Without wanting to sound too David Brent, one of the most important assets for a business is its people. Is there anything you can do to stop them leaving, and how can you prevent this from happening again?
It often happens
Team moves are more commonplace than you may think, particularly in certain sectors such as professional services, finance and insurance.
Competing businesses are often on the hunt for highly profitable teams to bring in and instantly boost revenue, reputation and client base. Typically there will be big financial incentives on the table, along with prospects of instant promotion and growth that seem far from achievable in the short term with the current employer. With temptation like this, a cunning exit plan is usually devised and either in one fell swoop, or slowly but surely, the team leaves.
Coping with the news
As HR in the targeted firm, you may be the first person to find out about the team move and, if it has been planned well by the departing team, it’s usually a big shock. There may be a designated spokesperson, or the team may approach you “en masse”, to tender their resignations. The instant reaction may be to try to stop it. It’s not uncommon to hear stories of teams being told “wait, you can’t do that…you’re not allowed”!
It is a “worst nightmare” moment for many HR advisers and whilst there is a temptation to knee jerk, it is best to resist.
Ask yourself the following:
1. What is the likely impact of the team leaving? Perhaps you won’t care so much once you actually apply thought to it – are there people going who were not great for the business anyway? Identify those, if any, that are worth keeping. Then explore what you can do to entice them to stay. Beware though of entering into a bidding war with the competitor – these rarely end well. Also think that if a team of employees have resolved to leave, do you really want to try to force them to stay? What would their level of commitment be and might they get tempted again in the future?
2. Are there any restrictive covenants that apply to those leaving and are they worth the paper they are written on? If so, do you want to enforce them and are you prepared to injunct the team so as to prevent them from working together? Consider that the average cost of an injunction is £30,000 upwards, they are high risk and only a temporary solution to a longer term problem.
3. Are there duties of good faith and/or fiduciary duties applicable to those leaving? Query whether these can be used as levers in any negotiation.
4. Is garden leave available to you to buy you some thinking time? It’s often the best short term solution and allows you to devise a damage limitation plan. Be sure to seize all company property at the time of gardening the employees and cut all IT access instantly.
5. How can you save your clients? Your workforce and the morale of those remaining is important, but think also about your clients. What measures can you put in place to keep them? Get a team together of some of your senior personnel and get them to demonstrate to key clients that they will be looked after.
6. How can you protect your confidential information? In our experience, team moves are planned well in advance – sometimes up to a year ahead. It is equally likely that confidential information has also been taken in the lead up to the departure – client lists, pricing information, sales pitches etc. In reality, it is difficult to truly retrieve all confidential information. With modern day technology and the increase of remote working, it is simply too easy for employees to steal information undetected. You can demand that it all be returned or deleted and require undertakings to that effect, but there are still no guarantees. If it is “coca cola recipe” type information, think about calling in the forensics and have them trace back the IT systems of those leaving. A common misconception of employees is that if they access their personal email from their work computer, it cannot be traced. It can. They also think that instant messaging services are not traceable if deleted. They are. It is worth trawling through IT systems to gather any evidence you need to support collusion between the employees and unravel their exit strategy.
7. How can you protect the company’s reputation? The press might be all over this news making all kinds of assumptions and bold statements about why the team has uprooted. Think about managing the external and internal messaging. There is much to be gained from a calm, considered and confident response.
It's a learning experience
Whatever happens, there are lessons to learn to try to prevent it happening again.
1. Tighten up your restrictive covenants and make them bespoke for key players. Include a specific clause preventing a move in concert and preventing employees from working together in a competing capacity. Also include an express obligation on employees to tell you if they are approached with a view to joining a competitor, or setting up in competition. Don’t do anything to breach the employees’ contracts as this may invalidate the enforceability of any covenants in the contract.
2. Invest in your employees and keep them incentivised and motivated – an employee that feels valued will be a difficult target for those planning a potential team move. Consider having long-term incentive plans, with lengthy vesting periods, to reward loyalty.
3. Communicate with employees by holding regular meetings. Picking up on dissatisfaction and frustrations early on can be vital.
4. Keep your ear to the ground and look out for sudden long unexplained absences, covert or hushed discussions, and employees suddenly avoiding eye contact!
5. Conduct an exit interview – these are a great source of intelligence.
Anita Rai is an employment law partner at Taylor Vinters LLP.
Kate is an associate at Taylor Vinters.