July 17, 2009
Honorable Governor Deval Patrick
Massachusetts State House
Office of the Governor
Office of the Lt. Governor
Boston, MA 02133
Twenty-six years ago this month I started Forrester Research, Inc. (Nasdaq: FORR) in the basement of my Cambridge apartment. IBM was my first client. Today we are more than a $200 million company with close to 1,000 employees – about half based in Massachusetts – and more than 2,500 clients around the world. We have been publicly traded for the past 13 years. We also are one of the Boston Globe 100’s Top Places To Work.
Corporate leaders outside of our state routinely tell me how unattractive Massachusetts is to do business in whether it’s due to taxes or labor laws. I disagree. I am proud to say that the Forrester brand was born in and continues to thrive based in Cambridge, Massachusetts. However, I wouldn’t start my business here today if non-compete contracts didn’t exist to protect our goodwill and intellectual property.
At Forrester, that’s all we’ve got. Nearly 400 analysts and advisors create our research and analysis and advise our clients about the impact of technology – trends, issues, products, services – on business, government, and consumers. We don’t invest in factory machinery, tools, or assembly lines; Forrester is an idea factory and we invest in people, which we are only too happy to do knowing that non-compete agreements help protect our investments. This is a realistic and practical perspective especially in today’s ultra-competitive global business environment. Now is not the time to change a practice that has supported some of the biggest brands and most successful Massachusetts companies.
You can find plenty of press coverage about why non-competes ostensibly thwart recruiting top talent to start-ups. What you don’t hear about is how non-competes ultimately help new and established companies alike to retain the talent they’ve invested in, further nurtured and who have become star employees due to their rewarding tenure and success. How can today’s start-ups hope to mature into successful firms if their top performers are easily poached? Non-competes protect all business.
If there is data that proves otherwise, I am more than willing to consider it. In 26 years, I have yet to see or hear of any empirical proof that supports the elimination of non-compete contracts. Do a search and you’ll see that all references are either anecdotal or hypothetical. Non-competes are one of the reasons businesses should start in or continue to call Massachusetts their home.
Please feel free to contact me if you’d like to discuss further.
George F. Colony
Chairman and CEO, Forrester Research, Inc.
My blog The Counterintuitive CEO can be found at: http://blogs.forrester.com/colony/
My Twitter stream at: http://twitter.com/gcolony
Cc: Representative William Brownsberger
Senator Patricia D. Jehlen
Representative Lori Ehrlich
Representative Daniel E. Bosley
Lora Pellegrini Chief Advisor, Legislative Affairs
Mark Lillienthal, Director, Constituent Services
Arthur Bernard, Chief of Staff
Paul Guzzi, President and CEO, Greater Boston Chamber of Commerce
Tom Hopcroft, President & CEO, Mass Tech Leadership Council
NOTE: This letter posted on behalf of the author by wb with permission.
This letter was copied to me and with the permission of the author, I posted it here — it is representative of what we have heard less formally from businesses and what led us to moderate the complete ban approach embodied in my original House 1794. Our goal in the new draft is to make real change that benefits the venture climate and employees without vitiating fair protections for the investments that employers make.
This reasoning cuts both ways. Just as non-competes are essential for an idea factory such as Forrester,to protect its investment in human capital, they also make it very difficult for employees to strike out and establish their own businesses.
Non-competes do nothing to protect the employee. They are one-sided manacles that help grow business in states without non-competes. Interesting to see the flight of personnel from Forrester when those personnel live and work in states where non-competes are not enforceable. Once upon a time, New England held its own in venture investment in high tech startups. Nowadays, it has lost most of its share. Where has the money gone? To environments far more friendly to startups. Non-competes kill startups.
The arguments in favor of non-competes are outrageous. Employees invest their time in helping their employer build their business and their brand. Employees invest a chunk of their careers in an employer but there is no power symmetry here.
At a minimum, if we are to persist in non-competes, employers need to guarantee income (salary and bonus) for as long as the non-compete is in effect. Bring some ethical balance to the process.
If you take a look at our pending legislation (follow the thread on non-competes), I think you’ll feel that it strikes a reasonable balance.
I never signed a non-compete, despite the fact that G.F.C has put lots of pressure on all employees taken over when he bought us. Anyway the status and future of non-competes in the EU (European Union) was & is most uncertain for employers. Especially overseas employers will have to expect the European Parliament and Commission to make non-competes ilegal in all of Europe. One step further, there is a draft asking for persecution of overseas companies that use anywhere in the world non-competes in order to pervert the free global competition.
Certainly the confidentiality clauses are the only working and effective means to make sure that intellectual property is protected.
In my opinion neither Forrester nor other companies have had used NC clauses with significant success, they just insist to let it be signed – where legal – only to psychologically blackmail employees weak enough to get impressed by words…
I know dozens of analysts and sales people as well as managers who just disregarded the clause or used a most simple “trick” to get around the clause (not to be explained here 🙂 )
And I know that all employers I worked for have repeatedly and heavily used confidential material originating from their compüetitors, hoping that they won’t find out about or will just settle the issue behind the scenes with a simple written excuse, without ever dismissing the “thieves”).
I certainly advocate a strict confidentiality clause, but strictly reject blackmailing by non-competes.
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