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Comment by gress | Hacker News Reader

It may be that the consequences of the 'conspiracy' was to depress wages, and it should clearly be prosecuted if the legal case can be made.

However does anyone think that this was the intention behind these agreements? Isn't it more likely that they wanted to stop an insane war on one another's businesses by buying off key employees to disrupt one another's operations? It would seem as though companies with a giant stockpile of cash - I.e. MS, Google, and Apple, could stifle competitors by just taking out key employees of their opponents with large signing bonuses, regardless of whether they intend to put them to work or not. The result would be a destruction of value.

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The solution here is the same as the solution when Zuckerberg complained about employees leaving their jobs too quickly[1]: Pay your employees more. Figure out what kind of value they bring, and the amount of cost if they were to leave, and adjust their wages accordingly. Make no mistake about it, the ultimate goal of stifling competition is to depress wages. While maybe described as "disrupting operation", it is really just allowing a company to not pay an employee what they are worth.

Analogously, if 2 companies sold widgets, one in state A and one in state B, and they each had a near monopoly in each state, if they each made a closed door agreement not to enter into each others' states so they could each maintain their near monopoly, I think people, and courts, would certainly cry foul. Certainly competing would disrupt each others' operations, but the competition would bring better products and better prices to both states, and that's the point.

[1] http://techcrunch.com/2011/10/30/facebooks-zuckerberg-if-i-w...

You missed my point. The cost of losing a particular employee at a particular point in time can be far greater than the individual contribution they will ever make. That cost is transient because it depends on the state of a particular project. The value of the employee becomes the value of disrupting the project to the competitor. Matching the offer would be an option, but it would cause massive distortion within the company since the retained employee wouldn't be contributing that much more than their colleagues.

I don't see any justification for your statement that better products would result from this.

"The cost of losing a particular employee at a particular point in time can be far greater than the individual contribution they will ever make. That cost is transient because it depends on the state of a particular project." I think what you're trying to say here is that if a competitive company can time it right they can derail a project by scooping away talent at the right time (say, right before a product launch) which will cause greater harm at the moment than what the employee is "normally" worth (by "normal" I mean an average of their normal value output). I agree with this, but it is a failure of the company's compensation structure if this is the case. For instance, project base bonuses (upon completion of the project) should relieve some of this pressure because they would only get paid out upon completion of the project.

Regarding "better products" do you mean in my analogy, or our real world case of companies competing for talent? In the analogy, the competition causes both company A and B to beat each others' products in order dominate the market (either by lowering price and improving the product). In the case of companies competing for talent, the "product" is really the overall compensation package. Some combination of salary, options, benefits, etc will attempt to be found that will keep the employee where they are.

Thanks for clarifying - I would like to believe that you are right - but I still have concerns about things like project base bonuses, because there is still a giant distortion around employees who happen to end up on key projects being overvalued compared to other employees without whose contributions the key projects couldn't exist, arguably mirroring the inequalities we see in the larger society and leading to disintegration rather than increased cooperation.

With regard to better products, I hadn't understood that you were referring to the compensation package as the product. That makes sense as an analogy.

Your position makes sense, but I'm not at all sure that the market mechanism really optimizes in the way you hope.

That is the nature of at-will employment.

Even in countries with out "at will employment" (y'know the EU), can still be distrupted by an employee leaving. You usually only have to give 1 months notice for when you leave a job.

What point are you making?

My point is that if the employee has no guarantee of continued employment over the period where the company still benefits from the IP that employee created, why should the company have any right/expectation to the employee's continued employment during a period that is critical for the company? Employees can and should be expected to leave at any time in the absence of a contract to the contrary.

I would say that since the idea apparently started with Lucas and he specifically stated it was done to prevent bidding wars because they simply couldn't afford it at the time supports the thought.

I don't think it was the sole intention. But two things stand out to me that was part of the deal. The fact that the HR departments would inform each other if their employees were applying for a job at a company within the group; which by the way should be considered a huge privacy issue. Also that when an employee was made an offer, they only received a "final offer" to specifically avoid a bidding war. Those two things directly relate to wage suppression to me.

As for your example, that's quite true. But in the end it still stifles those employees' ability to increase their income because these companies directly conspired to not recruit from each other. It is not in the employee's interest to worry over if Company A wants to give them a pile of money to simply leave Company B but not work. Two companies coming to such an agreement for their benefit is a detriment to the employee, which is what the lawsuit is about.

Never mind the fact that the whole thing is clearly illegal under multiple federal and state laws. Therefore, their intentions are irrelevant.

> However does anyone think that this was the intention behind these agreements?

From the article:

> George Lucas believed that companies should not compete against each other for employees, because ‘[i]t’s not normal industrial competitive situation.’ As George Lucas explained, ‘I always — the rule we had, or the rule that I put down for everybody,’ was that ‘we cannot get into a bidding war with other companies because we don’t have the margins for that sort of thing.’

I'm not sure that is enough to make the case. For one, it's Lucas alone. But secondly - the bidding I think they would be concerned about would be more like the 'ransom value' of an employee who happened to be on a critical path and who could not be replaced quickly enough to avoid a significant setback.

The problem is not the market value for an employees skills and experience that will enable them to contribute to whoever they are employed by, it is that there is also a value to simply disrupting the opponent's team.

This is probably true. Competition is sometimes destructive. But these business practices are still completely illegal.

I think the intention behind these agreements was to stop Steve Jobs throwing a pile of burning crap at your house. It's like sweet valley Fortune 500.

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