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 Non-Compete Sample Agreement (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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Posted In: Finance | HR | Professional Services Automation (PSA) | Sales
Tags: CRM | HP vs Oracle | Mark Hurd | Non-compete Agreement | Non-solicitation | Non-solicitation Agreement | Professional Services Automation | PSA
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Joe, As it relates to sales/marketing staff I agree, you cannot stress enough, the importance of the sales/marketing CRM being updated in almost real-time. I make it part of my sales reps job descriptions/comp plans in writing, that they do so, and manage them to it on a weekly basis. Leads, pipeline, quotes, notes etc. No CRM updates, no commission dollars.
Todd@mspexcellence.com
Hi Joe – To your point re safeguarding central IT systems and sensitive data in particular, we work with MSPs and their clients re monitoring usage of apps such as CRM to ensure productivity levels stay high and that when staff do act inappropriately, i.e. by sending data to USB devices or out via webmail accounts, a complete audit trail of their activity can be easily generated. Equally as important is to see staff behaviour in context, i.e. a sales person may have spent several hours surfing Facebook or LinkedIn, but for true business purposes rather than personal gain.
Sarah Slater,
Snapguard http://www.snapguard.co.uk
Hi Sarah: I wish I had $1 for every company secret that was shared, stolen or lost via a USB device…
-jp
Hi JP. I am with you…I will never sign another non-compete in my life. I will sign a non-solicitation or have non-solicitation agreements with my staff. I am not sure what it is like in the US but here in Canada, non-competes are pretty useless. Our laws protect and we can not limit a person from having a career that uses their skills, but we protect our existing client base.
Non-competes are sort of like a pre-nup in a marriage. Honey, I love you but I know this will fail so here!
Cheers
Stuart Crawford
MSP Marketing Coach
403.775.2205
Stuart: I never say never. But… that non-compete was my single biggest professional regret. Everything worked out fine but it caused considerable stress.
-jp