Today’s guest blogger is Martin Snyder, Main Sequence Technology. Founded in 1998, Main Sequence Technology creates talent acquisition technology solutions wherever and however organizations are built. PCRecruiter is the solution of choice for thousands of third party recruitment, corporate, and outsourced staffing teams across economic models and around the world. PCRecruiter provides comprehensive CRM and ATS functionality converged into database, voice, and email interfaces to empower recruiters to do what they do best with accessible, cost effective technology. Main Sequence is proud to serve the NPAworldwide organization and our many individual NPAworldwide-affiliated customers. To learn more, please visit www.pcrecruiter.net.
I was going to write this post about the Defend Trade Secrets Act of 2016, (“DTSA”), which will have some effects on the recruiting industry. Events overtook that plan however, so I’m going to split this post and talk about both DTSA and Microsoft’s acquisition of LinkedIn.
Why might you care about DTSA?
DTSA is a new federal law that changes the relationship between employers and employees regarding trade secrets. Aspects of the law’s effects may impact contract law between parties where trade secrets are involved, including recruiting and staffing firms and their customers. The law was enacted to ostensibly provide a more consistent, reliable means to protect trade secrets in this age of mobile information. The President signed it into law May 11, 2016. The law is an amendment of the Economic Espionage Act to create a private civil cause of action for trade secret misappropriation- available to any injured party. The act modifies existing criminal penalties and notably, increases the corporate penalty to $5,000,000 or three times the actual damages, whichever is greater.
A trade secret is defined in line with that of the Uniform Trade Secrets Act (UTSA) that was adopted by almost all U.S. states. A “Trade Secret” is information that derives independent economic value from not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use and the subject of efforts that are reasonable under the circumstances to maintain its secrecy. The law applies to all US persons. There is an important immunity granted for whistleblowers if they disclose trade secrets in confidence to a government official, either directly or indirectly, or to an attorney solely for the purpose of reporting or investigating a suspected violation of law, or is part of a court record. To encourage compliance with the whistleblower sections, all employers and potentially all contracting entities must notify employees and contractors of the whistleblower protections. Failure to notify means loss of the right to collect legal fees and enhanced damages from a defendant. This notice must be made available in conspicuous locations within, for example, contracts and employee handbooks. The term “owner”, with respect to a trade secret, means the person or entity in which rightful legal or equitable title to, or license in, the trade secret rests.
When something big passes the 2016 House of Representatives by 410-2 vote, and the Senate by 87-0, somebody needs to hang on to their wallets. This law may turn out to be a minor change to a relatively unknown part of the US Code, or it could turn into an epic transfer of wealth to attorneys and large corporations such as what occurred when the US patent system met the information age.
Federal litigation of any kind is frightfully expensive, precise, and slow-moving; the mere threat thereof is a powerful motivator. This can be a useful lever for recruiting firm owners attempting to mitigate or dissuade would-be employee spin-offs, but also a danger if trade secrets are not carefully managed within the frameworks of relations with customers, or potentially even 3rd parties targeted as recruitment sources. Adjust your contracts and employee communications to maintain your rights under the act, and think carefully when you sign that next NDA. It’s unknown to what extent parties to contracts will be able to mutually disclaim themselves from the civil portions of the law, and since that won’t likely be fully tested for years, it may pay to insert language to that effect. As always, please don’t take legal advice from random bloggers, however clever and pretty they may be (!) Discuss with a qualified legal advisor, or takes your chances!
Now let’s talk about something interesting.
Microsoft paid about 8.6 times sales or about 26 times free cash for LinkedIn, which is a lofty valuation if you think the LinkedIn growth story is slowing down, as many people in our industry believe is/was bound to happen. Surely Microsoft’s seemingly random purchase of Nokia was an all-time waste of money, but will LinkedIn follow that inglorious deal? How can Microsoft align LinkedIn with its various business and consumer offerings?
I think the potential of the deal could be staggering if Microsoft has the vision to think big. Firstly, it’s a huge identity asset. “Sign in with LinkedIn” is already a handy tool, but it could be very useful for Microsoft to consolidate people’s separate personal and business lives in a way not possible before the deal. Next, LinkedIn could become a de facto piece of enterprise software across every kind of company if Microsoft treats a person’s LinkedIn account as their “master” record for HR and operational purposes. Everything from calendars, to assignments and approvals, to self-service and collaboration could happen on the platform- and in good time too as solutions like Slack and others threaten Outlook’s enterprise supremacy.
An evolved vision could eventually include all kinds of algorithms to understand the work people are actually doing, who they are doing it with, where they are doing it, and how well they are doing it. Those are the core vectors of recruiting and organization-building, so it hardly takes much imagination to see how such information could be put to economic work.
Unlike Nokia, LinkedIn is still thriving, owns a relevant block of intellectual property, and employs a vast array of valuable talent in places where Microsoft has major presence. It’s entirely possible that Microsoft will leave LinkedIn on autopilot and will not pursue the larger possibilities of this merger. I tend to think that won’t happen, and I don’t think this is the last big surprise Microsoft may have up its sleeve. Microsoft has been doing a good job unifying Windows across devices, and it’s entirely possible that full versions of Windows running on phones could eventually run Android apps and begin to take a meaningful share of new phone sales. News about the death of Windows has clearly been exaggerated, and people forget that $100 billion in cash, a strong stock, cheap borrowing, and growing cloud-recurring earnings can be a mighty long lever with which to move the world. MSFT will be an interesting story, should the republic survive the election and aftermath of 2016.
I would be committing marketing malpractice if I did not say a few words about PCRecruiter. I think the LinkedIn deal is going to be a net positive for PCRecruiter, because our core competence in Microsoft technology has been central from the start. We will find good ways to improve the Microsoft value chain as it develops. PCRecruiter 9 has been very well-received, and our sales will be up double-digits for 2016 if the wheels stay on the economy. PCRecruiter has an all-new analytics package and a superb integration with Ring Central, which has also been highly appreciated by our customers. If you have not seen PCR in a while, we invite you to take a look. Wishing everyone a huuuuuge summer of recruiting success and plain old fun!