What happens when staff joins the competition?

It happens all the time--but you can be better prepared. Here are some proactive steps a manager can take with staff to ensure security and stability when an employee leaves to join the competition.

If you haven’t yet had a staff member leave your company to join a competitor, you have been lucky. When recruiters begin targeting your company, the defections can escalate. That is exactly what happened at my company. Sometimes we knew we were being targeted before the staff member had left and other times the management team only found out after the fact through staff who were in contact with the former employee. The first couple of times we didn’t have a strategy, protocol, or contingency plan in place to deal with it, so we dealt with in an ad hoc, reactive manner. You know the saying: "One day you’ll look back at this and laugh." The saying is true in my case and the person I’m laughing at is myself. Suffice it to say; it wasn’t fun.

Learn from my experience with this outline of the key items that you should consider as part of your contingency plan when staff members move to other jobs.

Damage control
Before things get out of hand, do a little damage control. Rumors and hearsay can damage staff morale. As a manager, you should be both protective of your company’s interests and show a positive attitude in order to maintain morale.

An important component of damage control is your communication plan to inform the requisite groups and individuals who are affected. Act quickly to avoid letting the information be conveyed through the rumor mill. Depending on the responsibilities of the staff member in question, your damage control communications initiative will have both an internal and external audience. Some of the messages that you need to convey may be the same for both groups.

For external vendors, contacts and clients, your communication plan should include information on:
  • The new person to contact.
  • The protection of information: Assure contacts that project information, intellectual property, etc., will remain with the company and will not be compromised.
  • Continuity: Everything will proceed as before. The integrity of the relationship is secure.

For internal staff, the communication should focus on:
  • Assurances that the company’s interests have been protected.
  • Continuity issues: Work and projects will continue as before.
  • Reminders that staff should not share any critical information with those that have left. A friend is a friend. A competitor is a competitor.

In some cases, your damage control process will include battling the perception that a staff defection means that your company is about to spin out of control and be crushed by the competition. Your job is to assure employees and stakeholders that business will continue as usual.

Risk assessment
After you have launched a damage control effort, it is time to assess the actual risks that this loss to a competitor poses to the company.

Things to ask and consider as part of this assessment include:
  • Why did the person leave? Money? Opportunity? Circumstance?
  • Who’s leaving next? Are they taking someone else with them?

Now is the time for due diligence to help plan a course of action to negate the risk. Hire a replacement, promote a subordinate, reassign an existing staff member. Do whatever is prudent and necessary to reduce risk and protect your interests and the interests of your company.

Security enumeration
Security issues also need to be addressed, as is the case when any staff member leaves your team. Some security issues include a plan to:
  • Change the door locks and building access codes.
  • Change all passwords (as part of a security policy you should be changing passwords regularly anyway, so this is just an opportunity for you to do it).
  • Back up all e-mail and data from the former employee’s machine.
  • Redirect e-mail from the former employee to a manager or the replacement employee.
  • Ensure that employees do not "take" any proprietary code/contacts/lists/data with them. They should leave with whatever they came in with, nothing more.

Legal considerations
The most obvious and standard manner of mitigating the risks posed by an employee leaving for a competitor are two common legal agreements. You’d be well served to have all of your staff sign both of these agreements when they join your operation.

The Non-Disclosure Agreement (NDA) is a confidentiality agreement that protects the information and intellectual property that a staff member may have come in contact with on the job. It’s supposed to prevent them from being able to take confidential information to the competitor. The Non-Compete agreement is supposed to prevent the former employee from taking clients with them to the competitor.

I’ve heard of situations in which a staff member resigns and informs management that she is going to a competitor, and management will pull out the NDA and Non-Compete and remind the staff person of her legal obligations. Whether or not that tactic actually works with developers, and whether or not the agreements are enforceable (and there are some that aren’t) is another question. At the very least, even as a placebo, the NDA and Non-Compete agreements are good things to have.

When one of your staff ends up at a competitor, don’t panic. Communicate with those affected and take immediate action to limit your exposure to risk. Help your staff remain calm, focused, and organized. It’s not the end of the world; you’re a competent professional manager, and you’ll deal with it.

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