How to Protect Your Business When An Employee Joins A Rival

How to Protect Your Business When An Employee Joins A Rival

As Hewlett-Packard attempts to block former CEO Mark Hurd from joining Oracle, here's a somewhat related question for your small business: Would your business be crippled if your best sales leader or business leader joined a rival MSP? If so, what are you doing to protect your business from that doomsday scenario?

Before I launch into this blog, I have a confession: One of my biggest professional regrets involved signing a non-compete agreement. I signed the document during a weak moment while working with an established media company. I never violated the non-compete, but when I resigned my position to join a start-up, my former employer went ballistic and tried to block my career move. It was a high-stress moment but ultimately I prevailed by honoring the terms of my contract even as I joined the start-up.

Now, back to you and your company. Do you promote non-compete and nondisclosure contracts with your most valuable employees? In most cases, I suspect the answer is no. Never seen a non-compete agreement? Here's a [download id="5"] (in PDF format).

Read the Business Owner's Toolkit, and you might conclude that every significant employee needs a non-compete agreement. But in many cases, non-compete agreements are unenforceable. Simply put, in most cases you can't stop an employee from walking out the door and earning a living elsewhere.

Advice Worth Noting

So, how can you protect your business when a top employee joins a cross-town rival? The New York Enterprise Report offers some valuable advice, which I've summarized here:
  • Scenario 1: Losing a key staff member for a short- or long period of time.
  • Potential Solution: Institute a buddy system so employees pair up for important projects and customer engagements. Also, leverage CRM or PSA (professional services automation) software to make sure company knowledge doesn't walk out the door if a key staff member leaves.
  • Scenario 2: Finding ways to protect trade secrets and maintain client loyalty when a former staff member joins a rival.
  • Potential Solution: Never leave the care of very important clients up to one staff member. As a small business, the business owner should strive to nurture main clients. You want clients to be loyal to you and your company, not an employee. If you and an employee must part ways, conduct exit interviews to be certain departing staff members do not walk off with valuable intellectual property, knowledge assets or client databases. Get feedback about your company's strengths and flaws. Also, remind the outgoing employee of any non-compete contracts they signed (if any), though such contracts are difficult to enforce. Also, terminate departing employees’ access to your computer systems immediately upon dismissal or resignation.
Ultimately, find a way to get your most important asset -- customer information -- out of your employees' heads and into a central IT system that you own, control and safeguard. Oh, and ask yourself this question: Why did the employee want to go to a rival in the first place?

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