What’s the Big Deal with Non-Disclosure Agreements?

Ok, so for anyone who has ever worked in a company that is focused on developing or maintaining a competitive advantage – read: every company in these United States of America, you have probably been asked to review and sign a Non-Disclosure Agreement.  What are these agreements all about?  Why are they so important?  What are the consequences of breaching this type of agreement?

What are these agreements all about?

Non-Disclosure Agreements “NDA” are essentially confidentiality agreements that are meant to protect a company’s proprietary information from being shared externally.  NDAs typically cover work product, practices/policies and people who work for the company.  NDAs are usually pretty wordy, with plenty of legal mumbo jumbo, but basically they state that you (employee) promise to keep all company business to yourself.

Why are these agreements important?

NDAs create an environment of trust, which allows for a free flow of ideas and communication within a company.   Some companies are pretty restrictive in terms of what they share with their employees, while others are pretty open.  We at SingleHop pride ourselves on being transparent and I think it is fair to say that we have a higher expectation of honesty and trustworthiness than some other companies.  We have chosen to be decidedly open with everyone in the company and would like to keep our genuine, open and creative spirit.

What are the consequences of breaching a Non-Disclosure Agreement?

NDAs are legally binding -- cue the attorneys.  Legal action can run the gamut, from calls or letters to/from attorneys, to a restraining order and/or formal complaint and request for action by the courts.  Companies take NDAs very seriously and are usually very willing to pursue legal action, which is costly and time consuming for everyone involved.

Additionally, and probably more importantly, you run the risk of damaging your reputation.  At the end of the day, no one appreciates broken promises and it becomes difficult to really trust someone who has demonstrated a low regard for honoring one’s word.

NDAs have become commonplace, and it is clear that they are critical for many businesses.  It is and really important for employees in all different functions to read, understand and honor any agreements that they sign.  If you don’t understand something, ask clarifying questions; thorough understanding and clear expectations are in everyone’s best interest.