This is one is a periodic series of posts about things that make my head explode because they are such bad ideas - the non-compete contract.
While I don't know the actual history of these, I believe they started due to intellectual property issues. In other words, if someone left a company to work for a competitor, the company was worried that important data or client connections could be stolen.
It should be noted that there is much debate on the legality of these non-compete contracts.
Some states have outlawed them completely and others have restrictions on them. I tend to think that in most states, they wouldn't hold up in court, but few people actually get that far in the process.
However, I have seen some people promote the non-competes as a way to keep talent. In other words, if you have an employee who is valuable, who you've spent time training and developing, the non-compete is a way to keep your investment from leaving.
WHAT?!?!
When someone suggests that - here is what they are really saying. "I see you as an asset, something that the company owns like a laptop or printer. I want to make sure you aren't stolen, so I am locking you away. Sure, I could try to make this a great work environment, pay you properly, and generally engage you so you don't want to leave, but that is too much work. I'd much rather simply have you sign this piece of paper and I can worry about important things like spreadsheets. After all, human beings are so difficult."
Don't legally chain your people to the company. Make the company so awesome that no one wants to leave. Make it so successful, engaging, and happy that people are begging to work for you. And if someone gets such an amazing offer that they do leave you, be happy for them. Publicize it because you helped the person develop to the point where they were in demand.
If anyone handed me a non-compete contract, I would leave without ever saying a word. If you are thinking about using one for your employees, think about what it says about you. I guarantee, it isn't good.