Comments on: Non-Competes, Health Insurance and Other Ugly Limits To Innovation

By: Fred H. Schlegel

Fred H. Schlegel — Fri, 16 Oct 2009 03:53:14 +0000

Hi Andrew, In the U.S. most health insurance is provided via employer plans. The larger the employer the more secure the benefit is, although this has been changing with the current financial crises. At many companies employees pay only a small portion of their health insurance cost – much labor unrest is currently around the issue of what percentage of health insurance costs will be paid for by the employee. If you do not work for a large company then the odds go down that insurance will be available through your employer at which point insurance companies can refuse to insure you for a whole host of reasons. In total, things are pretty messed up.

By: Andrew

Andrew — Thu, 15 Oct 2009 05:25:45 +0000

Fred,

I’m afraid that I am not particularly familar with the way health care functions in America (so please excuse my ignorance), but from what I can gather, most people who receive health care do so through schemes funded by their employer – is that correct?

If so, I can certainly see how a degree of anxiety with regard to changes in health care arrangements or entitlements would cause some ‘would be leavers for greener pastures’ to think twice about leaving, and how that would constrain the natural process of the flow of labor and ideas which results when innovative employees feel sufficiently confident so as to make bold career moves.

The points you raise are very interesting. I have always seen how freedom of inflow of labor benefits companies which encourage innovation, but had never really thought a great deal about the benefits which companies might derive from freedom of labor outflow in this regard. Restrictive covenants certainly have their share of advantages (as you rightly acknowledge) for employers, but I can certainly see from your discussion how their overuse might unduly stifle creativity.
Andrew´s last blog ..Google books – let a wonderful innovation go full steam ahead

By: Middle Zone Musings » All Entries: What I Learned From Limits

Middle Zone Musings » All Entries: What I Learned From Limits — Mon, 12 Oct 2009 11:01:45 +0000

[...] Non-Competes, Health Insurance, and Other Ugly Limits to Innovation, by Fred Schlegel at Frog Blog [...]

By: Fred H. Schlegel

Fred H. Schlegel — Sun, 11 Oct 2009 17:53:44 +0000

Hi Kay, I hadn’t heard about Wisconsin’s challenges here. The reversal in policy will be interesting to look at and who knows what technology the next growth curve may be founded on. While different communities may get a piece of the Silicon Valley action, just as automotive mfg was spread world wide by Detroit, the key element is preparing to catch the next wave not the last one. Very exciting. Thank you for the info to follow up on!

By: Fred H. Schlegel

Fred H. Schlegel — Sun, 11 Oct 2009 17:48:17 +0000

Hi Robert, I really enjoy the WILF project you’ve put together. It’s funny how many different thoughts can come from a seemingly simple question.

By: Fred H. Schlegel

Fred H. Schlegel — Sun, 11 Oct 2009 17:46:59 +0000

Hi Brad, There is no question that it is one way for a company to deal with an employee who is working against a companies interests or unethically. But I’ve begun wondering if this approach is even very effective at that. But could a non-compete actually establish an environment that encourages behavior that discourages innovation? If I feel secure that a salesperson can’t run off with my customer list and attack me with insider knowledge do I short change customer relations? Do I undervalue my sales person? I’m not sure. I do know that it is an unreliable covenant due to the factors you mention. In fact, an employee’s natural loyalty to a firm that treats them reasonably is a companies best protection overall.

By: kay plantes

kay plantes — Fri, 09 Oct 2009 22:23:56 +0000

Fred, many have questions why UW Madisonm #2 in the nation in earning federal research grants (if they’d accepted federal defense department grants they’d be #1) did not develop the rich tech community found in Boston and San Diego/San Francisco. The reason was non-competes the Wisconsin Legislature imposed on faculty–start a business and you lose your tenure position. Once this law was changed, we became a young Silicon Valley, but now we lack the scale that has become a competitive advantage for the regions with the head start. (Proximity to talent has become a key location driver and so the large are getting larger.)

I fully believe we are moving from a world in which tight boundaries and divide and conquer approaches are giving way to one in which success will require open and transparent and fluid boundaries. Your arguments are completely aligned with this.

By: Robert Hruzek

Robert Hruzek — Fri, 09 Oct 2009 20:12:06 +0000

Wow, you weren’t kidding when you said this month’s WILF topic took you in a different direction, Fred!

Good discussion, though. I think along the same lines as Brad, there’s definitely a use for ‘em, if only to limit the unscrupulous.

By: Brad Shorr

Brad Shorr — Fri, 09 Oct 2009 18:46:54 +0000

Hi Fred, While I’m generally sympathetic to work environment free of non-compete contracts, Ive had some experience on the company side of things and can report that there are times when these contracts provide legitimate protection to a corporation. When we discuss these things, I think most of us – and the courts – have a pro-employee, anti-corporation bias. However, there are employees who will act unethically to promote their own interests in ways that do serious harm to the companies they work for.
Brad Shorr´s last blog ..Elevate Your Mood with Food

By: Fred H. Schlegel

Fred H. Schlegel — Fri, 09 Oct 2009 18:01:54 +0000

Hi Emily, Thanks for dropping by and commenting.