My perspective is this, employees who have side projects will inevitably not be able to concentrate on the job that they are employed to work on.
Is this feeling shared amongst hiring managers in the industry?
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Many people would add points for someone doing some other programming in their free time, showing they are interested. From time to time I have "donated" code that I've written in my spare time to the company, so they definitely benefit from that. Or I know solutions to problems from my private work.
Other people just don't care what people do in their spare time, as long as it is legal and doesn't bring the company in disrepute.
You must be the only person in the world who sees this as a negative.
I'm a software leader, and I find individuals who don't have side projects to be a red flag. One of the most important qualities in an individual contributor is curiosity - fulfilling a need to know. Nothing screams curious like a public code repository jam packed with side projects of diverse topics and toolsets.
For people working for you now, you don't want to discourage these things, you want to encourage them. I would recommend even going so far as to allow a certain amount of company time to be spent on some of them just to give people an opportunity to fool around with new technologies, techniques, patterns and practices.
Anyone who engages in these kinds of side projects demonstrates a growth mindset, and those are the individuals you want to attract and nurture.
It depends on the purpose of the side projects.
If it is an attempt to earn income, then I am m concerned. I aw worried you are looking for a new job.
If it is a hobby: updating the webpage for their community association, then I am less concerned.
I worry about things that could conflict with our activities. It isn't the hours, because they can do all sorts of things that take up their free time, it is working on things that could complicate our activities or our customers.
I knew a person who thought he had a million dollar idea. They talked about it constantly. It got so bad, that they told everybody that this month might be their last month. They were then surprised when they weren't picked for the new project. The problem wasn't the hours they were putting into it, it was the fact that customers were worried they would quit at any time. They also worried they weren't focus on the customer.