Pending Business: Non-Compete
By Steve Lapa
Lapcom Communications Corp
President
It’s complicated, this whole Federal Trade Commission ruling potentially banning the non-compete. Considering where you stand on the non-compete concept, it’s really all about evaluating the five “C” profile of your media business.
Personally, I sit at a roundtable where all sides are given equal consideration. More about that roundtable later.
First the five Cs of your media business: Company, Culture, Customers, Competition, Compensation. Let us define each.
1. Company – What is the image and reputation of your Company (management) internally?
Externally? Is your Company viewed as a destination or last resort for employment?
2. Culture – Is the atmosphere on your sales team or in your talent pool upbeat, positive performance driven, supportive, with access to key management? Is there a feedback loop that makes employee voices valued in this new world of Zoom, Teams, etc.? Is achievement recognized in a positive manner? Do sellers and talent have input into goals? Are missed goals treated like broken glass or the start of a learning curve?
3. Customers – Advertisers and audience are important customers. Advertisers, the cash register of any ad-based media model, move in only three directions – increase their spend, decrease their spend, flatline spending. Audience scale is the currency of your performing talent. Audience, like advertisers, can only go in three similar directions – increase, decrease, level off. If you are a subscription-based media entity, pay close attention to overdelivering subscriber expectations and lowering churn.
4. Competition – Keep a close eye on what your competitors are paying, how they are recruiting and what they are changing.
5. Compensation – My favorite. Have the courage to pay for performance at the high end and many of your non-compete clauses may not be needed.
Check the boxes on all five Cs in the model as outlined. Now back to my roundtable.
When you consider your company’s view, the non-compete in any media business that provides training (sales, talent, and other personnel), promotional investment, exposure to confidential research and strategies, is not simple to eliminate.
Consider the following:
1. The talent/show that is backed with a six-figure promotional campaign. Should the talent/show be allowed to seek employment at a competitor who is smart enough to realize, your company invested the money to make the talent/show a success, and all the competitor needs to do is revise compensation and lift a few restrictions? Your company’s investment could never be paid back.
2. Ever sit in on a focus group project? When the participants open the perception spigot, the bucket can fill up with verbal gold. Whomever gains access to that research and the resulting strategic change in direction has their hands on confidential information that can help drive results off the charts. How is the company’s investment in that research protected? What about the employees learning how it all works?
3. Good sales training, seminars, and off-site are not cheap, and considered an investment in all sellers and management. Should you really be permitted to walk across the street with no notice and all that expensive training in your laptop?
I’m writing this column as a roundtable, considering all sides and it is still complicated.
Steve Lapa is the president of Lapcom Communications Corp. based in Palm Beach Gardens, FL. Lapcom is a media sales, marketing, and development consultancy. Contact Steve Lapa via email at: Steve@Lapcomventures.com.
Commerce vowed to sue the FTC to block the proposal, calling it ‘an unlawful power grab’ in a statement shortly after the vote. The chamber, as well as the two dissenting [FTC] commissioners, has argued that the FTC doesn’t have the authority to address this issue and that it should be left to the states.” The Times piece notes that the rule becomes law 120 days after being published in the Federal Register – meaning sometime in late August – but that legal challenges could block or delay the change. In the radio industry, most on-air talent, programmers, and sales staff who work under written contracts have a noncompete clause that prevents them from working “across the street” usually for six months. If this new policy stands, it will be a monumental change for radio companies.