When Workers Sign Non-Compete Agreements, No One Benefits

On the surface, it seems like common sense: keep your employees from taking what you’ve taught them and bringing it to your competition by making them sign non-compete agreements. Logical, right?

Not so fast.

Every analysis of this burgeoning practice is showing that not only is this a terrible thing to inflict on workers—who are ensnared in a kind of servitude where they must stay with a bad job or risk leaving their profession entirely—but it destroys innovation, economic growth and entrepreneurship.

Employment and labor law Professor Orly Lobel of the University of San Diego School of Law wrote in today’s New York Times just what non-compete clauses really mean to the burgeoning ranks of the 30 million employees who have signed them. According to Lobel, instead of just requiring non-competes from the top echelon of employees, now one in six workers without a college degree are also forced to sign them. “By including them in employee contracts, employers can use the threat of litigation to constrict wages and employee mobility,” she says.

The effect this has on the workplace can’t be underestimated. Psychologically healthy, safe and fair workplaces don’t shackle employees’ ability to freely leave their jobs for better wages and benefits, to advance a career, or to accrue working capital. Parents are especially penalized when they can’t move to a state that doesn’t enforce non-competes because of the need to live near family, their children’s education or their spouse’s employment.

For the clearest proof as to how non-competes hurt industry, Sobel cites the example of California and Massachusetts, both of which benefited from an early boom in high-technology. California, which does not enforce non-competes, is now a thriving hub of tech innovation. Massachusetts on the other hand, which enforces them, had its tech boom die out. If employees wanted to stay in the industry they had to leave the state—much to the state’s detriment.

In From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire I discuss how psychologically healthy, safe and fair workplaces are fertile breeding grounds for creativity, innovation and productivity. If you want the exact opposite of all these things, introduce a non-compete agreement. But beware. The employee you exploit the most may wind up being yourself.

Photo credit: BIGSTOCK

Why Do the Big Tech Companies Drive Away Women and Minorities?

There are toxic workplaces and then there are toxic workplaces in the tech industry. Up until now the evidence was heavily anecdotal. There was the female employee who revealed sexual harassment at Uber, followed by the heart-wrenching tragedy of the African-American engineer at Uber who took his own life as the stress became unmanageable. There is the gay employee taking on the Omnicom Group for horrific abuse and the well-known story of Ellen Pao, whose gender discrimination suit made national news.

At last we have some data to support the chorus of diverse voices begging us to pay attention to the working conditions they’ve been forced to endure. The Kapor Center for Social Impact and Harris Poll just conducted a study to explore the reasons why people leave tech companies. What they discovered was that the outpouring of first-person stories of sexual harassment, gender discrimination, bullying and racial bias is borne out by the numbers: eight in 10 employees who left tech said they did so due to unfair behavior or treatment.  Eighty-five percent observed such behavior and 37 percent left their jobs because of it.

Women experience and observed far more toxic behavior than men, with women of color being most likely to be passed over for promotion. In addition, LGBT employees endured the most bullying and public humiliation leading to the decision by 64 percent to leave their company.

Given that employee retention problems due to toxic workplaces are costing $16 billion a year, one would think that the tech companies would use their brain power to work harder at a solution. However, Facebook, whom we recently praised for its new policy about gender-diverse legal teams, has been cited in the Wall Street Journal for its hidden biases against female engineers. Perhaps Cheryl Sandberg might want to figure out how to help her company lean in. Right now it’s not getting the job done.

Andrew Faas is the author of From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire.

Illustration credit: Womena/greenlining.org

The Majority of Organizational Leaders Don’t Care About Ethics

In his book, The Golden Passport: Harvard Business School, the Limits of Capitalism, and the Moral Failure of the MBA Elite (HarperBusiness; April 2017), Duff McDonald outlines how professors at the Harvard Business School sold their soul to Wall Street by abandoning a 75-year-old philosophy articulated in 1951 by John D. Rockefeller: “The job of management is to maintain an equitable and working balance among the claims of the various directly affected interest groups...stockholders, employees, customers, and the public at large.”

Harvard fell under the influence of former University of Rochester Professor Michael Jensen in the 1980s. Jensen wrote a paper that laid the groundwork a seismic shift in philosophy to the economic theory that shareholders must always be first, insisting that institutional investors and Wall Streeters be released from “the obligation of considering anything but their own narrow wants and needs” according to Newsweek article by McDonald. By 1985 Harvard invited Jensen to join their faculty.

In 2003, Harvard created its Leadership and Corporate Accountability course. McDonald doesn't buy it, I don't buy it, nor should you buy it. McDonald references a New York Times interview where Jensen responded to a question on ethics with, “But I admit, we scholars don't yet know the real answer on how to make this happen."

McDonald succinctly retorts, "That's called ethics, and Jensen is right: Harvard Business School doesn't know how to teach ethics as well as it knows how to teach financial engineering, and it never will."

The propagation of Harvard’s teachings has long tendrils. In my book From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire. I point out, "Rarely a day goes by when there is not a story in the media about abuse of power, inappropriate behavior, corruption and greed on the part of leadership in every segment of our society, worldwide. Whether it is business, industry, government, education, sport, media, social services, military, police, entertainment, not-for-profit or religion, not one is immune.”

The effects of the Harvard Business School philosophy reach to the highest office in the land. In a recent Financial Times article, “Complacency will eat the heart out of Whole Foods,” writer Andrew Hill cites Donald Trump’s recent encounter with the Associated Press. "Is there anything from your business background that isn't applicable to the job of president?” the correspondent asks.

“Well, in business, you don't necessarily need heart, whereas here, almost everything affects people,” Trump says, then adds: “In fact, in business you’re actually better off without it."

And the hits keep coming. Last week, in a note to shareholders of American Airlines about the decision to give pay increases to pilots and flight attendants who were paid less than the industry standard, Citi analyst Kevin Crissey wrote, “This is frustrating. Labor is being paid first again. Shareholders get leftovers.”  This Wall Street idiot just reinforced the results of Harvard selling its soul with his disregard for all stakeholders other than the shareholder.

As I discussed yesterday, in a study conducted by Mental Health America sponsored by the Faas Foundation, an astounding 69 percent of more than 17,000 people surveyed admitted to speaking poorly about their organizations to others. Given what this legion of Harvard Business School graduates have done to capitalism, is any surprise?

Those Who Rely on Whistleblower Hotlines are Fools

Reports about the effectiveness of harassment hotlines are leaving me cold. In a recent Letter to the Editor of the New York Times, an attorney who formerly worked with the Labor Department’s Whistleblower Advisory Committee stated that hotline reporting went up 8 percent in 2016 and the average length of resolution dropped from 46 to 42 days. While I have the deepest respect for this individual and the work he does, he’s sadly misinformed.

I have also worked with a number of organizations on ethical issues and have done a fair amount of research in the field, which have led to two books on workplace dynamics—the most recent one being From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire. My research has shown that most employees do not trust hotlines and other mechanisms to report workplace wrongdoing. There’s a good reason for this. Take the example of Michael J. Lutz who reported an impropriety he spotted in his work as an accounting specialist at the Radian Group. The company scheduled an investigation and concluded that he was wrong and everything was proper. Frustrated, Lutz reached out to the internal compliance hotline—and one of his superiors found out and retaliated and started to force him out of the company. That’s when he contacted the Securities and Exchange Commission, which is supposed to be the whistleblower’s advocate. In spite of having solid evidence of the retaliation, nothing happened.

Ironically, one of his tasks was to make sure that internal accounting controls were in proper compliance to avoid the strict penalties that resulted from the Enron-era legislation. When he was ousted, Radian hired an outside accounting firm to prove that they were in compliance. The firm? KPMG—the Big Four accounting firm whose improprieties I recently wrote about.

Clearly, business leaders aren’t hearing what employees have to tell them on every level. In a study conducted by Mental Health America sponsored by the Faas Foundation, an astounding 69 percent of more than 17,000 people surveyed admitted to speaking poorly about their organization to others. And yet, as in the case of Bill O’Reilly, leaders continue to insist that no one had a problem because there were no complaints to the whistleblower hotline.

Boards of Directors and senior executive often tout their policies, programs and HR departments as proof that they have a value-based, inclusive, safe and fair workplace culture that includes freedom of expression. My research says otherwise. Top management still isn’t listening, making all of their mechanisms for reporting misbehavior nothing more than legal shields. Even more disturbing, my research shows they don’t want to hear what they need to hear.

Illustration credit: Dilbert by Scott Adams

Suicide at Uber: Is this Tantamount to Murder or Manslaughter?

Before he went to work for Uber, Joseph Thomas was described as “the smartest guy in the room,” a hard-driving and ambitious engineer with a warm heart who gave up a job at Apple to work for Uber. But according to the San Francisco Chronicle, after he started working at the ride-share company, he began to change.

His family told reporter Carolyn Said that he began to struggle for the first time. He was working long hours under acute stress and frightened he’d lose his job. Then the panic attacks began, along with constant anxiety and lack of mental focus. Visits to a psychiatrist didn’t help, nor did pleas that he quit Uber. His wife reported that his personality changed and he kept insisting that he couldn’t do anything right. Thomas was one of the less than 1 percent of African-American managers at the company and given previous reports of bullying and harassment, it is very likely that racism played a role in his decline.

In August 2016 Joseph Thomas took his own life. He left behind a wife and two young sons who are being denied a worker’s compensation claim because he had only worked for the company for five months. His wife is looking to hold Uber accountable for Joseph’s mental decline. “If you put a hard-driving person on unrealistic tasks, it puts them in failure mode. It makes them burn themselves out; like driving a Lamborghini in first gear,” Thomas’ father told the Chronicle.

I’ve written a lot about suicide brought on by bullying at work, and given the 120,000 annual deaths attributable to workplace stress according to a joint study at Harvard Business School, it’s not a surprise that not enough is being done to address the cause of this terrible epidemic. I devoted an entire section of my book, From Bully to Bull’s-Eye: Move Your Organization Out of the Line of Fire to preventing this sort of tragedy. The Faas Foundation has been working to address the issue of mental health in the workplace with Mental Health America with the same goal.

It is eminently clear that the toxic workplace culture at Uber is having a horrendous impact on its people. In February I wrote about how a former female employee of Uber was driven out by sexual harassment that human resources did nothing to stop. It’s gotten so bad that two of the company’s original investors penned an open letter to the board about the egregious culture of the place.

If it is found that the toxic environment was the main factor in Thomas’ suicide, Uber must be held accountable for what is tantamount to murder—or at least manslaughter.  

Photo credit: Contract Magazine

Trump: Which One is He?

Yesterday I wrote about the paper-thin speech that Donald Trump delivered on Monday to commemorate the Jewish observance of Holocaust Remembrance Day. Trump tries to present himself as Churchillian, but as someone who studies Winston Churchill I have to paraphrase the late U.S. Sen. Lloyd Bentsen and say, “Mr. Trump, you are no Winston Churchill.”

There are many ugly things that the well-crafted veneer of Trump’s speech tried to cover. I’m reminded of a claim by his first wife, Ivana, who said that Donald used to keep a copy of My New Order by Adolph Hitler on his bedside table. There is, of course, the continued employment of Steve Bannon and Sebastian Gorka in his inner circle—not to mention noted racist Jeff Sessions as attorney general.

But most damning is his silence on Chechnya. It is true that Nikki Haley, American ambassador to the United Nations, issued a statement saying in part, “We are against all forms of discrimination, including against people based on sexual orientation.”  Like Trump’s speech, these are nicely crafted words, but without action they signify nothing. For those who are unaware, there are reports out of Chechnya that gay men are being arbitrarily detained and killed after requesting permission to hold gay pride parades. The Russian government denies these reports and Chechen leaders insist if anyone was gay their own families would have already killed them.

These horrifying reports and denials are all too reminiscent of the heroes who tried to get word out about the Holocaust and the implementation of Hitler’s “Final Solution.” Not only were reports denied, but there were those who knew them to be true and turned their back anyway, most notably President Franklin D. Roosevelt. However, Trump doesn’t even rise to that standard—at least Roosevelt, who was also raised with a silver spoon, put country before self.

It’s clear that Trump’s promise of “never again” is just a slogan meant to placate his daughter and son-in-law and Jewish donors. He’s totally missed the point of why we reopen such terribly painful wounds each year to remember the Holocaust and its martyrs—to try to prevent such tragedies from reoccurring. This is why we must continue to resist. As Lutheran pastor and theologian Martin Niemöller reminded us in 1946:

First they came for the Socialists, and I did not speak out—

Because I was not a Socialist.

Then they came for the Trade Unionists, and I did not speak out—

Because I was not a Trade Unionist.

Then they came for the Jews, and I did not speak out—

Because I was not a Jew.

Then they came for me—and there was no one left to speak for me.

Photo credit: The Churchill Project/Hillsdale College

Trump Honors Holocaust Survivors with Words, Not Actions

There were memorials around the world on Monday for the Jewish observance of Holocaust Remembrance Day, also known in Hebrew as Yom HaShoah. In Israel, two minutes of silence are observed at 10 a.m. when an air raid siren sounds and everyone stops whatever they’re doing. It’s quite a sight to see cars stop in the middle of the freeway as their drivers get out to stand in silent tribute to the six million who were murdered. As the son of two people who fought in the Dutch underground during World War II, I find this silent observance moving.

Not silent on Jewish issues for once was Donald Trump, who delivered a speech at the U.S. Holocaust Memorial Museum in Washington, DC. The speech had many fine attributes, but we would be right to be skeptical. Too much of what comes out of his mouth is untruthful, insincere and self-serving. To promise to protect our Jewish citizens after months of dismissal and the continued employ of known anti-Semites Steven Bannon and Sebastian Gorka, seems disingenuous. Nor does he support the cause of preventing anyone else from suffering the fate of the Jews, Romani, homosexuals and other victims of the Nazis. His reaction to the most recent judicial rulings on sanctuary cities and his lack of action against the horrific purging of gay men in Chechnya makes his rhetoric of “never again” ring hollow.

Perhaps Steven Goldstein, executive director of the Anne Frank Center for Mutual Respect put it best in his “report card” on Trump’s speech:

Anne Frank Center for Mutual Respect’s

REPORT CARD
on the President’s Holocaust Remembrance speech today

Overall: C-

Commentary below by Steven Goldstein, Executive Director of the Anne Frank Center for Mutual Respect.

1.     Recognition of the Holocaust as a Jewish genocide. Grade A.
The president gave the clearest speech of his presidency in discussing the impact of the Holocaust on the Jewish people, a sharp contrast with his administration’s repeated refusal to include Jews on International Holocaust Remembrance Day.

2.     Recognition of the rise of #Antisemitism in America. Grade C.
The president acknowledged the rise more than he has in any past speech. But he refrained from pointing out that Antisemitism on his watch has increased dramatically – by 86 percent in 2017, according to the ADL. He also did nothing to address the presence in his Administration of Steve Bannon and Sebastian Gorka, both with Antisemitic pasts.

3.     A plan to stop Antisemitism and other hate. Grade D.
The president mentioned his resolve to stop the Antisemitism, but he offered no plan. Organizations including the Anne Frank Center for Mutual Respect have presented the president various plans to address Antisemitism and other hate. The president missed a golden opportunity today. #NeverAgain is not just a slogan about the past, but a call to action for the future.

4.     A vow to learn from history by not repeating President Franklin Roosevelt's tragic mistake in denying refugees entrance into the United States. Grade F.
The president said nothing. Who will be the next Anne Frank to die among the refugees his plan would deny entrance into the United States?

Photo credit: Newsweek/Reuters

Let the Buyer Beware: Law Firm Needs to Check Sexism Accusations

There is a trend in industry toward retaining legal counsel that is committed to inclusion and diversity. I recently wrote about how Facebook now requires its outside legal representatives to include women and minorities in 33 percent of their legal teams. Facebook isn’t alone in this—HP and MetLife have created similar rules. Perhaps legal powerhouse Norton Rose Fullbright should take this into consideration before acquiring the law firm of Chadbourne & Parke. Kerrie L. Campbell, the single remaining female partner at Chadbourne & Parke has just been voted out of the firm, which she says in retaliation for her lawsuit alleging that female partners are paid less and given fewer opportunities.

It certainly seems curious that of the five female partners from among 70, two have left the firm and the two remaining female partners have joined Campbell’s law suit. In my opinion, this is a red flag for Norton Rose Fullbright who should have done their due diligence before the merger.

In order to advance the cause of equality, workplace equity activists could take a lesson from the advertisers who left The O’Reilly Factor. By reaching out to clients like Facebook and HP and asking them to make their position on gender discrimination and pay inequity known to both firms, they may be able to hold the law firms accountable for fair practice. 

Photo credit: BIGSTOCK

The Customer isn’t Always Right

Airlines have been coming under scrutiny lately, with the latest incident happening on board an American Airline flight. In this instance, an airline attendant attempted to take a passenger’s stroller to check it into the cargo hold. According to the rules listed on American Airlines’ website, each ticketed customer is allowed one small, collapsible stroller, which must be checked at the gate. Strollers are too big for the overhead and could become a dangerous obstacle if not secured.

However, on this particular flight from San Francisco to Dallas, fellow passengers report that the passenger was reluctant to part with the stroller and when a male flight attendant jerked it out of her hands, he narrowly missed hitting the baby. The woman began to cry and a male passenger stood up and threatened the attendant. Eventually, the airline escorted the woman and her children off the plane and later upgraded her to first class. The attendant was removed from duty. The belligerent would-be hero remained on board.

I’ve spent the majority of my career in retail management and I always made it a motto with my employees to “treat employees the way you’d like them to treat customers.” That doesn’t mean that customers are always easy—some can be rude, abusive and manipulative—and airlines get more than their share. But when I reached out to two American Airline employees to try to understand their workplace culture, I was told that they’re ingrained with the motto, “the customer is always right” and to “inform” rather than “enforce” rules.

The enforcer in any situation is supposed to be the pilot, who is the final word aboard the plane, much the way ship captains were back in the day. However, on the video the captain just stands there and watches and doesn’t seem to intervene.

I feel that this is completely unfair to the flight attendants. Their job isn’t just passenger comfort—it’s passenger safety. They’re charged with making sure that everyone aboard arrives at their destination alive and safe. This is a case where it should be imperative at times for the customer NOT to be right, when the security of all on board must come before comfort and convenience.

Given that, the fact that American Airlines is punishing this employee for trying to do his job is unwarranted. Since I wasn’t there I can’t comment on his interaction with the passenger, but the fact that he was trying to keep everyone safe meant he was doing his job. If you can’t support your employees in that circumstance it means that you don’t stand by your values.  

Photo credit: NBC News

Bill O’Reilly Dismissal No Reason to Claim Victory

Hold the applause, please. The dismissal this week of the host of The O’Reilly Factor from Fox News is no reason to cheer. Before activists claim victory, consider this—21st Century Fox owner Rupert Murdoch has known for years that Bill O’Reilly was a serial predator, as was former CEO Roger Ailes. After Ailes was forced to leave, promises to fix the culture at Fox was followed by a renewal of O’Reilly’s contract. So when articles such as this one in the New York Times express surprise that O’Reilly was shown the door so fast after the revelation that he had paid nearly $13 million to settle sexual harassment claims, all I can say is—give me a break! There were years of allegations and the “punishment” includes a $25 million severance.

The firing of O’Reilly has done little to nothing to reassure women that reporting harassment will be treated properly. Powerful men continue to cover up each other’s misbehavior. As former Fox News co-host Alisyn Camerota told the New York Times: “It was Roger Ailes’ fiefdom. He was the king. There was no higher authority that you could ever go to and there was harassment. And I tried, in my own way, to raise the flag and to talk to people about it. I went to my superiors to talk to them about it and there was certainly a feeling of ‘this is Roger, what are you going to do? Who are you going to go to?’ ”

Fox has shown repeatedly that it couldn’t care less about women in the workplace, or about the company’s toxic culture. All they care about is money—which is clearly the motivating factor behind the dismissal after some 50 advertisers withheld their commercials from The O’Reilly Factor. As I have indicated many times, Fox should not be in the business of reporting the news, especially where they are supposed to be exposing wrongdoing. They are entirely hypocritical, and therefore have no credibility.

Illustration credit: Steve Sack/The Minneapolis Star Tribune