3 Steps to Hiring and Retaining the Right Executive

Senior Financial ExecutiveBy:  Tracy Levine, Chairman and CEO, Advantage Talent Inc.

The top reason given by Executives actively searching for a new opportunity is their current company misrepresented the job on the front end.

1.)  Before you can hire the employee you need, you must define clear responsibilities for the position you are hiring the candidate to fill.

Executives tend to be movers and shakers: the get it done employee.  Never discussing more than the general job description with no defined resources and timelines leads to Executive disengagement.  Many hiring managers switch into the salesman mode once they find a candidate that they are interested in hiring.  It is tempting to pass over the specifics of the heavy lifting involved in the job and focus on general goals.  If you have target deadlines, then share with the candidate those deadlines and the resources they will have to accomplish the stated goal.  Or if you are needing someone to lead and keep the status quo, tell the candidate.  But also, be clear on what aspects they will be judged on in their review.

2.)  Don’t hire on gut instinct alone.

Bringing your personal biases to the table can keep you from hiring the best Executive for the job.  Hiring the right Executive is a complex decision.  According to Harvard Business Review, “The more complex the situation, the more misleading intuition becomes.” (1)  Do not jump to quick decisions in the first few minutes of an interview.  Both the candidate and interviewer can have off days.  Take time to dig deep into specific job performance goals and finding out what is in the candidate’s tool kit to achieve these goals.

3.)  Lose your biases when defining what is needed to for the job.

Time and time again, we see hiring managers miss getting the top Executive for their position because of hiring manager biases.   An example of this bias are hiring managers that state MBA required.  Good hiring begins with accessing current and future capabilities, current expertise and past job success as the first sorter.  Education should be considered as a backend requirement as part of a holistic review of the candidate.

Many companies are moving away from using degree requirements as the most important qualification.  “Academic qualifications will still be taken into account and indeed remain an important consideration when assessing candidates as a whole, but will no longer act as a barrier to getting a foot in the door,” …. Maggie Stilwell, Ernst and Young’s managing partner for talent” (2)

Job Seekers Want To Know: Why a CPA may trump an MBA

By: Tracy Levine, Principal, Advantage Talent Inc.

Every other week The Renaissance Executive Transition Forum, composed of top Executives who are highly educated and highly accomplished, meet for networking and peer mentorship.  In recent months the topic of how some Senior Financial Job Descriptions have changed has brought about much debate.  Job Descriptions for many Finance positions are now including the following:  “CPA required or preferred.”  Other job openings even include experience with a “Big 4”  or Large Regional Public Accounting firm required.

As one recent ex-public company executive shared with the group, it doesn’t make sense that a job I have done for over 20 years, may be out of reach.  The most outraged and stunned are the Senior Executives that have earned an MBA.

These Executives argue their case vigorously.

“I’ve done this job for years which should make a CPA irrelevant.”

“I have an MBA with solid work experience which should be at least equal to a CPA with experience.”

“Requiring a CPA is a way to promote age discrimination.”

“If I could just get around the ‘dumb’ HR Managers and/or Recruiters to a real ‘educated’ person, the lack of the CPA would be a nonissue.”

Several people who do not have a CPA have in the past held and done exceptional jobs as internal accountants, assistant controllers, controllers and chief financial officers.  These same candidates could continue to do fabulous jobs but the world economic paradigm has shifted.  The U.S. has just experienced the worst economic downturn since the Great Depression.  American’s want the gatekeepers to have accountability.  Regulatory Authorities, such as, the Securities and Exchange Commission, the FDIC and the IRS are busier than ever.  Accountability and measurable expertise has become a key concept in today’s economy.

Meet the new Rock Stars: Certified Public Accounts (CPA)

Certified Public Accountants (CPA) muscling in on MBAs

Meet the new Rock Stars: CPAEarning an MBA is a very significant accomplishment.  However, in today’s economic reality an MBA is not always viewed as an equivalent to a CPA.  A CPA in several instances is getting paid more than an MBA.  If a person has a JD and a CPA or an MBA and a CPA, they have the “Willie Wonka Golden Ticket”.  Getting an undergraduate accounting degree coupled with a CPA License takes as much time and work as earning an MBA.  The current requirement is 5 years of undergraduate classes.  After graduation, the person has to pass a 4 part exam and complete a one year apprenticeship to obtain their CPA License.  And while both the MBA and the CPA continue to gain real world experience, only the CPA continues to take classes for Continuing Professional Education (CPE) credit to supplement their real world experience.  The CPA cannot keep their license active if they do not take CPE Classes.  A CPA License is not just a piece of paper, as many non-CPA Senior Financial Executives argue, anymore than an MBA is just a piece of paper.  Both are only earned through hard work.

Why does all of this matter? Changes in Corporate Governance

In a past blog, I wrote about how the switch to IFRS will affect corporate governance.   Under the final rules the Securities and Exchange Commission makes it clear that just because someone was already serving on an Audit Committee did not mean they could automatically be grandfathered in as the Audit Committee Financial Expert in IFRS Accounting.  It further states that the fact that a person has experience as a public accountant or auditor, a principal financial officer, controller or principal accounting officer or experience in a similar position would not, by itself, justify the board of directors in deeming the person to be an Audit Committee Financial expert. (http://www.sec.gov/rules/final/33-8177.htm)

Just like the Audit Committee Financial Expert, Senior Financial Executives may not get to be grandfathered in as the experts when all eyes are on GAAP, IFRS and corporate accounting.  Some Boards may take the position that it is of great relevance for a company to hire someone with a CPA and public accounting experience.  As the old adage goes, “Nobody was ever fired for buying IBM.”  Even though it has been assumed the rule only applies to the auditors, any accountant filing a report with the Securities and Exchange Commission (SEC) is required by law to be a Certified Public Accountant (CPA).  This may include senior level accountants working for or on behalf of public companies that are registered with the SEC.  Technically the assistant controller, the controller and the CFO are all involved in the accounting, the creating and filing of the financial reports that are submitted to the SEC.

Shareholders are now quicker to sue Board Members for any financial missteps.  Regulators are becoming more aggressive.  The Board is not and will not be able to continue business as usual.  A litigious environment coupled with aggressive regulator investigations does have an effect on the way the Board views the Finance and Accounting Executives being hired by the Corporation.  Therefore, Senior Financial Executives should not find it shocking that the Board may prefer to hire candidates with a CPA and “Big 4” or large public accounting experience.

The Senior Financial Executive’s are correct that their job encompasses more than accounting.  However, Corporate Boards and Chief Executive Officers are very aware that the shareholders, the regulators and the general public are not in a happy or forgiving mood.   Shareholders feel like they were blindsided by the massive banking and corporate failures over the past couple of years.  Both Shareholders and Regulators want Senior Financial Executives to provide financials that are accurate and provide transparency into the health of a corporation.  Certified Public Accounts are viewed as the experts in providing what the shareholders and regulators are currently demanding.

Trends In Accounting Employment

By: Tracy Levine, President – Advantage Talent Inc. and Michael Levine, Principal – Advantage Talent Inc.

What have employment trends been like for the accounting industry in both Georgia and nationwide in past years?  Looking back to the period from 2003 through early 2008, the trend was very positive for accountants in both ‘Industry’ and ‘Public Accounting’.  In mid-2008, many companies in ‘Industry’ reduced their hiring appetite, but ‘Public Accounting’ firms were still scrambling to find accountants at all levels to ramp up for the upcoming Busy Season.  By February 2009 (only 7 months later), many of these same ‘Public Accounting’ firms were forced to lay people off due to lack of demand for their services. 

Over the past several years was there a shortage of experienced Accountants?  From 2004 to early 2008 there were some minor shortages in ‘Industry’ but ‘Public Accounting’ experienced a shortage of experienced candidates for their positions.

What’s the overall landscape of Accounting Employment?  Today, the employment environment for both ‘Industry’ and ‘Public Accounting’ is mixed.  Some companies and some firms are expanding and others are contracting.

How has the recession impacted employment in the Accounting industry?  Unemployment within ‘Public Accounting’ and ‘Industry’ has increased significantly during the last 2 years.  Many of the ‘Public Accounting’ firms have cut staff, and large numbers of accounting professionals from ‘Industry’ are between jobs and looking for work.  The first half of 2010 saw some modest improvement in the government and healthcare sectors, but employment in many sectors continued to decline throughout most of 2010.

How has it impacted education in the Accounting field? Are there fewer students?   The number of students majoring in accounting has been steadily growing.  In fact, according to the last AICPA survey, 2008 saw the largest number of graduates in history.  This trend is expected to continue.  The major problem is replacing the Accounting Ph.D. Professors.  They are retiring in large numbers.  The current economy may help this problem.  Many of the new graduates who did not get hired continued their education.   The AICPA has a fund to help students who wish to continue their education and earn an Accounting Ph.D.

Are fewer people being certified as CPAs? Or is it just more difficult for those new to the profession to get jobs because of layoffs, consolidations, etc.?     Just like their peers, accounting graduates were affected by the bad economy.  According to a survey from the National Association of Colleges and Employers, only 19.7 percent of all 2009 graduates who applied for a job actually had one. 

The AICPA reported a significant drop in students sitting for the C.P.A. Exam when the exam was computerized that made it look like the number of students sitting for the exam had dropped 50%. The truth of the matter is there has been a small decrease. When the exam was given in paper form, if a student took the exam in May and November, they were many times counted twice. 

What’s in store for Accountants in the coming years?  We believe the demand for CPAs will be strong whether the economy improves or not.  New governmental healthcare/insurance regulations and Financial Reform regulations will require companies to put significant resources toward compliance.  International Financial Reporting Standards (IFRS) are scheduled to be implemented over the next few years. Some companies that have been putting off Merger and Acquisition activity or other transactions will get ‘back in the game’ at some point.  All of these activities represent good news for the accounting community because all of these issues create additional demand for CPAs.

Will employment numbers for Accountants (both in Georgia and nationally) increase again? If so, why?  According to the U.S. Department of Labor’s Bureau of Labor Statistics’ Occupational Outlook Handbook, employment for a number of accounting and finance specialties will rise as fast or faster than the average for all occupations in the coming years.  In fact, accounting was listed as one of the top 20 industries that would experience the most growth through 2018.  The MetLife Foundation and Civic Ventures, a think tank that focuses on baby boomers, predicts that a worker shortage could develop within 10 years as this group retires.  This will be particularly true for the Public Accounting Firms.  Many of the current Partners are part of the baby boomer generation.  Public Accounts at all levels will have more opportunities for positive career advancement as the top positions become available.  We have seen a huge pickup in hiring by Public Accounting Firms across the nation.  This trend should continue well into first quarter 2011.

Check out our National Public and Industry Accounting Jobs at http://www.advantagetalentinc.com/Job_Openings.html

SEC Approves Shareholder Proxy Access: Have you reviewed your by-laws?

By: Tracy Levine, President, Advantage Talent, Inc.

On August 25, 2010, the Securities and Exchange Commission voted 3-to-2 to adopt a controversial proxy access rule to facilitate shareholders’ ability to nominate a limited number of candidates for election as directors.

SEC Chairman Mary Schapiro stated, “As a matter of fairness and accountability, long-term significant shareholders should have a means of nominating candidates to the boards of the companies that they own………….Nominating a director candidate is not the same as electing a candidate to the board. I have great faith in the collective wisdom of shareholders to determine which competing candidates will best fulfill the responsibilities of serving as a director. The critical point is that shareholders have the ability to make this choice.”

The new SEC rules do not change any state or foreign corporate law rules governing the nomination and election of directors, they do provide for the inclusion of nominees properly nominated in accordance with state law in the company’s proxy statement. The shareholders claimed victory and the U.S. Chamber of Commerce declared it was against Federal Law and immediately filed suit. The U.S. Chamber of Commerce has been successful in using Federal Courts to strike down SEC efforts to allow shareholder proxy access. These successes came at a different time in history and were before the recent Dodd-Frank overhaul. The SEC has prepared a 450 page response to the lawsuit while the U.S. Chamber of Commerce has asked the courts to temporary delay the rule going into effect. Only time will tell who will win.

The response has been quick and harsh against the U.S. Chamber of Commerce this time around. The Council of Institutional Investors, a group representing approximately $3 Trillion in investments, was quick to put out their own statement, “The Council of Institutional Investors regards the business community’s legal challenge to the Securities and Exchange Commission’s (SEC) “proxy access” rules as an assault on a fundamental shareowner right.” (http://www.cii.org/UserFiles/file/09-29-10%20proxy%20access%20legal%20challenge.pdf) Considering the mood of the country, the fight might not be as clear cut and easy for the U.S. Chamber of Commerce this time around. Shareholders are looking at the decline of their personal wealth while Corporate Executives and Wall Street continue to pay out huge bonuses. Corporations are going to have to be prepared for an uphill battle or a possible loss in the Federal Courts. Good Corporate Governance may require Boards to review their Corporate By-Laws related to Director Elections before the 2011 Proxy season. As stated before, the SEC ruling does not supersede state or foreign laws. A Corporation’s By-Laws will set the backdrop of how the new ruling will affect their Corporate Board.

UPDATE:  SEC puts on hold Shareholder Proxy Access until courts make a decision.

http://online.wsj.com/article/SB10001424052748704631504575532691876953852.html?mod=dist_smartbrief

Will IFRS Make CPAs a Requirement for SOX Compliant Boards?

By: Tracy Levine, President, Advantage Talent, Inc.

Most articles about IFRS have been technical in nature. The focus has been on what items will be accounted for differently under IFRS versus GAAP. Little attention has been given to how the switch to IFRS will affect corporate governance. While the SEC supports the switch to IFRS, they have expressed concern that the switch will cause a short term SOX compliance issue as it relates to financial experts on the audit committee. Under SOX at least one member of the Audit Committee must be defined as an Audit Committee Expert. The SEC defines an Audit Committee Financial expert as a person who has the following attributes:

An understanding of generally accepted accounting principles and financial statements;………………..Under the final rules, a person must have acquired such attributes through any one or more of the following:

(1) Education and experience as a principal financial officer, principal accounting officer, controller, public accountant or auditor or experience in one or more positions that involve the performance of similar functions;

(2) Experience actively supervising a principal financial officer, principal accounting officer, controller, public accountant, auditor or person performing similar functions;

(3) Experience overseeing or assessing the performance of companies or public accountants with respect to the preparation, auditing or evaluation of financial statements; or

(4) Other relevant experience.

Under the final rules the SEC makes it clear that just because someone was already serving on an Audit Committee did not mean they could automatically be grandfathered in as the Audit Committee Financial Expert. It further states that the fact that a person has experience as a public accountant or auditor, a principal financial officer, controller or principal accounting officer or experience in a similar position would not, by itself, justify the board of directors in deeming the person to be an Audit Committee Financial expert.

(http://www.sec.gov/rules/final/33-8177.htm)

The rules of the game are changing. An understanding of GAAP is no longer going to be the starting benchmark. IFRS knowledge is going to be the starting benchmark. Audit Committee Financial Experts familiar with IFRS are going to be in short supply. Very few financial experts have the prerequisite experience to qualify as the expert under SOX. One of the groups actively preparing for and educating their members about the switch to IFRS is Certified Public Accountants (CPA). Starting in 2011, the CPA Exam will include testing on IFRS. A CPA is required to finish a predetermined amount of Continuing Professional Education (CPE) each year to keep their licenses current. For the last couple of years they have been able to take numerous CPE Classes on IFRS. Putting a CPA with IFRS training on the Audit Committee may be one of the steps companies may have to take to protect themselves from litigation.

Shareholders have become very litigious. Many feel the gatekeepers have failed miserably and left the shareholders with diminished assets. The Security Police and Fire Professionals of America are suing Goldman Sachs and Morgan Stanley over large bonuses and losses sustained by investors. The Atlanta Firefighters’ Pension Fund is suing their custodian, Chicago-based Northern Trust, over risky investments. These are just a few examples of shareholders lashing out.  Corporate Boards run the risk of finding themselves the next group of gatekeepers subject to shareholder litigation. If the company loses money or fraud is discovered, shareholders might put forth litigation challenging the competence of the Audit Committee Expert, the Audit Committee members and of corporate decisions approved by audit committees who are alleged to have lacked the necessary competence.

The Securities and Exchange Commission is soliciting comments on this issue and several others related to IFRS and Corporate Governance. If you are interested in commenting on this issue, the SEC requests the following:

DATES: Comments should be received on or before October 18, 2010.

ADDRESSES: Comments may be submitted by any of the following methods:

Electronic Comments

•Use the Commission’s Internet comment form

(http://www.sec.gov/rules/other.shtml);

•Send an e-mail to rule-comments@sec.gov. Please include File Number 4-608 on the

subject line; or

•Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

Paper Comments

•Send paper comments in triplicate to

Elizabeth M. Murphy, Secretary

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549–1090.

All submissions should refer to File No. 4-608. This file number should be included on the subject line if e-mail is used.

Click the following link to read about all of the Coporate Governance Issues being addressed by the SEC:   http://www.sec.gov/rules/other/2010/33-9134.pdf

SEC States CEO Succession Planning a Key Board Responsibility

By: Tracy Levine, President, Advantage Talent Inc.

In 2009, corporations saw executives exiting as their corporations’ economic health were failing and corporate sustainability questionable. These abrupt departures during a critical time in the corporations’ fight for survival magnified the adverse affect of minimal or no succession planning. Corporate Boards found themselves in the position of focusing on finding a leader rather than focusing on the immediate financial problems at hand. If any company should be the poster child of poor succession planning in 2009, it would be the Bank of America Corporation. CEO Kenneth Lewis resigned at a time when the company was in the process of paying back TARP money which ultimately resulted in a 2009 fourth quarter loss of $5.2 billion. It took the Board three months to find a successor. Time that would have been better spent focusing on improving corporate performance.

In the past the SEC has supported the exclusion of shareholder proposals calling for succession planning transparency. Corporate Boards have been able to Rely on Rule 14a-8(i)(7) to exclude this type of information in the proxy. Rule 14a-8(i)(7) allows corporations to exclude information relating to the day-to-day management of the workforce.

Shareholder proposals for strategic succession planning are now getting support from the SEC. The SEC has changed its stance of classifying succession planning as part of the day-to-day operations. Succession Planning is now considered a risk item that needs to be addressed.

SEC Staff Legal Bulletin No. 14E (CF)

“One of the board’s key functions is to provide for succession planning so that the company is not adversely affected due to a vacancy in leadership. Recent events have underscored the importance of this board function to the governance of the corporation. We now recognize that CEO succession planning raises a significant policy issue regarding the governance of the corporation that transcends the day to-day business matter of managing the workforce. […] Going forward, we will take the view that a company generally may not rely on Rule 14a-8(i)(7) to exclude a proposal that focuses on CEO succession planning.”  (http://www.sec.gov/interps/legal/cfslb14e.htm)

Laborers’ International Union of North America (LiUNA) a long time proponent of succession disclosure had tried unsuccessfully in the past to have their CEO succession disclosure proposals included in the proxy of numerous companies for shareholder vote. In 2010, corporations such as Whole Foods, Bank of America and Verizon were forced to include LiUNA’s proposals for shareholder vote. Approximately 30% of the Whole Foods shareholders, 40% of the Bank of America shareholders, and 33% of the Verizon shareholders voted for the proposal. Even though the proposals were defeated the first time around, Corporate Boards can expect shareholder support for the proposals to grow if the issue is not voluntarily addressed.

Interpol Chief Admits Facebook ID Theft

By: Tracy Levine, President, Advantage Talent Inc.

As most people have heard by now, Interpol Chief Ronald Noble announced at the inaugural Interpol Security Conference in Hong Kong that criminals had used Facebook to steal his identity.  Before anyone jumps to the wrong conclusion, they did not gain access to his identity by stealing information off of his Facebook Account.  Two Facebook Accounts were set up in Noble’s name where the criminals gathered information about a recent global Interpol-led Operation Infra Red.  The operation was for tracking down criminal fugitives who had fled national jurisdictions. 

Web 2.0 social networking is a catch-22 for many people.  Some think it is dangerous to put any information about themselves out on the web.  While others have no qualms about putting everything about themselves out on the internet.  There have been numerous articles written on the dangers of putting too much personal information on the internet.  In contrast, very few articles have addressed the consequences of not owning and managing your Web 2.0 social networking information.

If you do not claim your identity, brand and image someone else might. If Interpol Chief Robert Noble’s identity can be stolen, then anyone’s can.  It shows the ease with which the criminals are able to forge people’s identities across all forms of social media sites to steal information.  While I would not necessarily suggest everybody sign up for every Web 2.0 platform available, I would strongly suggest executives claim and control their Linkedin Profile.  For an executive, his/her contacts, clients and industry knowledge could be at stake if he/she ignores their Linkedin Profile.

According to Alexa, Linkedin traffic rank is 17th in the US and 27th in the world.   What does this mean to the typical executive?  Linkedin will come up before almost every company website in the US.  I.E. There are only 16 websites in the U.S. that rank higher than Linkedin.  If someone claims your identity on Linkedin, they have effectively stolen your identity.  Google Search and most other search engines will pull up your name in Linkedin on the first page before your company profile or any other internet information.  With aggregators such as ZoomInfo, 123 and many more, if someone steals your identity on Linkedin, the false information will get picked up by the web aggregators. It doesn’t take long for the identity theft to go viral.

What Executive group is the most vulnerable to Web 2.0 identity theft? The group that Interpol Chief Noble belongs to, 50+ years old.  According to Alexa, the largest group to participate on Linkedin is the 35 to 44 year age range.  The 55+ years and above age range are statistically too low to calculate.  This means that a large group of some of the most influential executives in the U.S. have left themselves vulnerable to a situation similar to Interpol Chief Ronald Noble.

To learn more about the incident visit: http://news.yahoo.com/s/afp/20100917/tc_afp/hongkongitinternetinterpolsecurityfacebook.

The Devil Went Down to GA: Goldman Sachs vs. Credit Suisse-Noncompete Agreements

AtlantaBy: Tracy Levine, President, Advantage Talent Inc.

In February of this year, Credit Suisse lured away seven of Goldman Sachs’ top Wealth Managers.  Purportedly some were offered upwards of $10 million to move to Credit Suisse.  According to some of the articles written, Credit Suisse is the devil, and companies like them are the reason Georgia needs to change their view on noncompete and non-solicitation agreements.  It is amazing how much media this situation got in Atlanta that was not just gossipy news but highly politically charged news.  I am sure the defection did hurt Goldman Sach’s business.   However, Goldman Sach’s is hardly the poster child for reform.

How shocking, a Wall Street firm stole top talent from another top Wall Street firm.  Wrong.  This is not shocking at all and is business as usual. The top Wall Street Firms have been raiding each other’s top employees for decades.  In this instance, Goldman Sachs filed a lawsuit not against Credit Suisse, but against the seven wealth managers.  It was voluntarily dismissed the next day.  What makes this situation so ironic is that Goldman Sachs is no saint.  This is a situation of what is “good for the goose is good for the gander.”  In 2010, I believe the score is Goldman Sachs 55 and Credit Suisse 7.  Earlier this year, Vestra, a Goldman Sachs backed UK company lured an estimated 55 employees from UBS.  Shocking really shocking…..not.

Full disclosure: Back in the 1990’s, I was an employee who was lured away from Credit Suisse, then Credit Suisse First Boston, by Smith Barney with 3 other employees.  In that point in time very few people had non-solicitation agreements.  Obviously, Credit Suisse has more than thrived since then to have the money to lure people from Goldman Sachs for millions of dollars.  Over the past three decades, it hasn’t been unusual for the very top Directors and other top employees to be lured away from one Wall Street firm to join another and lured back by the original firm in a year or two.    

So why has this business as usual situation in Georgia led to many trumpeting the horn for stricter noncompete and non-solicitation agreements?  Wall Street already has a current master agreement that all Wall Street Firms and Investment Firms are encouraged to sign that says a firm will honor nonsolicit/non-compete employment agreements.  If Goldman Sach thought honoring non-solicitation and noncompete agreements were good for business in the long run, they would have signed it.  Or was it their arrogance of being one of the biggest or strongest bullies on the block that made them feel immune to the ramifications of not playing nice with others?  Credit Suisse is another firm that has up to this point not signed the agreement either; probably for the same reasons as Goldman Sachs.

Noncompete and non-solicitation agreements have been problematic for both employers and employees in Georgia’s current environment.  I agree Georgia needs to review their approach to non-solicitation agreements and noncompete agreements.  However, it needs to be viewed in a real context and not the lens of hyperbole.  Goldman Sachs is not a victim but the recipient of their own practices.  Yes, they might lose millions of dollars.  I am sure UBS probably lost millions of dollars also when Vestra hired their employees.

In the real world, it is not appropriate to leave each contract brought before the court to individual judge’s discretion on whether they are enforceable or not.  The Georgia Courts’ approach with these type of contracts is a little like defining pornography…I know a bad contract when I see one.  On the flipside it is not o.k. to go too far the other way by changing the Georgia Constitution to the point it makes it impossible for an employee to work for up to three years after leaving a company due to corporate downsizing.

In November, the public is going to be asked to vote to make the following changes to the Georgia Constitution in regards to non-solicitation and noncompete agreements.

H.B. 173, codified in relevant part at O.C.G.A. §§ 13-8-2.1 and 13-8-50 to -59, provides for a host of revisions to the current status of Georgia law on restrictive covenants.

  • Georgia courts will be allowed to partially enforce restrictive covenants that are otherwise overbroad, thus reversing Georgia’s strict and longstanding “no blue-penciling” rule;
  • provides that in-term restrictive covenants will not be considered unreasonable because they lack specific limitations on the scope of activity, duration, or territory, as long as the covenants promote or protect the purpose or subject matter of the agreement or deter any potential conflict of interest;
  • establishes a presumption that post-employment noncompete agreements with a duration of two years or less are reasonable;
  • establishes a presumption that post-employment customer and employee non-solicitation agreements with a duration of three years or less are reasonable;
  • permits employers to extend post-employment restrictions on customer solicitation to customers and potential customers with whom an employee did not have actual contact as long as, within two years prior to the date of termination, the employee supervised the employer’s dealings with the customer, obtained confidential information about the customer, or earned compensation, commissions, or other earnings as a result of the customer’s purchase of the employer’s products or services; and
  • permits employers to enforce post-employment restrictions on employee solicitation that lack an express reference to a geographic area.

See Paul Hastings Client Alert for complete information.

It is about time that Georgia did away with the non-blue penciling law that made it hard for employers to have any kind of meaningful protection.  The rub for the employee is that Georgia is an “at will” state.  A company can end your employment at anytime.  This wouldn’t be such an issue if noncompete and non-solicit agreements were only being signed by the very top level executives.  Up until recently, they were the only employees asked to sign such agreements.  Now many companies make all employees sign a non-solicit or noncompete agreement whether they are a top level executive or integral to the overall big picture or not.  It is hard to discern what the appropriate balance is for protecting the employer, the employee and the public’s intrinsic right to have free competition and the right to do business with whomever they want.

I would like to hear your thoughts on the amendments to the Georgia Constitution.  Is it not enough of a change? Does it go too far? Or do the changes strike the right balance? Why do you believe that some of the Wall Street firms don’t see the advantage of agreeing to honor nonsolicitation/noncompete agreements and completely ignore employment agreements?

LinkedIn Recommendations For Your Job Hunt: Do They Help?

LinkedIn Recommendations For Your Job Hunt: Do They Help?

By: Tracy Levine, President, Advantage Talent, Inc.

Recently, I was forwarded an article about how Executives could get a job through LinkedIn.  One of the suggestions was to solicit recommendations for the hiring manager to read.  The observation was made that in the normal job situation you only get to provide a few recommendations but now with LinkedIn you can give the hiring manager even more positive recommendations to read.  The declaration made me laugh out loud.  Published studies show that the average hiring manager only looks at a resume for 10-15 seconds.  It flies in the face of logic to think that the hiring manager who only takes seconds to read a candidate’s resume is going to take even one second to read recommendations on LinkedIn.   Professional Executive Recruiters and HR Directors are tasked with asking specific questions that relate to the job at hand when calling a reference.  A short recommendation on LinkedIn isn’t even in the same league as a real recommendation and cannot be compared.

Some people have taken to attaching their LinkedIn recommendations to their resume. Most Executive Recruiters and hiring managers I have spoken with say they take recommendations on LinkedIn with a grain of salt.  Recommendations that are from people who have actually worked with the person or used a person’s services are the closest to real recommendations.  The problem with LinkedIn recommendations is that many people solicit recommendations from people who know them from social situations and networking but cannot speak to the person’s work experience.  Another problem is the “you give me a recommendation” and “I will give you a recommendation” situation.  Typically, these exchanges are not conducive to real or to meaningful recommendations.

Getting recommendations are great if you stick to only getting and giving recommendations to people you have personally worked with in a meaningful capacity.  However, no amount of recommendations can erase a checkered history.  It is the job of the Professional Recruiter or HR Director to do a thorough background check.

10 Rules of LinkedIn Group Etiquette

10 Rules of LinkedIn Group Etiquette

By: Tracy Levine, President, Advantage Talent, Inc.

1. Do not ask to join groups you are not qualified to join.  For example, if you do not qualify for the XYZ professional organization in the ‘real world’ then you don’t qualify in the LinkedIn world either.  Asking to join groups you are not qualified to join makes you appear to be a spammer.

2. Do not post job orders in the discussion section of the LinkedIn Group.  There is a job posting section…..Use it.  It may seem like everyone is looking for a job these days but many are not.

3.  Make sure to be relevant with your postings.  Don’t post just to post or to have your name everywhere. Make sure that the topics you chose are relevant to the group’s interests.   For example, if you are part of a LinkedIn wine group don’t post about your car collection. 

4.  Do not post inflammatory comments.  Most users of LinkedIn are established professionals.  They did not join the group to argue with you.  Also, posting inflammatory comments is a quick way to burn bridges in the professional community.

5.  Do not sell to members.  People do not join LinkedIn Groups just so you can have access to spam them with personal e-mails through LinkedIn.

6.  Do not, not, not post sale pitches for products in the Discussion Thread of a LinkedIn Group.  This is the quickest way to achieve negative brand recognition.

7. Do be a mentor.  Sharing your expertise with others and helping them reach their goals is appreciated by all.

8.  If you are the administrator of a group, check the requests to join often and frequently.

9.  Do not write anything that you do not want out in the public.  It may be a LinkedIn Group but it is not a confidential group.

10. DO NOT use the LinkedIn Groups as your personal blog.  This is my personal pet peeve and seems to be a growing trend in a couple of the LinkedIn Groups that I am a member.  Get your own blog, it’s cheap and it is free. (WordPress.com).  If members of a group find you interesting they can sign up to follow your blog.