Monday, April 28, 2014

The $3 Billion Dollar (Wo)Men

It is rare to see a company above the $500 Million revenue mark fail to give a nod to the importance of employees, or "human capital".  The recurring theme that I see, if it is possible to paraphrase goes something like this - "Our people are our most important assets."

If you are an employee, hearing your company say something like that should give you encouragement.  As the company's most important component, that should mean it will do whatever it reasonably can to make sure that it retains, motivates, and engages you.  But let's say that your company also owns 30,000 patents, four million acres of land, 15 sky scrapers, and five corporate jets.  All of these I've just mentioned have a definite, discreet value.  In fact, all of them are very valuable indeed.  So if you are the most important asset your company has, just how much are you worth?

A close friend and colleague first made me aware several months ago of a situation that had been brewing in Silicon Valley since 2011 and finally found its resolution last week.  In short, that year five software developers filed a lawsuit against Apple, Adobe, Google, and Intel, and several other companies "...over an alleged "overarching conspiracy" to suppress pay by agreeing not to recruit or hire each other's employees."  Another way of saying this is the five believed that the tech giants were collaborating to (a) squelch the movement of employees from one company to another and (b) hold wages down artificially.  Needless to say, these claims were exceedingly bold and not something to casually allege against some of the biggest and most powerful corporations on Earth.  The companies being sued seemed to agree with this sentiment and tried to get the case thrown out by the 9th Circuit Court of Appeals, only to be rebuffed.  At that point it was game on between plaintiffs and defendants.

(For the record, Facebook has never been part of this case.  They pursue whomever they want, whenever they want, and don't seem to have much internal turnover.)

Over the ensuing three years from 2011 until this month (April 2014), the case evolved into a class action lawsuit encompassing about 64,000 employees in total.  Before the case was granted this status, there had been several other cases that had been filed and settled, all dealing with alleged employer collusion to control the free flow of employment for workers.  This article shows a timeline of almost everything and includes information about those cases against eBay, Pixar, Inuit, and LucasFilm. 

It appears that the reason why the workers were given class action status is that the presiding judges believed that the evidence pointed to a possible case of anti-trust actions.  I'm not schooled in law, but I know that when "anti-trust" comes into the picture, the situation gets a whole lot more serious.  So serious, in fact, that the lawyers for the 64,000 plaintiffs were seeking $3 Billion in damages.  Due to U.S. Anti-Trust Law, if the case in this situation goes to trial the total damages could be triple up to $9 Billion!  

For the reasons outlined in this piece by eWeek, the four companies (Apple, Adobe, Google, Intel) agreed to settle for $3 Billion rather than allow it to go to trial.  Besides the embarrassment of essentially being caught "red handed", I am assuming that they anticipated losing (badly) in front of a jury.  A $3 Billion settlement is always better than a $9 Billion loss.  Now, after the law firm takes its 20% cut, or a measly $600 MILLION, each of the plaintiffs will receive a gross amount of about $35,000 if the money is divided equally. (That's not always the case)

So, after writing all of this I come to my point.  The first is that $3 Billion for these companies is just pocket change.  In their place, I would have done the same thing.  But second, as bad as this may sound, I think that even though what the firms did was illegal and, as Google might put it, "evil", I have to agree with their actions.  At least to a point.  

The articles I have linked will paint the leaders of all these companies in a bad light.  However, I think that each one of them truly gets just how important each of their employees is or could be.  There has been and always will be a MONUMENTAL difference between "good" employees and the "great" ones.  

If your employees are truly your greatest assets, how far would you go to protect (and keep) them?  I would guess most of you would go to great lengths.  The situation with this lawsuit shows that the companies in Silicon Valley, even if they used the wrong methods, truly get the importance and value of high performing employees.  How many other companies say the same thing but can't or don't do anything to keep the "A players" who come through their organizations?

As a leader you are always in a war - every day - for the best people.  Be prepared to fight tooth and nail to keep them once (if) you are fortunate to get them.  The greatest are not a dime a dozen and are rarely replaceable.

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