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You have to see both sides here. Employees are too quick to see this as being robbed of the opportunity to be the subject of a bidding war. Companies try not to

You have to see both sides here. Employees are too quick to see this as being robbed of the opportunity to be the subject of a bidding war. Companies try not to start or escalate poaching wars because it's massively disruptive to everyone's projects. It takes a long time to replace someone and a long time to onboard someone. While it may be economically feasible to poach an employee, it's almost definitely detrimental to the entire industry's profitability to create a recruitment culture based on poaching. Since there's a strong tit-for-tat instinct when company B takes a high-value employee from company A, the companies just agree to avoid these tensions altogether. That's the big picture version that Catmull, Jobs, et al, are seeing. They're honestly not trying to keep your salary depressed this way, but they're an easy target for Justice Department lawyers that're trying to earn some street cred and "trade outlets" that are trying to earn lots of pageviews from artificially outraged workers. People believe they've been deprived of money and attention by default, so they'll eat up anything that appears superficially credible and gives them occasion to lay blame for that deprivation.

archagon 12y ago
Putting aside for the moment the illegality of collusion, I appreciate your take, and I think it's important to always try to see things from the other side, even if it stands against everything you believe in. With that said, isn't the obvious solution to just raise everyone's salaries? Also, the explanation only reinforces the idea that these executives view their employees as chips to be bartered, not free agents.
- underbluewaters 12y ago
  How does raising salaries change the situation? All the other party has to do is raise the offer another 10k. There are enormous costs associated with loosing a valued employee, but naturally very little cost for the employee to move.
  - archagon 12y ago
    dragonwriter above offers a more informed solution: "But if a company wants to restrict 'poaching' of its employees unilaterally, it can just offer them defined-term personal services contracts with suitable compensation."
    - cookiecaper 12y ago
      Employees don't want that. The terms of the current relationship are centered around the employee's desire for continuity and stability. Most employees do not want to be tied down to the company in a binding fixed-term commitment; how much worse would things be if people weren't free to pursue other employment whenever they wanted? How much more abuse would employees suffer if they didn't have the option of walking out and finding comparable employment at any time? Most employees want benefits and perks that would be very difficult to provide in the context of independent agency, like medical insurance. In professional circumstances that are based on procuring such agents, there's usually a union, co-op, axis, or league that furnishes the benefits the worker desires. Read this page [1] about the stability NBA players lacked prior to unionization. The grass is always greener. Perhaps an employee's raw salary would be higher if a free agency model was used, though I personally doubt it would be, but most of the terms of this game are defined by the employee, not the employer. A world where every employee is an independent agent with his/her own contract is a much, much different world than we have now and would take a long time to analyze with any depth or completion. It's not that there aren't ways to make it work, but the standard employment relationship exists because it's the employment arrangement most conducive to the type of lifestyle the average person wants to have. [1] http://nbpa.com/about-nbpa/ http://nbpa.com/about-nbpa/
      - njloof 12y ago
        I was under personal service contracts for 16 years. They were incredibly helpful for making long term personal decisions, such as buying a house. Who knows when you'll get laid off as an at-will employee, for reasons having nothing to do with personal performance?
      - greenyoda 12y ago
        "Employees don't want that." It depends on the terms of the contract. If a company offered me a three-year contract for more than I thought I could earn anywhere else over the next three years (e.g., $500K per year), why shouldn't I take the opportunity? The contract would need to spell out working conditions, of course. For $500K, I wouldn't lock myself into an obligation to work 60-hour weeks for three years straight. My health and sanity are worth more to me than that. Some of the highest-paid workers in our society lock themselves into contracts: professional athletes, movie stars, etc. Would you want to start filming a high-budget movie if your leading actor could walk off the job at any time?
mikeash 12y ago
When you say "detrimental to the entire industry's profitability," I see "wages would rise to match the value contributed by employees, which would reduce the surplus that businesses can extract." If you don't want your prized employee leaving, there's a really easy solution: pay him enough to stay. If he's that valuable, then it's worth paying. Since the solution is so easy, but Jobs et al didn't want to apply that solution, I can only conclude that suppressing salaries was precisely the idea. If it wasn't about suppressing salaries then they could have just increased the salaries for these key employees such that leaving for another job was no longer an attractive prospect.
- cookiecaper 12y ago
  >I see "wages would rise to match the value contributed by employees, which would reduce the surplus that businesses can extract." I understand that theoretically the wage would be negotiated to the point where it was no longer attractive to poach or be poached and everyone's life would continue along swimmingly. The problem is that I don't believe this would happen in the Real World. There is just too much emotion involved, and perception is too fickle, for this to work out well for anyone. The industry's productivity would be deeply damaged, not just from the high-level executive POV where you're comparing year-over-year profit-dollars-per-employee, but also from the tangible, objective POV, where it would take much longer to get things done. There's a reason that anyone who gets caught up in a poaching war takes effort to avoid that situation from occurring ever again, and there's a reason that employees aren't going out and more actively inciting bidding wars no matter how fun it sounds in theory to have two or more companies tripping over themselves to outbid each other for you. Putting aside the actual economic realities that would be incurred, employees have real emotional needs that would be difficult to meet in a poaching culture. People need continuity and camaraderie. People need a sense of accomplishment and contribution. Those things are not going to occur if 25% of your workforce churns over to the competitor and back again every year, and like I said, while I understand the theory that the churn would eventually stop once a "market price" for the labor was stabilized, I don't think that's how it would play out in real life; I think the entities would commonly harbor feelings of resentment and betrayal, and I think many participants would adopt other combative emotional stances, that would deeply impede the industry's function. I'll have to do some research and see if I can find some real-life data that may credit or discredit this theory. We also need to acknowledge that anti-poaching agreements can be interpreted in various ways. My understanding is that most of these agreements bar active recruitment or incitement of sitting employees at members of the pact, but they do not bar hiring an employee away if he seeks you out. There may be exceptions and this may have changed depending on the interpretation of different persons in the HR dept. I definitely believe that refusing to hire employees who seek out employment externally due to your no-poach agreement is uncool.
jroseattle 12y ago
> You have to see both sides here. Why? To understand the motivations of Jobs, Cook, Catmull, etc.? The motivations are clear. Collusion is still illegal, and "seeing both sides" is an attempt at justification.

archagon 12y ago

Putting aside for the moment the illegality of collusion, I appreciate your take, and I think it's important to always try to see things from the other side, even if it stands against everything you believe in. With that said, isn't the obvious solution to just raise everyone's salaries? Also, the explanation only reinforces the idea that these executives view their employees as chips to be bartered, not free agents.

underbluewaters 12y ago
How does raising salaries change the situation? All the other party has to do is raise the offer another 10k. There are enormous costs associated with loosing a valued employee, but naturally very little cost for the employee to move.
- archagon 12y ago
  dragonwriter above offers a more informed solution: "But if a company wants to restrict 'poaching' of its employees unilaterally, it can just offer them defined-term personal services contracts with suitable compensation."
  - cookiecaper 12y ago
    Employees don't want that. The terms of the current relationship are centered around the employee's desire for continuity and stability. Most employees do not want to be tied down to the company in a binding fixed-term commitment; how much worse would things be if people weren't free to pursue other employment whenever they wanted? How much more abuse would employees suffer if they didn't have the option of walking out and finding comparable employment at any time? Most employees want benefits and perks that would be very difficult to provide in the context of independent agency, like medical insurance. In professional circumstances that are based on procuring such agents, there's usually a union, co-op, axis, or league that furnishes the benefits the worker desires. Read this page [1] about the stability NBA players lacked prior to unionization. The grass is always greener. Perhaps an employee's raw salary would be higher if a free agency model was used, though I personally doubt it would be, but most of the terms of this game are defined by the employee, not the employer. A world where every employee is an independent agent with his/her own contract is a much, much different world than we have now and would take a long time to analyze with any depth or completion. It's not that there aren't ways to make it work, but the standard employment relationship exists because it's the employment arrangement most conducive to the type of lifestyle the average person wants to have. [1] http://nbpa.com/about-nbpa/ http://nbpa.com/about-nbpa/
    - njloof 12y ago
      I was under personal service contracts for 16 years. They were incredibly helpful for making long term personal decisions, such as buying a house. Who knows when you'll get laid off as an at-will employee, for reasons having nothing to do with personal performance?
    - greenyoda 12y ago
      "Employees don't want that." It depends on the terms of the contract. If a company offered me a three-year contract for more than I thought I could earn anywhere else over the next three years (e.g., $500K per year), why shouldn't I take the opportunity? The contract would need to spell out working conditions, of course. For $500K, I wouldn't lock myself into an obligation to work 60-hour weeks for three years straight. My health and sanity are worth more to me than that. Some of the highest-paid workers in our society lock themselves into contracts: professional athletes, movie stars, etc. Would you want to start filming a high-budget movie if your leading actor could walk off the job at any time?

mikeash 12y ago

When you say "detrimental to the entire industry's profitability," I see "wages would rise to match the value contributed by employees, which would reduce the surplus that businesses can extract." If you don't want your prized employee leaving, there's a really easy solution: pay him enough to stay. If he's that valuable, then it's worth paying. Since the solution is so easy, but Jobs et al didn't want to apply that solution, I can only conclude that suppressing salaries was precisely the idea. If it wasn't about suppressing salaries then they could have just increased the salaries for these key employees such that leaving for another job was no longer an attractive prospect.

cookiecaper 12y ago
>I see "wages would rise to match the value contributed by employees, which would reduce the surplus that businesses can extract." I understand that theoretically the wage would be negotiated to the point where it was no longer attractive to poach or be poached and everyone's life would continue along swimmingly. The problem is that I don't believe this would happen in the Real World. There is just too much emotion involved, and perception is too fickle, for this to work out well for anyone. The industry's productivity would be deeply damaged, not just from the high-level executive POV where you're comparing year-over-year profit-dollars-per-employee, but also from the tangible, objective POV, where it would take much longer to get things done. There's a reason that anyone who gets caught up in a poaching war takes effort to avoid that situation from occurring ever again, and there's a reason that employees aren't going out and more actively inciting bidding wars no matter how fun it sounds in theory to have two or more companies tripping over themselves to outbid each other for you. Putting aside the actual economic realities that would be incurred, employees have real emotional needs that would be difficult to meet in a poaching culture. People need continuity and camaraderie. People need a sense of accomplishment and contribution. Those things are not going to occur if 25% of your workforce churns over to the competitor and back again every year, and like I said, while I understand the theory that the churn would eventually stop once a "market price" for the labor was stabilized, I don't think that's how it would play out in real life; I think the entities would commonly harbor feelings of resentment and betrayal, and I think many participants would adopt other combative emotional stances, that would deeply impede the industry's function. I'll have to do some research and see if I can find some real-life data that may credit or discredit this theory. We also need to acknowledge that anti-poaching agreements can be interpreted in various ways. My understanding is that most of these agreements bar active recruitment or incitement of sitting employees at members of the pact, but they do not bar hiring an employee away if he seeks you out. There may be exceptions and this may have changed depending on the interpretation of different persons in the HR dept. I definitely believe that refusing to hire employees who seek out employment externally due to your no-poach agreement is uncool.

jroseattle 12y ago

> You have to see both sides here. Why? To understand the motivations of Jobs, Cook, Catmull, etc.? The motivations are clear. Collusion is still illegal, and "seeing both sides" is an attempt at justification.