Protect yourself against employees leaving for the competition

Picture this scenario:

One of your star employees has decided to leave and you’ve heard rumours that they’re going to your competition. You’re not only disappointed but also a little worried. They know your customers and clients, have a great rapport with them and are adept enough to handle and manage operations when you’re away. But this isn’t the worst part. Following this person’s resignation, you see that your customer and client base is declining.

What does this mean? What would you do?

In this week’s blog post we want to talk about key employees leaving to work for your competitors. Here are some thoughts on what to do, to both avoid key employees from leaving and joining the competition, and also if it does happen, what you can do to protect your organisation from troubles further ahead.

1) Review Employment Contracts

Many organisations today in both Australia and overseas have provisions in their employment contracts limiting what an employee can do when they leave for a new job.

These provisions can include: non-compete provisions; non-solicitation provisions for employees, clients, customers or others; confidentiality provisions; and trade secret provisions. These provisions vary in their relevant time limitations and scope.

As competitive hiring increases, companies losing key employees should review their employment agreements to ensure they include as many enforceable provisions as possible. If they are too broad or too restrictive, making it impossible for an employee to be able to earn a living, then the courts will change them to become more reasonable – these also will vary depending on the industry your organisation operates in.

Agreements need to ensure that the actions which the restraint prohibits are targeted and specifically relevant to the business interest which the employer seeks to protect.

An employee taking their skills, experience and problem solving abilities is unavoidable, but taking property (including intellectual property), going out of their way to poach clients or other employees is unethical and harmful to an organisation.  In those circumstances, non-compete contracts can be enforceable.

2) Protect Trade Secret Information

If a staff member is dealing with or developing intellectual property, you should be clear about ownership of that property. It is important to have policies that define what company information is considered to be confidential or a trade secret.

It is also important to develop policies and procedures that help ensure (and can prove) that certain information is treated as a “trade secret” or confidential.

Check computers – Employees often plan departures months in advance. Key files and information can be emailed to a private e-mail address or downloaded to a flash drive with the click of a few buttons. Unusual emails or bulk transfers can provide an employer with an indication that departing employees may not have the best of intentions.

After an employee has left, discontinue remote electronic access and change passwords – the traditional office is no longer confined to walls surround an employee’s desk. They can access their computers and voicemail from remote locations, but also remember to ensure return of any tangible property (office keys, building access keys etc.)

3) Conduct an Exit Interview

If you have reason to believe a departing employee will compete, an exit interview may be even more important than usual. If the departing employee is willing, the employer should conduct an exit interview during which the employee is asked about future employment plans and reminded of contractual obligations (such as non-competes or confidentiality agreements).

4) Communicate

Let your customers and clients know that service will not decline as a result of the employee’s departure. Don’t forget to also transition your clients – clients should be assigned new company contacts as soon as possible. This will enhance the employer’s chances of maintaining the client relationship, and may uncover evidence of the former employee’s misconduct such as a breach of a non-solicitation agreement. Don’t bad mouth the departing employee but immediately notify customers that the employee no longer has authority to act on behalf of your company.

5) Nurture and incentivise your valued employees

Non-competes aside, there are many other ways to more effectively prevent employee poaching. All companies have valued employees – those they can’t afford to lose because of their skill, experience and commitment to their work. One way you can help retain them is to show that you are invested in their future. Give them management time, discuss their professional goals, and share your vision for the continued growth of your organisation and their role in it. You need to send a clear message to your employees that they have a recognised and valuable role to play in your organisation as a whole.

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