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‘Nike accuses former shoe designers of taking secrets to Adidas’
Written by Andrew Chung, Nike accuses former shoe designers of taking secrets to Adidas outlines the most recent details of a lawsuit Nike initiated against three of its former employees. The company claims Denis Dekovic, Marc Dolce, and Mark Miner violated their non-compete agreement by consulting with Adidas starting in April 2014.
Nike is seeking $10 million in damages and plans to “vigorously” protect its intellectual property (Chung, 2014). The company suggests that Adidas’ Brooklyn Creative Design Studio is a knock-off of Nike’s own Kitchen design lab, and was brought to the competing company by the trio. Nike has also accused the designers of bringing future strategy and product designs to Adidas.
Nike and Adidas both hail from an industry I’ve spent my career in, and I have had the pleasure of doing business with both Adidas and Nike. The issue around the non-compete agreement, and the complexity of the overall situation is interesting.
The Human Resource Management issues range from strategic (supporting Adidas in its quest to gain back lost market share) to detailed (employment contracts, and compensation details). This is a rich situation with varied implications for the previous employer, the employees, and the current employer.
HRM Issues and Implications | Nike Inc., the previous employer
A small group of top employees leaving together highlights the challenge inherent in forecasting external demand for talent. Environmental scanning, in this case for competitive/market trends, is difficult to do. Adidas, Nike’s top competitor, is motivated to bring their sales and market share to higher levels previously enjoyed. With vast resources and a strong brand, Adidas can spend time recruiting talent from other blue-chip organizations, and make competitive or better offers.
On a regular basis, the two companies will have talent moving between them. Mark Milner himself spent almost two years at Adidas (Milner, 2015) prior to joining Nike. In this case, Nike may not have anticipated the team of three leaving at once, and heading to a single other company to disrupt the market.
The second issue is whether these senior designers were engaged in their roles at Nike. “Engaged employees feel a vested interest in the company’s success and are both willing and motivated to perform to levels that exceed the stated job requirements” (Dressler et al., 2014, p. 432). The actions the organization is accusing them of - including copying sensitive design and business documents (Chung, 2014), approaching the competition, etc. - would indicate the opposite. At first glance it seems that Nike did not do enough from a career planning and retention perspective for these three.
The third and current issue affecting HRM at Nike is whether this higher profile departure, and subsequent lawsuit will affect the company’s climate and culture. In 2012, Nike had 6,624 full-time employees at its Oregon World Headquarters (Brettman, 2014), where the three designers were based. Its impact on anyone but their direct teams and designer / director group would be minimal.
However, Nike does not want to continue to lose top talent to one particular competitor. According to textbook author’s Gary Dessler, Nita Chhinzer, and Nina Cole, career planning “can play a significant role in retaining employees” and “reducing turnover of valued workers” (Dessler et al., 2014, p. 239). There are few top-level positions to promote high-value employees into. But employees value a total rewards approach including career-growth opportunities (like transfers, job expansion, or horizontal loading which will better prepare the company’s future leaders), a high quality of work, recognition and work climate (Dessler et al, 2014, p. 296). Nike must continue to provide / extend these additional opportunities in career planning for its top employees.
HRM Issues and Implications | Dekoviv, Dolce, and Miner, the employees
One issue arising from Chung’s article is the fine line between use of company-owned technology and employee privacy. Nike was able to determine that the former employees downloaded sensitive company information, erased incriminating emails and text messages. We don’t know what Nike’s written policy on electronic surveillance is, or whether they have one, but employees will certainly be more mindful in their communication on work-issued technology.
Another consideration is balancing the employee’s skills and career development with employee commitment. According to Dessler, Chhinzer, and Cole, “most employees appreciate and respond well to having their skills and potential enhanced, and to knowing that they will be more marketable (Dessler et al., 2014, p. 239). Generally speaking, it is these HRM activities (skills and potential development) that often reaffirm an employee’s engagement. Dekovic, Dolce, and Miner instead used that marketability to advance at another competing firm.
HRM Issues and Implications | Adidas, the current employer
Creating, designing and working in a new job team, for any company, will require a bit of reorganization (including, literally, with the org chart). Dekovic, Dolce, and Miner will be based in a different group than the rest of the design team in Brooklyn, NY and operate a new kind of lab. The trio will be in a different physical location than the rest of the Adidas design team is based in Germany. The new roles may also have different outcomes and goals. The performance measurement piece will need to be considered, particularly amongst job families. Will the product designers in Germany be held to different productivity metrics than the design trio in New York?
Adidas was very strategic in going after this team. The changing business market has allowed only a few brands to make most of the globe’s sales in any one category. The aging workforce and shifts in occupations and employment patterns have created a sense of urgency regarding the development of careers for the next generation of managers and executives (Dressler et al., 2014, p. 239). Align this environmental awareness within HRM and the business, and it is clear that Adidas is looking forward in their human resources planning policies.
Human capital is a key competitive differentiator in the business world today. And as shown in the move by Mark Miner, Denis Dekovic, and Marc Dolce, “increasing competition for talent is expected to create a serious challenge for retaining high-potential employees” (Dressler et al., 2014, p. 239).
The human capital lifecycle inherently has many highly involved processes in it, many of which are related in this article, from selection and the capabilities developed within an organization, to the transition out of the organization.
ADDITONAL | Former Nike Designers Issue a Counter Lawsuit for Violation of Privacy Rights via HypeBeast
Appendix 1 | Works Cited
Brettman, Allan (2014, October 7). Nike hires 2,000 in Oregon in past 2 years, satisfies employment agreement with state, Kitzhaber's office says. The Oregonian. Retrieved from http://www.oregonlive.com/playbooks-profits/index.ssf/2014/10/nike_hires_2000_in_oregon_in_p.html
Chung, Andrew (2014, December 9). Nike accuses former shoe designers of taking secrets to Adidas. Reuters. Retrieved from http://www.reuters.com/article/2014/12/09/nike-adidas-lawsuit-idUSL1N0TT1OH20141209
Dessler, G., Chhinzer, N., & Cole, N. (2014). Human Resources Management in Canada (12th ed.). Toronto: Pearson.
Miner, Mark (2014). LinkedIn. Retrieved via https://www.linkedin.com/in/2markminer
This academic paper was written by Jennifer D. Pilkington in February 2015.