Like all business owners, you strive to find and retain the best talent. From a business perspective, this approach makes sense. After all, recruitment and training costs can set any business back thousands of dollars. If you want to protect your financial investment, you may be thinking about asking employees to sign a noncompete agreement.
Noncompete agreements are common in many industries. If you do business in the scientific, engineering, mathematical or similar fields, you have probably seen a few noncompete agreements in your day. Still, while these contracts can help you keep talented workers, they may also work against you. Here are some of the pros and cons of noncompete agreements.
Pro: You protect your intellectual property
You may have a proprietary way of doing things in your industry. If your workers leave and use the same methods to attract clients, you could lose business. Noncompete agreements help you protect your intellectual property and trade secrets by preventing employees from competing against your company.
Con: You must be careful with your wording
For an enforceable noncompete agreement, you must understand legal restrictions and abide by them. Generally, you must draft a specific agreement that does not overly burden your workers. You also cannot usually create agreements that last a significant amount of time.
Pro: You keep high-caliber employees
Employees tend to establish roots where they work. Because noncompete agreements prevent workers from working in the same geographical area, your workers may have to move to another place to find a new job. The incentive not to uproot families may be enough to keep your high-caliber employees working for you.
Con: You may scare away potential employees
While finding the best employees is usually a recipe for success, noncompete agreements may have the opposite effect. That is, potential employees may refuse to work for you if you ask them to sign a noncompete agreement.
When deciding whether to rely on noncompete agreements when building your workforce, you must consider the advantages and drawbacks of these contracts. Only when you fully understand how noncompete agreements may affect your organization can you decide if they are the right tool for growing your business.