Here’s what CHROs actually think about the potential ban on noncompetes

March 15, 2023, 11:37 AM UTC
Non-compete agreement
Seventy-two percent of HR leaders view the potential ban on non-compete agreements as a possible boon for accessing top talent, according to Gartner.
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The Federal Trade Commission’s proposed ban on noncompete agreements sparked fervent debate about the positive and negative implications for employers. But what do CHROs think about the news? Gartner’s latest monthly insight report suggests that most HR heads are fairly optimistic about what the potential ban could mean for sourcing talent. 

The proposed rule aims to better protect workers and foster a healthier environment for people seeking to change jobs. “Noncompetes block workers from freely switching jobs, depriving them of higher wages and better working conditions, and depriving businesses of a talent pool that they need to build and expand,” said FTC Chair Lina Khan in a prior statement. Many people leaders recognize the potential upsides as well. 

In fact, a majority of the over 280 HR heads surveyed by Gartner last month said that the ban would provide access to a larger pool of skilled workers—72% to be exact. In addition, 48% said they believe it will actually improve competition for talent, and 46% believe it will promote better workplace diversity. 

“A lot of people suggested it would hurt companies [and] make a bad situation worse,” says Dion Love, vice president of advisory in the Gartner HR practice. “But in my work, I’m finding the smart companies actually see things differently, and they’re turning it to their advantage. It is a little counterintuitive.” 

HR executives are preemptively planning to respond to the potential ban by actually increasing investment in their people. To offset no longer having noncompetes as a way to retain employees, 47% of survey respondents said that their organizations will offer more learning or growth opportunities, and 41% said they will compete with higher salaries. A significant number (38%) also reported that they plan to increase internal focus on promoting work-life balance to prevent losing valuable talent to competitors. 

“When we boil it all down, what we’re talking about here are strategies to keep people in a tight labor market, and we’re weighing their relative merits,” Love tells Fortune. “And when one strategy goes away, they pivot to another, and that’s exactly what they’re doing.”

Amber Burton

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The dispersal of American workers has resulted in an unanticipated amount of traffic congestion that could potentially affect economic growth. 

“Even though congestion is a sign of bustling economic activity, it can also be a problem from a business standpoint,” writes Prarthana Prakash for Fortune. It could result in “‘a reduced potential labor market if you are a company or a business—lost time, productivity [and] fuel, those kinds of things are the big costs of congestion,’” explained a transportation analyst.

Around the Table

A round-up of the most important HR headlines, studies, podcasts, and long-reads.

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- The combination of remote work and a byzantine immigration system means tech companies are increasingly offshoring jobs. Insider

- Hiring managers are debating whether using ChatGPT to write a cover letter should disqualify job applicants. Wall Street Journal

- Credit Suisse is scrapping executive bonuses after it found errors in its financial reporting. CNN


Everything you need to know from Fortune.

Meta layoffs continue. Meta plans to lay off another 10,000 employees, as its “year of efficiency” continues. The company also plans to pause hiring for 5,000 open positions. —Tristan Bove

WFH loneliness. Full-time remote work increases loneliness by 67%, according to a study from organizational psychologist Lynn Holdsworth. —Orianna Rosa Royle

Four-day week. A California lawmaker wants to reintroduce a bill shortening the workweek to 32 hours. The Society for Human Resource Management called the bill “bad for business,” raising concerns about staffing shortages and labor costs. —Chris Morris

This is the web version of CHRO Daily, a newsletter focusing on helping HR executives navigate the needs of the workplace. Today’s edition was curated by Paolo Confino. Sign up to get it delivered free to your inbox.

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