" on Social Media Policy...

Wow.

That's all you can say.  Download the NLRB's recent guidance to it's Regional Directors on Social Media here

You can judge it overall on your own.  I'll give you one highlight (hat tip to Dan Schwartz) that shows how clueless appointees are to how things work in the real world.  Read it and weep:

"Sample Social Media policy cited: Use technology appropriately* * * * *If you enjoy blogging or using online social networking sites such as Facebook and YouTube, (otherwise known as Consumer Generated Media, or CGM) please note that there are guidelines to follow if you plan to mention [Employer] or your employment with [Employer] in these online vehicles. . . Don’t release confidential guest, team member or company information. . . .

What the NLRB said:  We found this section of the handbook to be unlawful.  Its instruction that employees not “release confidential guest, team member or company information” would reasonably be interpreted as prohibiting employees from discussing and disclosing information regarding their own conditions of employment, as well as the conditions of employment of employees other than themselves--activities that are clearly protected by Section 7."

And you wonder why production of all types is going offshore.  So, you're telling me that you would strike down as illegal any language that says confidential information can't be shared because of your view on conditions of employment?  Without attempting to clarify and parse further?

Right.  You have no clue on how companies actually work.  It's the kind of thing that makes a business-focused moderate like me decide that the Libertarian path doesn't look so bad.