Non Competes for Recruiters and Salespeople

I recently published some articles about what small business owners should do if they are looking to hire salespeople. That brought the following question to my inbox:


"Wondering if you could do an article to help laid off Baby Boomer Sales Execs who have massive years of experience yet no contacts to bring to their new employer due to non-compete issues. I just had breakfast and lunch with 2 colleagues who are struggling to stand out, just for an interview. Not to mention myself, if my 90 day evaluation next month does not go well."

I once had an employer ask me to sign a two year non-compete sales agreement early in my tenure at their company. It was my first review with the company. The employer said he didn't have time to write a review. He did have time to write up a three page non-compete in 11 point type! The contract I was given was so prohibitive that the employer explained I couldn't even make contact with prospects if I happened to run into them in a grocery store!

I refused to sign.
It caused a big argument and a lot of consternation on the part of the employer.
I never signed.

My own views about non-competes for salespeople and recruiters are pretty plain. I'm against them except when it involves classified information. In my experience most of the things business owners are worried about salespeople disclosing to a competitor are financial information, market strategy, and personal information that could be used to hurt the management of said company. Most ethical salespeople realize that if they disclose these things their own hide is toast in the market so they wouldn’t do it anyways because it would cause a backlash with some of the clients and they might be blacklisted in a big hurry by other employers.

To me all of the above is easily covered by a non-disclosure agreement.

I posed the question to Mark Thomas of Lawrence, Allen & Kolbe. Mark is a transition coach and I wanted to know what he advises his clients who are in this situation.

"That is an interesting question. First, most people have many more contacts than they initially imagine. While some are off limits due to non-compete, many are not. Many non-competes apply to customers, not to prospects, and many to only a specified group of customers. They generally do not apply to suppliers, so there are a variety of industry contacts available to call on.”

“The best thing they can do is analyze their career and find points at which they started with no customers, or few, and built a customer base quickly. They should recall all they can in detail about how they did it, and be ready to talk about that. If they have built a portfolio somewhere else, they can to it again. They just need to be convincing and specific in showing how they did it before. When they are asked about bringing clients with them, shift the topic to bringing in clients generally and be ready to prove how to do it again.”

“And, non-competes are not forever. They generally are a year or less. So at some point, everyone is back in play. Meanwhile, an experienced sales pro can focus on learning the products and business, and find other ways to improve results: maybe mentor some less senior people, do some training, identify some sales related projects they can do while they wait. If they have all this great experience, they can bring it to bear in ways that do not necessarily involve calling on “out of bounds” customers."