In "Becoming Steve Jobs", Tim Cook says the following in regards to Apple's collusion scandal:
"I know where Steve's head was. He wasn't doing anything to hold down salaries; it never came up. He had a simple objective: if we were working together on something, like with Intel, where we threw everything in the middle of the table and said, 'let's convert the Mac to the Intel processor', well, when we did that, we didn't want them poaching our employees that they were meeting, and they didn't want us poaching theirs. Doesn't it make sense that you wouldn't, that it's an OK thing? I don't think for a minute he thought he was doing anything bad. And I don't think he was thinking about saving any money. He was just very protective of his employees."
Ed Catmull of Pixar, a seemingly gentle person, is similarly unapologetic about the issue. Why is it that, at a certain level, intelligent company leaders seem to stop thinking of their employees as individuals and instead start thinking of them as company assets?
(I don't mean this as an anti-Apple comment. In fact, I want to give Jobs, Cook, and Catmull the benefit of the doubt, in the sense that they probably did approach the issue from the perspective of doing what's best for their companies, not as a quick way to save some paltry money. But that's kind of the underlying problem, isn't it? Once you've internalized the idea that your employees are company assets — that they aren't hard workers who make the company tick, but that they literally are the company — it's easy to slide down the slippery slope towards incredibly unethical and shady dealings like collusion. I wonder how this can be avoided.)
The word "protective" doesn't seem apt here, as that would imply he had his employees' best interests at heart, when clearly he only had the company's best interests in mind (which is fair, given that's the job of the CEO).
Using HR lingo, try "s/employees/resources/". Now it parses, neh?
I've read that book (audio) - that was one of the more cringeworthy passages of the book. What I gathered was that Tim probably felt like "hey I wouldn't do this, but it's Steve and he's my boss so I have to put a marginal defense out there".
That quote is so nuts! He didn't think for a minute he was doing anything wrong. That's supposed to make me feel better?
I agree with you, the way these rich people look at employees as chess pieces rather than humans is awful. If you're so afraid of someone quitting, then address that by making it worth their while not to quit! Not with collusion for god's sake.
The fact that they call someone getting a better job "being poached" just says it all really. (If you use this phrase, take a moment to really think about what you are saying.)
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.
If your employees are under pure default at-will employment, its not poaching to seek to hire them out from under you, because you haven't purchased a property interest in their continuing to remain your employees. And, if you have purchased such an interest, then you suddenly don't need a no-poaching agreement to prevent them from being poached.
A multiparty no poaching agreement with the other main employers in the industry -- particularly a secret one -- is essentially trying to impose the restriction of having an extended contract with your employees without paying them for accepting that restriction.
> it can just offer them defined-term personal services contracts with suitable compensation.
The ability to do that is HIGHLY restricted by labor laws. I'm not saying you couldn't get around it with very careful contracting... but I wouldn't want to count on it.
> The ability to do that is HIGHLY restricted by labor laws.
The ability to do that under the law is demonstrated by the fact that there are whole major industries where this kind of contracting with talent is normal. (Legal limitations tend to highly restrict the ability to get a remedy beyond money damages for breaches of such agreements, to be sure, but they don't tend to prevent the agreements themselves.)
It tends to be expensive (both in terms of what you pay the talent and in terms of the overhead associated with contracting), but if the talent is really valuable enough, that's the price you pay.
If you aren't willing to pay that price, you shouldn't complain about people "poaching" what you didn't want to pay the cost to have a durable claim to in the first place.
It should be expensive! Tech companies are getting a fantastic deal on their employees right now. Apple made $460k in profit per employee in 2013[1]. This to me is a failure on our (software developers) part in capturing the value we're delivering.
If a company sold a widget that routinely generated $500k in profit per year each and leased it for $125k/year, would it make business sense to keep it at that price? Hell no! Charge as much as the market will bear. That's just supply and demand.
There's two sides here. The company making profit enables it to take more risks, try new things. The employee making a higher salary has other benefits, some of which might benefit the company, but the company itself will have to be more careful when hiring and take fewer chances both on people, products and strategy.
Imagine if Apple had to pay $300K per employee what kind of a landscape that would be. Nobody but Apple could afford to hire anyone.
It depends on how you define risk, or what angle you're looking at it from.
With lower salaries, the company can assume more risk, there's more room for failure. With higher salaries the employee becomes an increasing liability.
Just compare how hiring in France is, where terminating people is significantly more difficult, with an at-will environment like California.
To even use the phrase "poaching" is to give too much to the devil. It implies that a person "belongs" at a certain organization, as opposed to being a self-interested economic actor, and that there is something incorrect or dirty or unethical or wrong about leaving where they work to work somewhere else.
Sadly true. But what's worse is, look at who I'm replying to - not a group of CEOs or other billionaires, I reckon. Even the people who get screwed by this kind of shit agree with the reasoning behind it, for some reason.
Sure, it is the optimal arrangement for both companies. It's also illegal because it is patently unfair to the majority of the people involved.
I can understand why large company CEOs would want to do this. I can even empathize with them and imagine myself wanting to this were I in their situation. I can also see how this affects employees, though, and why employers shouldn't be allowed to do so.
Either way, it would surprise me if people who are otherwise happy at their company would randomly switch to a partner company unless either: a) the salary offered were significantly (>30% or so) higher than at their current company for similar work in similar conditions (meaning they are undervalued or undercompensated at their current company), b) the other company looked much more promising a place to work for or offered a much better position (in terms of autonomy or career advancement). Pretty sure the solution there is just to compensate your employees fairly and make their work conditions on par with the standard for similar workers in the industry (or better, if possible).
> This is the Prisoner's Dilemma, plain and simple.
It's not really, but that is an enlightening comparison. Using the prisoner's dilemma as an analogy for this hiring situation, the employees aren't players (prisoners, if you prefer) at all. Which is exactly the problem.
If you are looking at the players as the companies deciding to poach/not-poach then the payoffs look just like the prisoners dilemma.
That just gives you the reason why two companies would want to collude and would have to agree to collude to get the best outcome for both companies.
I agree the more important issue is as you say; the legal and moral aspects are what they are because of the fact that employees are being treated as resources or pawns. But that means that we are happy to see a prisoners dilemma dynamic here, it means that there has to be some type of collusion to make this dynamic happen. Collusion is explicit and detectable. Much better than the various other types of exploitative dynamics that are emergent.
> If you are looking at the players as the companies deciding to poach/not-poach then the payoffs look just like the prisoners dilemma.
Okay, but the problem itself is different. In a classic prisoner's dilemma the players cannot know how the other will decide and so they act in the manner which benefits them the most. When pursuing their interests they both rat out their accomplice, with the ironic outcome that neither avoids punishment.
> But that means that we are happy to see a prisoners dilemma dynamic here, it means that there has to be some type of collusion to make this dynamic happen. Collusion is explicit and detectable.
Okay, but the collusion is why it's not a classic prisoner's dilemma, I would think.
Also, we're not that happy. The collusion means the companies can avoid punishing one another prisoner's dilemma style. Great for the companies but bad for the employees, since "punishment" in this context involves... hiring.
I think the Tragedy of the Commons is a more apt analogy. There's a finite resource (employees) which optimally benefits each company if they were non-competitive. As soon as they start shortening the supply of that resource (in this case, making it more and more costly to obtain the resource), then it becomes a race to the bottom.
Why is it that, at a certain level, intelligent company leaders seem to stop thinking of their employees as individuals and instead start thinking of them as company assets?
I think this is directly related to the language used within most companies -- at least all those I've worked at -- to describe their employees: human resources. I think this is because people too easily conflate human resources with natural resources, which are consumed by some manufacturing process.
Once upon a time, I worked at a company whose internal management guidelines stressed loading new hires with as much work as they could bear to determine their breaking points. Work load was then scaled back to some sustainable-ish percentage of that maximum, and the employees were worked until burnout. The expectation was they would then leave the company. Obviously they had an absolutely absurd amount of turnover. Upper management saw nothing wrong with utilizing their resources in this manner. This experience obviously colors my view of things.
In my opinion, the phrase human resource is simply dehumanizing. But, I also think it might be a necessary psychological barrier that is required by massive companies. If the upper management actually conceive of their organization as made up of employees, not human resources, they may act or react more slowly, become less risk averse, etc. That is bad for business! Likewise, I think there's a similar statement to be made about citizens vs. consumers when speaking about another type of large organization: governments.
Language and the words we choose matter. They shape our thoughts, and define what is possible. We ought to choose better words.
While I don't agree with many of the comments here, I agree with yours specifically. I really hate the phrase human resource, like it is something that is ready for exploitation.
One of the many reasons I never worked for big consulting companies is that, they look at things as problems vs resources. If the problems cannot be solved by X resources, try X+1. There they are called resources, not even human resources.
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.
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.
>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.
If you're a CEO of a large company worried about the impact that poaching will have on your company and on the industry as a whole, you don't have to sit around and wait for the churn to eventually stop when the market price stabilized. You can go out and make it happen by paying your people better.
We agree that there is some salary level where that constant churn of poaching doesn't happen, right? As you said, people generally like to stay where they are. That means that poaching will only work if you can offer something substantially better. When employees are paid well enough that it's not worth paying them substantially better just to convince them to leave their current job, the poaching churn will stop.
If Jobs wanted to stop the poaching churn without being evil and without breaking the law, it would have been easy: go out and figure out what that salary level is, and start paying it. Or heck, he wouldn't even have to go that far. If we assume that the "no poaching" level is vastly higher than current salaries, all he'd have to do is pay, say, 50% higher than the other companies around, then keep an eye on things and continue bumping up compensation if and when other companies started to follow along.
I don't see how that scenario has any negative outcomes for anyone besides shareholders and executives who counted on being able to pay $1 to an employee in return for $10 of value forever. There would be no feelings of resentment and betrayal, no combative emotional stances, because none of the churn you describe would happen.
Faced with poaching, Jobs had three alternatives. He could ignore it, he could collude with other companies to stop it, or he could pay his people well enough to make the problem go away. The only reason to choose collusion over better pay is to save money by giving less of it to your workers.
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.
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.
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."
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.
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?
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?
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.
Perhaps the reason Jobs has been convincing to so many followers is because of the power of his own self-delusion.
It is possible he was very good at deluding himself.
Perhaps that self-delusion is contagious.
If one wants to believe something strongly enough, then maybe one can believe it.
If people want to believe that the only way to produce great form factor and ease of use in a computer is to be Jobs-like and conduct "business" like Apple, then they might believe that, even if there is a good chance or evidence this behaviour is not necessary.
It seems people have a difficult time separating the Apple products from the organization that sells them.
One may be worthy of adoration, the other may not.
Maybe its Dunbar's number. These executives know and interact with so many people that perhaps its quite difficult for their minds to see their employees as people.
But then, I've seen that attitude in startups. The passion for the company as a whole trumps everything so the people are easily disposable to them. Which, as in so many other areas of life, is completely backwards from what they perceive as logical.
Several years ago, I was contacting by a recruiting firm about a job opening. I was interested, I fit the description of the person for whom they were looking and I wanted to proceed.
The recruiter was going off an old copy of my resume that they found online and was unaware that I had a different employer. When I disclosed this, they immediately refused to go any further in the process because they were worried that if they helped me to leave then my employer wouldn't use them to fill future openings.
I told them to lose my number. Since that time, when one of my friends is looking for work in tech, I steer them away from this particular recruiting firm (I have no desire to blast them here) because of my experience with them.
This happened in the Pittsburgh area, I can only imagine what it was like out there on the left coast.
Employees do not belong to their employers, I don't know why this is such a difficult concept for some people to grasp.
I agree that this sucks, but you need to keep in mind that the recruiter works for his corporate clients, not for you. If helping you would cause him to lose his contract with his biggest customer, he'll make the obvious choice.
But even the Tim Cook statement is the exact same tone as Ed Catmull. At first "protect his employees" sounds like it's as if he's protecting chess pieces from being killed in battle. But really what it boils down to is him protecting his employees from becoming employees at another company, from getting opportunities outside of Apple. Which is essentially him keeping assets to himself.
If you are partnering with a company, you typically can break the partnership by poaching employees. I think the biggest problem is this anti-bidding strategy extended to companys that weren't partners.
Steve Jobs had a simple agenda: do what was good for Apple and Steve Jobs. Everything else was collateral damage if it didn't fit in with that goal (mistreated kids, wives, employees, ...).
Remember in this case we have two companies which decided to work together on a project and established no-poaching agreement.
If you ask your friend to go out with you on a trip along with your girlfriend, would it be ok if your friend builds relationship with her during the trip and she breaks up with you? You can argue that may be your girlfriend found a better fit and you should be ok with that. OR you can argue that you and your girlfriend were doing just fine but your friend violated your trust and lured her away destroying your precious relationship. I bet you can find people arguing both cases as "obviously" right outcome.
PS: I'm not arguing any of the sides but I'm intrigued by this morality problem.
I don't think that analogy works. The boyfriend/girlfriend relationship is completely different from the employer/employee relationship, and the whole point of this controversy is that companies aren't supposed to be friends.
Here's what I think would be a better analogy: let's say you run a restaurant in a small town. The restaurant business is booming, and you and your competitors are all expanding, to the point where it's getting hard to find qualified cooks and servers.
The cooks and servers start working to get a piece of the pie. They move between restaurants as higher pay is offered. You desperately need more staff and since you can't find new people, you resort to soliciting the staff at competing restaurants and offering them more money. They do the same to your employees. Average pay rises.
You and the other owners don't like this at all. Cooking and serving was a minimum-wage job not too long ago! This steadily increasing pay is eating into your profits. So you all get together and agree to put a stop to it: you won't try to hire away their staff, and they won't try to hire away yours. Pay stagnates, and you and the other owners get to keep more of your profits.
This is what happened with Apple and these other companies over time, only with computer people instead of cooks and servers. Is it immoral for businesses to collude to artificially hold down wages? I think most people would say yes. Probably more importantly, it's illegal.
Employers would say such an agreement is not immoral, because it benefits them, but employees would say it is immoral, because it harms them. However, most people are employees, so yeah.
Law aside, it is unpractical. All companies are starved for cooks, and by collaborating to keep salaries low, they are preventing the job market from expanding.
Oh please, your analogy doesn't fit at all. Apple and Intel aren't friends, they're competitors in the labour market, both hoping to attract the top talent. If they had legitimate concerns about their employees leaving then they should've focused on convincing their employees to stay by increasing their compensation and improving their work environment.
Perhaps "corporations are people, my friend" but they're not buddies out on a camping trip with a girl. There's no Corporation-A-broke-their-word-to-Corporation-B - there's business and competition is a huge part of that.
If you sign an agreement with your friend behind your girlfriend's back you're looking out for your own interests. You're in effect controlling or limiting her choice without her knowledge.
"I know where Steve's head was. He wasn't doing anything to hold down salaries; it never came up. He had a simple objective: if we were working together on something, like with Intel, where we threw everything in the middle of the table and said, 'let's convert the Mac to the Intel processor', well, when we did that, we didn't want them poaching our employees that they were meeting, and they didn't want us poaching theirs. Doesn't it make sense that you wouldn't, that it's an OK thing? I don't think for a minute he thought he was doing anything bad. And I don't think he was thinking about saving any money. He was just very protective of his employees."
Ed Catmull of Pixar, a seemingly gentle person, is similarly unapologetic about the issue. Why is it that, at a certain level, intelligent company leaders seem to stop thinking of their employees as individuals and instead start thinking of them as company assets?
(I don't mean this as an anti-Apple comment. In fact, I want to give Jobs, Cook, and Catmull the benefit of the doubt, in the sense that they probably did approach the issue from the perspective of doing what's best for their companies, not as a quick way to save some paltry money. But that's kind of the underlying problem, isn't it? Once you've internalized the idea that your employees are company assets — that they aren't hard workers who make the company tick, but that they literally are the company — it's easy to slide down the slippery slope towards incredibly unethical and shady dealings like collusion. I wonder how this can be avoided.)