How do you minimise the risks after an employee resigns - restraint of trade

I was out at a business today preparing to deliver a presentation on 'Getting your recruitment right'. I was chatting to their CFO, who is a good friend of mine, when the topic turned to the other end of the employment relationship - termination.

More specifically, we began discussing an issue that the CFO was currently dealing with. A senior executive had resigned a day after returning from a company funded conference overseas.This in itself was no real issue and something that both the CFO and I agreed was just the cost of running a business.

The real issue was that this particular senior executive had immediately joined a competitor and had taken a substantial amount of company property (intellectual and otherwise) with him. He had then used this inside knowledge of the company to put in a competing tender for a lucrative supply contract. Illegal? Possibly. Immoral? Most likely. Very difficult for the former employer to deal with effectively (from a cost and time point of view)? Definitely!

Unfortunately for the ex-employee the former employer has sought substantial legal advice and their position is quite strong with respect to enforcing their restraint of trade/no-competition clause and seeking damages should they occur.

For the business this now creates the catch 22 situation that we were discussing today. Although in a seemingly, and logically, very strong position the company is going to have to spend a substantial amount of money to defend their position, or potentially lose a substantial revenue source if they lose the contract in question.

As technology makes it easier for us to access information, it in turn makes it harder for us to control what people do with that information. This particular employee had a very intimate knowledge of the company's position and operations in practically every way. So when this employee resigned he took a significant amount of inside knowledge with him. This is likely to occur every time an employee leaves a business. And whilst you can try to minimise how much information an employee takes with them, short of erasing their memory there is very little that can be done to guarantee an employee won't use their knowledge in their next role.

Obviously this particular employee had chosen to use his knowledge for less than honourable endeavours, seemingly more for a significant personal gain. His former employer is very reasonable and they understand completely they cannot expect that employee's won't leave - and an element of this will be employee's taking a knowledge of sensitive information with them. They are also very much aware that they need to defend their hard earned market share.

Restraint of trade clauses are commonly used in the contracts of senior employees and in industries that are at risk of their employees taking their clients with them (finance, sales and law are the most common).

Even when these clauses are included in such contracts they can be costly to enforce and in many circumstances they can be found by a relevant Court or Tribual to be unenforceable if it found they are unreasonable or too restrictive.

Clauses can be found to be unreasonable or restrictive generally because a Court or Tribunal will find that an employee has a right to earn a living and a business cannot unreasonably restrict this right. Typically taken into account is the nature of the business/industry, the risk to the business and the employee from a financial point of view and the employee's career prospects (this will look at the jobs available, including geographical factors).

I won't go on too much about the solutions I offered the CFO - that sort of information is confidential. However, I will say I still advocate the use of restraint/no-competition clauses, provided you are realistic/aware of their pro's and con's.

I definitely recommend that should you have cascading restraint clauses - from very restrictive to less restrictive. This allows a Court or Tribunal to find that one element of the clause is unreasonable and others reasonable (and therefore still enforceable). If cascading provisions are not included and a Court or Tribunal finds one element unreasonable, the whole clause will be deemed inoperable and ineffective.

For more information on anything discussed in this blog please get in contact.

Regards,

Chris Turner

Introducing change - the fear of the unknown

"Any change, even a change for the better, is always accompanied by drawbacks and discomforts".

Arnold Bennet – Journalist & Author

Progress is the result of change.

Yet when we try to introduce change, the fear of altering the status quo often leads to fighting and resistance. How do we overcome these fears and lock in the progress we desire?

Unfortunately, change isn't an easy sell, especially in the circumstances where the change is unpopular or dramatic. Change challenges us to put our faith in the planning skills of the change drivers.

Change is often dressed up as innovation, but frequently there are other underlying factors that have necessitated the desire to introduce difference.

Some of the most common change drivers are:

1) A crisis or near miss

2) A new business opportunity or venture

3) A revision of the business’ vision and strategy

4) A change in company structure or company executives

5) To address perceived knowledge and/or skill gaps

6) To respond to client demands

7) To increase productivity potential

8) To increase the skills and attributes of the workforce

Whilst change is often ‘sold’ as a positive thing, a common trap that many managers and business owners fall into is introducing change too quickly – a knee jerk reaction to address a problem or opportunity that has arisen - without considering who will champion the change once they remove themselves from the process.

Top reasons employees resist change:

1) Inability to understand the nature of the change required and the implications of not implementing the change.

2) An unpleasant previous experience brought about from a previous attempt at change.

3) Insufficient explanation is provided so that affected employees consider the changes to be irrelevant and inappropriate.

4) Insecurity, a lack of confidence or a lack of desire to acquire new skills or deal with changing work and/or associated procedures.

5) A perception that their autonomy levels are being eroded by change being forced upon them.

6) The potential benefits do not outweigh the risks.

7) Lack of any incentive to ‘buy-in’ to the change proposed.

8) An unwillingness to change long-term habits and get out of their comfort zone.

9) The fear of the unknown

"One can choose to go back toward safety or forward toward growth. Growth must be chosen again and again; fear must be overcome again and again".

Abraham Maslow - Psychologist

Let’s look at how we overcome the fear of the unknown
A fear of the unknown is normal and to be expected. When a person leaves the familiar - the status quo – and steps outside of their comfort zone they will be unsure that the new way of doing things will be better, or even work out. The comfort of the norm will beckon them like a warm, safe blanket. Naturally this will cumulate in them feeling increasingly uncertain and fearful of the future.

This fear, whilst common and very normal, can be extremely destructive and contagious – able to spread very quickly through a group or team. The fear of the unknown will resonate within a group or team as they will all have undergone change at various points in their lives and undoubtedly some of these changes will have ended in failure. After all, we can all relate to a time when we have set out on a new venture, or tried to change something at work or at home, and experienced failures. These failures stand out a lot more than many successes that have been achieved through change.

This predictable irrationality can be worked to your advantage. By appreciating that the fear of the unknown has the ability to deride even the best laid plans we can look to minimise the risk through skilled management and communication.

Whilst we cannot predict the future – and therefore cannot guarantee that the changes we are looking to implement will bring success or achieve the desired result – what we can do is strategically outline/evidence the thought-process and planning that has gone into the proposed change process to the affected employees. By controlling the information that the employees receive you not only reduce the ‘unknowns’ but also the conjecture that quickly snowballs when employees try to guess the ‘real’ change motivators and fill the gaps.

This can quickly turn ‘change losers’ into ‘change champions’. By making employees aware of the end game, they are more likely to buy into the change process and the potential successes that can be achieved.

"After serious consideration, I have come to the conclusion that if I haven't been making any mistakes lately, I must be doing something wrong!"

Susan Jeffers - Author

Ensuring the right flow of information is one element. The next element that has to be addressed is the risk aversion that the chance of failure exposes. Business leaders and managers need to show that failure is acceptable. Whilst not preferable, failure is always an option, after all we learn more from the errors and mistakes we make than the successes we achieve.

Unfortunately, ‘change losers’ generally have an irrational belief that they should be good at something the first few times they try it. And when that doesn't happen and they experience failure, they convince themselves they shouldn't have bothered to try. They give up at the first signs of difficulty and quit the change process soon after they start.

Business owners and managers must be able to verbalise that the start-to-finish line in the change process is not always going to be a straight line to success. The line will almost always have some failure bumps along the way.

Change champions know this. They know that change requires risk, and risk can bring with it setbacks. Change champions will allow themselves some no-fault, trial-and-error learning experiments. Whilst change champions set their goals for change, they don't set their goals to be instantly successful.

The final element is knowing how to overcome the typical aversion to commitment that employee’s exhibit. Ironically change requires commitment to be successfully implemented. Commitment is often challenging as it means the opportunity cost of other choices not taken is exposed. Change champions realise the need for commitment – they are able to ask themselves what they want and are happy to stand by their answers. A lack of commitment will lead to options remaining unexplored, which will in turn increase the fear levels of the unknown – or create new unknowns (the very damaging ‘what ifs’).

To appease these employees, business owners and managers must look at how they can focus on what needs to be changed whilst keeping the rest. This will generally provide a balance between risk and change aversion and provide the benefit of change whilst providing the security of ‘unscrambling the egg’ should it be required.

"Don't be distracted by criticism. Remember the only taste of success some people have is when they take a bite out of you."

Zig Ziglar - Author
Employees, especially in teams or groups, wants to be liked, accepted and feel appreciated. They want to feel that their efforts and opinions have won the approval of their peers. When you look to introduce change, upsetting the status quo, you risk being unpopular. Employees will feel conflicted whether to be change champions, and risk alienating their peers, or change losers and risk their reputation with their employer.

Minimising the ability for negative comments to gain traction and creating forums for healthy debate and information sharing can help reduce the fear and uncertainty that change can bring about.

Make supporting the success that change can bring about seem less work than resisting.

For further information on change management please get in contact with us.

Thanks

How do you motivate highly skilled staff?

One of the questions I frequently get asked is how do you keep highly skilled staff motivated. More specifically, how do you keep highly skilled staff motivated to perform low autonomy roles.

The amount of employers that say their ideal employee is hard working, enthusiastic and highly motivated would border on 100%. These same employers wonder how it all went so wrong when their highly skilled staff become highly skilled headaches.

The first point of consideration that I try to make people realise is that highly skilled staff will invariably be seeking opportunities to showcase their skills. Whilst this may appear like I am stating the obvious - please indulge me for just a moment.

Enthusiasm can quickly turn to resentment or complacency if the right direction or outlet for their skills is not provided.

Simple you say - if they are motivated they will naturally be promoted into higher positions where these unique, highly sought after skills can be utilised. Well let us consider for a moment that you have, on average, one manager to roughly every 10 direct reports. This means that the opportunity for promotion for your team of highly skilled workers is roughly 10%. Given that the median time that a person stays in a job is about 4 years (as of 2008) this can mean that your business contains a large team of demotivated employees who will be looking for their promotion opportunities elsewhere.

Let us further consider that in a lot of industries - especially professional occupations - many employees do not aspire to enter into a management position, nor do they necessarily possess the inherent skills to be effective managers. This means that competing for the 10% chance of promotion may be workers who, even if successful, may not be overly motivated to succeed. I will come back to this point.

The most correct answer I have generally found is the most obvious and simple solution. When it comes to motivating staff I have found that the simple answer is clear and frequent communication.

'Wow thanks for that obvious insight you might say! Talking to my staff I would never have thought of that...' but you have indulged me this much so please indulge me just a little more.

Highly skilled employees don't just want to be given promotions. They want validation that the work they are doing is critical to the success of the business. They also invariably want to feel like they are gaining new skills or becoming more employable. They want to feel like their employment will shape the future of the organisation. If they feel there is a dissonance between their direction and the direction of the organisation their motivation levels can drop rapidly.

The easiest and most cost effective way to ensure that you are not caught offside by an alienated or disaffected employee is to have clear communication channels that require regular interaction between management and staff.

This evidences the need for communication. Which brings me to my next point for consideration. Training. Training. Training.

I generally get a groan when I suggest training demotivated employees. Because invariably the business owner or manager who is dealing with the employee see training as an additional cost and the employee can misinterpret it as a performance management tool.

In my experience just as change can be as good as a holiday, training can be as good as a promotion. I personally really like providing employees with as much training as possible. If chosen properly targeted training can be a very win-win scenario for both parties; the worker gains a wider skillset which in turn makes them a better resource to the business.

Training can also help workers make the transition from team member to manager more effectively. Even if a worker has the inherent skills, training can make them more relevant to requirement of the organisation and the position.

Highly skilled workers love becoming more highly skilled workers. They also love the opportunity to network with other highly skilled workers. Training programs can be a great opportunity for networking with like minded professionals.

Now I could go on and on about other methods that I have tried in the past but hopefully this has been a bit of food for thought.

Any questions or comments - please feel free to get in contact.

Regards,

Chris Turner

Director