6 ms·

It may be that the consequences of the 'conspiracy' was to depress wages, and it should clearly be prosecuted if the legal case can be made. However does anyon

by gress 13y ago

It may be that the consequences of the 'conspiracy' was to depress wages, and it should clearly be prosecuted if the legal case can be made. However does anyone think that this was the intention behind these agreements? Isn't it more likely that they wanted to stop an insane war on one another's businesses by buying off key employees to disrupt one another's operations? It would seem as though companies with a giant stockpile of cash - I.e. MS, Google, and Apple, could stifle competitors by just taking out key employees of their opponents with large signing bonuses, regardless of whether they intend to put them to work or not. The result would be a destruction of value.

tdees40 13y ago
This is probably true. Competition is sometimes destructive. But these business practices are still completely illegal.
talmand 13y ago
I would say that since the idea apparently started with Lucas and he specifically stated it was done to prevent bidding wars because they simply couldn't afford it at the time supports the thought. I don't think it was the sole intention. But two things stand out to me that was part of the deal. The fact that the HR departments would inform each other if their employees were applying for a job at a company within the group; which by the way should be considered a huge privacy issue. Also that when an employee was made an offer, they only received a "final offer" to specifically avoid a bidding war. Those two things directly relate to wage suppression to me. As for your example, that's quite true. But in the end it still stifles those employees' ability to increase their income because these companies directly conspired to not recruit from each other. It is not in the employee's interest to worry over if Company A wants to give them a pile of money to simply leave Company B but not work. Two companies coming to such an agreement for their benefit is a detriment to the employee, which is what the lawsuit is about. Never mind the fact that the whole thing is clearly illegal under multiple federal and state laws. Therefore, their intentions are irrelevant.
bps4484 13y ago
The solution here is the same as the solution when Zuckerberg complained about employees leaving their jobs too quickly[1]: Pay your employees more. Figure out what kind of value they bring, and the amount of cost if they were to leave, and adjust their wages accordingly. Make no mistake about it, the ultimate goal of stifling competition is to depress wages. While maybe described as "disrupting operation", it is really just allowing a company to not pay an employee what they are worth. Analogously, if 2 companies sold widgets, one in state A and one in state B, and they each had a near monopoly in each state, if they each made a closed door agreement not to enter into each others' states so they could each maintain their near monopoly, I think people, and courts, would certainly cry foul. Certainly competing would disrupt each others' operations, but the competition would bring better products and better prices to both states, and that's the point. [1] http://techcrunch.com/2011/10/30/facebooks-zuckerberg-if-i-were-starting-a-company-now-i-would-have-stayed-in-boston/ http://techcrunch.com/2011/10/30/facebooks-zuckerberg-if-i-w...
- gress 13y ago
  You missed my point. The cost of losing a particular employee at a particular point in time can be far greater than the individual contribution they will ever make. That cost is transient because it depends on the state of a particular project. The value of the employee becomes the value of disrupting the project to the competitor. Matching the offer would be an option, but it would cause massive distortion within the company since the retained employee wouldn't be contributing that much more than their colleagues. I don't see any justification for your statement that better products would result from this.
  - mrgriscom 13y ago
    That is the nature of at-will employment.
    - gress 13y ago
      What point are you making?
dbpokorny 13y ago
> does anyone think that this was the intention behind these agreements? Absolutely. > Isn't it more likely that ... This is a just-so story. > It would seem as though ... All companies are vulnerable to losing key employees. There are two ways to address this problem: (1) do good, legal things to address it (2) do bad, illegal things to address it. I mean, to use a perfectly ridiculous analogy, suppose for a minute that engineers are cards from Magic: the Gathering and that CEOs and their executive teams are the players. A CEO can probably count on the loyalty of their inner circle. Or at least I would hope so. A CEO with a disloyal inner circle is going to be toast sooner rather than later. But generally speaking you can't count on the loyalty of engineers. They care more about the challenge, the money, the excitement, being a hero, being a rock star, etc... and the high-level ones tend to act like rock stars (not all of them by any means, but a substantial and vocal minority). These are the "rare" cards in Magic: the Gathering. They are super-valuable and they can make the difference between winning and losing. Now imagine playing this card game where the cards have minds of their own. We can sorta rationalize an anti-competitive agreement between the players, a prohibition on poaching each other's engineers, product managers, designers, etc... because the players all want to play the game a certain way and don't want the headache of dealing with brain drain. They rationalize, "it just makes playing the game a little bit easier and allows us to sleep at night". The problem is that in the real world, it is real people who get hurt when these kinds of agreements get made. Doing this is not only illegal, it is wrong. You're creating an agreement that essentially says, "these engineers are my property, those engineers are your property. We agree to not steal each other's property." By making such an agreement, you're intentionally depriving another human being of a legitimate economic opportunity. You're saying to them, "I'm going to deprive you of an opportunity for my own benefit, and I don't care about how it affects you or your life." I find this sickening. You might as well say, "I'm going to sacrifice your happiness to increase the size of my bank account". It is a form of exploitation. I mean, I'm a fire-breathing free-enterprise capitalist, but the Marxist line of reasoning about exploitation and alienation rings true on this one. The problem here is that free-enterprise principles are being violated. > The result would be a destruction of value Perhaps, but I can use a similar style of argument for the opposite conclusion. If a few key employees would have gotten substantially more money, then you would see those employees, as a group, making different decisions. They might have gotten together to create a new innovative company in which they were much more personally invested. It is possible that huge opportunities for value creation have been missed and can never be recovered.
steveklabnik 13y ago
> However does anyone think that this was the intention behind these agreements? From the article: > George Lucas believed that companies should not compete against each other for employees, because ‘[i]t’s not normal industrial competitive situation.’ As George Lucas explained, ‘I always — the rule we had, or the rule that I put down for everybody,’ was that ‘we cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing.’
- gress 13y ago
  I'm not sure that is enough to make the case. For one, it's Lucas alone. But secondly - the bidding I think they would be concerned about would be more like the 'ransom value' of an employee who happened to be on a critical path and who could not be replaced quickly enough to avoid a significant setback. The problem is not the market value for an employees skills and experience that will enable them to contribute to whoever they are employed by, it is that there is also a value to simply disrupting the opponent's team.
dhoulb 13y ago
I think the intention behind these agreements was to stop Steve Jobs throwing a pile of burning crap at your house. It's like sweet valley Fortune 500.

by gress 13y ago

tdees40 13y ago

This is probably true. Competition is sometimes destructive. But these business practices are still completely illegal.

talmand 13y ago

I would say that since the idea apparently started with Lucas and he specifically stated it was done to prevent bidding wars because they simply couldn't afford it at the time supports the thought. I don't think it was the sole intention. But two things stand out to me that was part of the deal. The fact that the HR departments would inform each other if their employees were applying for a job at a company within the group; which by the way should be considered a huge privacy issue. Also that when an employee was made an offer, they only received a "final offer" to specifically avoid a bidding war. Those two things directly relate to wage suppression to me. As for your example, that's quite true. But in the end it still stifles those employees' ability to increase their income because these companies directly conspired to not recruit from each other. It is not in the employee's interest to worry over if Company A wants to give them a pile of money to simply leave Company B but not work. Two companies coming to such an agreement for their benefit is a detriment to the employee, which is what the lawsuit is about. Never mind the fact that the whole thing is clearly illegal under multiple federal and state laws. Therefore, their intentions are irrelevant.

bps4484 13y ago

The solution here is the same as the solution when Zuckerberg complained about employees leaving their jobs too quickly[1]: Pay your employees more. Figure out what kind of value they bring, and the amount of cost if they were to leave, and adjust their wages accordingly. Make no mistake about it, the ultimate goal of stifling competition is to depress wages. While maybe described as "disrupting operation", it is really just allowing a company to not pay an employee what they are worth. Analogously, if 2 companies sold widgets, one in state A and one in state B, and they each had a near monopoly in each state, if they each made a closed door agreement not to enter into each others' states so they could each maintain their near monopoly, I think people, and courts, would certainly cry foul. Certainly competing would disrupt each others' operations, but the competition would bring better products and better prices to both states, and that's the point. [1] http://techcrunch.com/2011/10/30/facebooks-zuckerberg-if-i-were-starting-a-company-now-i-would-have-stayed-in-boston/ http://techcrunch.com/2011/10/30/facebooks-zuckerberg-if-i-w...

gress 13y ago
You missed my point. The cost of losing a particular employee at a particular point in time can be far greater than the individual contribution they will ever make. That cost is transient because it depends on the state of a particular project. The value of the employee becomes the value of disrupting the project to the competitor. Matching the offer would be an option, but it would cause massive distortion within the company since the retained employee wouldn't be contributing that much more than their colleagues. I don't see any justification for your statement that better products would result from this.
- mrgriscom 13y ago
  That is the nature of at-will employment.
  - gress 13y ago
    What point are you making?

dbpokorny 13y ago

> does anyone think that this was the intention behind these agreements? Absolutely. > Isn't it more likely that ... This is a just-so story. > It would seem as though ... All companies are vulnerable to losing key employees. There are two ways to address this problem: (1) do good, legal things to address it (2) do bad, illegal things to address it. I mean, to use a perfectly ridiculous analogy, suppose for a minute that engineers are cards from Magic: the Gathering and that CEOs and their executive teams are the players. A CEO can probably count on the loyalty of their inner circle. Or at least I would hope so. A CEO with a disloyal inner circle is going to be toast sooner rather than later. But generally speaking you can't count on the loyalty of engineers. They care more about the challenge, the money, the excitement, being a hero, being a rock star, etc... and the high-level ones tend to act like rock stars (not all of them by any means, but a substantial and vocal minority). These are the "rare" cards in Magic: the Gathering. They are super-valuable and they can make the difference between winning and losing. Now imagine playing this card game where the cards have minds of their own. We can sorta rationalize an anti-competitive agreement between the players, a prohibition on poaching each other's engineers, product managers, designers, etc... because the players all want to play the game a certain way and don't want the headache of dealing with brain drain. They rationalize, "it just makes playing the game a little bit easier and allows us to sleep at night". The problem is that in the real world, it is real people who get hurt when these kinds of agreements get made. Doing this is not only illegal, it is wrong. You're creating an agreement that essentially says, "these engineers are my property, those engineers are your property. We agree to not steal each other's property." By making such an agreement, you're intentionally depriving another human being of a legitimate economic opportunity. You're saying to them, "I'm going to deprive you of an opportunity for my own benefit, and I don't care about how it affects you or your life." I find this sickening. You might as well say, "I'm going to sacrifice your happiness to increase the size of my bank account". It is a form of exploitation. I mean, I'm a fire-breathing free-enterprise capitalist, but the Marxist line of reasoning about exploitation and alienation rings true on this one. The problem here is that free-enterprise principles are being violated. > The result would be a destruction of value Perhaps, but I can use a similar style of argument for the opposite conclusion. If a few key employees would have gotten substantially more money, then you would see those employees, as a group, making different decisions. They might have gotten together to create a new innovative company in which they were much more personally invested. It is possible that huge opportunities for value creation have been missed and can never be recovered.

steveklabnik 13y ago

> However does anyone think that this was the intention behind these agreements? From the article: > George Lucas believed that companies should not compete against each other for employees, because ‘[i]t’s not normal industrial competitive situation.’ As George Lucas explained, ‘I always — the rule we had, or the rule that I put down for everybody,’ was that ‘we cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing.’

gress 13y ago
I'm not sure that is enough to make the case. For one, it's Lucas alone. But secondly - the bidding I think they would be concerned about would be more like the 'ransom value' of an employee who happened to be on a critical path and who could not be replaced quickly enough to avoid a significant setback. The problem is not the market value for an employees skills and experience that will enable them to contribute to whoever they are employed by, it is that there is also a value to simply disrupting the opponent's team.

dhoulb 13y ago

I think the intention behind these agreements was to stop Steve Jobs throwing a pile of burning crap at your house. It's like sweet valley Fortune 500.