ChatGPT and Generative AI utilizing Large language models (LLMs) will continue to have major implications for individual and organizational productivity. As your team starts experimenting with Generative AI technology, executives must educate people on what AI can — and more importantly can’t — do well. For example, while AI is excellent at spotting patterns, aggregating information, and making predictions, it’s not yet capable of generating truly original insights. With this in mind, encourage your managers to evaluate whether AI’s capabilities match with a task and proceed accordingly. For example, it could help people process a lot of information quickly or generate a rash of new ideas. Generative AI can even offer advice to help people make a difficult decision, provided it’s been trained on relevant data. But emphasize to your managers and employees that they shouldn’t use Generative AI to create meaningful work products without human review/approval. The most important thing to stress at this early stage is that Generative AI’s outputs are only as good as its datasets and algorithms—and those aren’t always reliable.
Builting a Culture of Kindness on Your Team
There is no denying that kindness at work motivates and fosters teamwork that over-achieves team goals. But how do you promote a culture of caring and generosity on your team?
First, take the lead. People are highly attuned to the behaviors of high-status team members; when you give compliments to your employees, they’re likely to emulate your behavior.
Second, set aside time during Zoom meetings for a “kindness round,” in which team members can acknowledge and praise each other’s work. This doesn’t need much time — even just a few minutes is plenty of time to boost morale and social connection.
Finally, consider small, peer-nominated spot bonuses to allow people to recognize their colleagues’ work. If you have a limited budget, a gift card or a small gift can show appreciation which goes a long way. It’s your job as a leader to set a tone of kindness on your team. These small gestures can have a big impact.
Remember, it’s never a perfect day to do something for someone who can never repay you.
On January 5, 2023, the U.S. Federal Trade Commission (“FTC”) issued a Notice of Proposed Rulemaking (“NPRM”), seeking comments on a proposed rule that would effectively ban the use of non-compete agreements, nationwide. In a typical non-compete agreement, employees agree not to work for a competing employer, or start a competing business, within a certain geographic area and period of time after their employment ends. The FTC is taking the position that such agreements are, on their face, anti-competitive and hurt workers and, accordingly, want to prevent all employers from entering into non-compete agreements with any “workers,” paid or unpaid – including both employees and independent contractors, as well as to require employers to rescind any existing non-compete agreements with workers and “actively” inform them that the agreements are no longer in effect, with very limited exceptions. The FTC is seeking public comment on various issues related to the proposed rule over a 60-day period. The rule would require full compliance within 180 days after the publication of a final rule.
Although the proposed rule, if finalized, is destined to receive vigorous legal challenges from numerous stakeholders, all employers should consult with counsel and take immediate action to prepare for the possibility that this rule will go into effect later this year. In addition, as recent FTC enforcement actions announced this week have made clear, the FTC is taking the position that the use of non-compete agreements in various industries violates the federal antitrust laws – whether or not the new rule goes into effect – and has put employers on notice that it intends to vigorously enforce those laws. This latest push by the Agency grows out of the Biden Administration’s belief that lack of labor market competition harms workers, arguing that employers’ ability to restrict worker mobility can decrease wages, reduce benefits, and worsen working conditions. Promoting fair competition in labor markets is a “key priority” for the FTC. In addition, numerous states have recently enacted extensive limitations on using non-compete agreements, and three states, California, North Dakota, and Oklahoma, outright ban them.
What you need to know about the proposed rule:
The proposed rule defines a “non-compete clause” as “a contractual term between an employer and a worker that prevents the worker from seeking or accepting employment with a person, or operating a business, after the conclusion of the worker’s employment with the employer.” The FTC would apply a “functional test” as to whether a contract provision is a “de facto non-compete clause” because it has the effect of prohibiting such employment. Although this would be a particularly fact-specific analysis, the proposed rule provides examples of potentially “de facto” non-compete clauses, including:
- Overly broad non-disclosure (confidentiality) agreements that “effectively preclude the worker from working in the same field after the conclusion of the worker’s employment with the employer;” and
- Agreements that require an employee to repay the employer’s unreasonable training costs if the worker’s employment ends within a specified time period.
For purposes of the rule, the FTC defines a “worker” as a person who works, whether paid or unpaid, for an employer, including “without limitation, an employee, individual classified as an independent contractor, extern, intern, volunteer, apprentice, or sole proprietor who provides a service to a client or customer.” The term “worker” does not include a franchisee in the context of a franchisee-franchisor relationship; however, the term worker “includes a natural person who works for the franchisee or franchisor.”
The proposed rule would declare it to be an “unfair method of competition” for an employer to enter into or attempt to enter into a non-compete clause with a worker; maintain with a worker a non-compete clause; or represent to a worker that the worker is subject to a non-compete clause “where the employer has no good faith basis to believe that the worker is subject to an enforceable non-compete clause.”
The rule would not simply “void” such agreements; to the contrary, the proposed rule requires employers to actively “rescind” any non-compete clause no later than 180 days after finalization of the rule, and provide notice to the worker that the worker’s non-compete clause is no longer in effect and may not be enforced against the worker. The employer must notify the worker in “individualized communication” within 45 days of rescinding the non-compete clause. The notice must be sent to current and former employees who may be covered by such an agreement. The proposed rule provides (non-mandatory) “model language” for the required notices, which can serve as a “safe harbor” against enforcement.
The requirements of the proposed rule would not apply to a non-compete clause that is entered into by a person who is selling a business entity or otherwise disposing of all of the person’s ownership interest in the business entity, or by a person who is selling all or substantially all of a business entity’s operating assets, “when the person restricted by the non-compete clause is a substantial owner of, or substantial member or substantial partner in, the business entity at the time the person enters into the non-compete clause.” Non-compete clauses covered by this exception would remain subject to Federal antitrust law and all other applicable laws.
The proposed federal rule would supersede any state statute, regulation, order, or interpretation to the extent that such statute, regulation, order, or interpretation is inconsistent, unless such statute, regulation, order, or interpretation affords any worker greater protections.
As for comments, the FTC is particularly interested in public comment on:
- Whether franchisees should be covered by the rule;
- Whether senior executives should be exempted from the rule, or subject to a rebuttable presumption rather than a ban; and
- Whether low- and high-wage workers should be treated differently under the rule.
What should employers do now?
There is no reason at this point to panic given the anticipated time period between the 60-day public comment period, the unknown time period thereafter for any proposed rule to become final, the uncertain outcome of the language in any final rule, and the 180-day grace period thereafter for employers to become compliant with any final rule. As such, there is no reason to immediately stop using such restrictive covenant agreements in your business, provided such agreements are otherwise reasonable and enforceable under applicable state law. However, given the position the FTC has taken on this issue, as well as the increasing scrutiny covering such agreements around the country, it may be prudent to evaluate their utility and what steps may be needed to take in the event some variation of the proposed rule takes effect in the future.
Stop Promoting Incompetent Leaders
If you want to understand why some companies have a toxic culture, underperform relative to their potential, and eventually collapse — look no further than the quality of their leadership teams. Whereas competent leaders cause high levels of trust, engagement, and productivity, incompetent ones result in anxious, alienated workers who practice counterproductive work behaviors and spread toxicity throughout the firm. Consider that the economic impact of avoiding a toxic worker is two times higher than that of hiring a star performer.
Incompetent leaders are the main reason for low levels of employee engagement, and the prevalent high levels of passive job-seeking and self-employment.
There are too many incompetent individuals in leadership positions — in large part because businesses tend to promote people on the basis of charisma, confidence, inaction, and even narcissism.
Instead, companies should be putting people in charge who demonstrate competence, humility, and integrity. If you’re responsible for assessing leadership candidates, you should work on your ability to distinguish between confidence, competence, and experience. Remember that overconfidence is a natural result of privilege.
Fortunately, you can use scientifically valid assessments to measure the traits you want (or don’t want) in your leaders. You can ask company leaders, including emerging leaders, to take self-assessments, and then measure their responses against their leadership style, performance, and effectiveness. The resulting data will help identify patterns that characterize good and bad leaders at your company.
Of course, this practice will take time and effort, and many organizations won’t want to invest those resources. But vetting candidates for leadership roles will pay enormous dividends down the line.
Leading Through Uncertainty Is All About Mindset
Uncertainty is unavoidable. As an executive, you need to be prepared to lead your organization through murky waters, but doing so requires getting in the right mindset. Here are my six tips to help you shift your perspective:
- Embrace the discomfort of not knowing. Move from a “know-it-all” to a “learn-it-all” mindset. You don’t need to have all the answers you just need to ask the right questions.
- Distinguish between “complicated” and “complex” issues. They require different solutions.
- Let go of perfectionism. Instead, aim for progress, expect mistakes, and recognize that you have the ability to continually course correct as needed.
- Resist the urge to oversimplify and come to quick conclusions. Take a disciplined approach to understand both the complexity of the situation and your own biases.
- Don’t go it alone. Connect with your peers who have their own set of experiences and perspectives to draw from.
- Zoom out. Taking a broad, systemic view of the issues at hand can reveal unexamined assumptions that would otherwise be invisible.