I have seen this a number of times and these things can be bloody, especially with integrators fighting for a relatively small number of large local clients.
Whether it was from your own business or it was one of your co-workers, etc., what experiences do you have to share there? Any ways to mitigate the problem?
I think if you hire top quality talent, with entrepreneurial mindsets, this is always going to be a risk. I think having a good Non-Compete agreement in place in which the specific wording says that the exiting person cannot specifically attempt to take all the customers from the previous place of employment would halt some of this activity.
I always thought of it this way. If I have an employee leave that starts up their own business and takes a significant amount of their clients with them, then I didnt do my job of making the business as a whole better than just one person. If your business is powerful and unique enough, your customers will like your business because of your business, not just because of one salesperson.
In my case, I was let go by my employer although I was one of their top performers (per customers feedback) and now I launched my own business. In my opinion, once employers stop thinking about their employees just as a number for them, and start to treat them well, employees will stick around without becoming a competition.
Had one. He took a large prospect and ran, then hired an employee. He wound up in China after failing. Of course, I at one point worked for him and started my own company, so all's fair I guess...
I had about 8 from one department and our lead sales guy stole out customer database, went to a another company not quite in the business and agreed to start it up as a branch of what they used to do there. We first found out from our customers they were contacting.
Simple summary, stealing any "trade secrets" and not even bothering to hide it isn't the smartest thing someone can do.
I was one of those employees.
I had roughly 5 years of experience as a field sales engineer at the time. Originally, I was hired away from another competitor to be a subject matter expert on one of the 3 VMS platforms they sold. I was told during the interview process that I would not be forced to support or sell any of the Pelco systems they had in place. I was very clear about this, as they made no attempt to hide that they had a strong relationship with Schneider in the HVAC and ACS business. 4 months after my hiring, the sales staff was told that we were to lead with Pelco, and that the VMS I was brought in to sell and support was going to drop to 3rd, and only sold to existing accounts until we could flip them to Pelco. I was not invited to that meeting. In the mean time, the company I had left went bankrupt (not because I left; I saw the writing on the wall when I was leaving), so I couldn't look to going back to them.
My best option was to go to a local IT/networking integrator who I had a relationship with the sales manager and some of the engineers there, and start up a security department at that company. We brought along 40-50% of the accounts that were customers of the VMS I was a SME in, and the other 50-60% eventually converted to Pelco. Both companies have continued to grow and build out in our respective markets.
There are definite hard feelings from some people and ownership at the company I left (especially when they lost the lawsuit after 2 days). It left them in much better shape long term because my sales manager at the time was demoted after I quit when they realized how bad he was managing that side of the sales business, and their new sales manager (who I respected and still get along with) is amazing.
I'm an employee that left. But it was never my intention to directly compete -- I left for several reasons, but primarily because I wanted to focus on a different technical area than my former employer. There ended up being some overlap in work type but I made an effort not to poach clients, and we actually ended up occasionally referring customers back and forth and subbing different parts of jobs to each other. It has worked out well.
I know the default response in our industry to this is to make ever more restrictive non-competes. I strongly feel this is the wrong approach for a few reasons:
1. It generates poor feelings right up front.
2. If you need a shackle to keep your staff there are issues. Eric Fullerton (formerly of Milestone) described this right by calling it slavery in one session I attended.
3. If someone is going to leave they will find a way to leave.
4. This is greatly contributing to wage stagnation in the middle class that people in both political parties in the US complain about.
5. Do we really need more lawsuits?
To be clear non-solicits should absolutely be used and enforced. Stealing employees and customers is highly unscrupulous. It's one thing if the customer leaves of their own accord, it is another if a former employee is treating your contact list as free marketing data.
A better approach is to do the following:
1. Grant the employees autonomy in lieu of micromanagement. I will say this reaps massive rewards. Staff retention is extraordinary and the sense of ownership for the people involved results in greater margins. Accountability for your own successes or failures cannot be underestimated.
2. Treat them as human beings, rather than cows to milk for profit.
3. Compensate fairly and reward the performers. As their skills increase their wage should increase. If you won't pay them someone else will. However, these other items demonstrate that compensation is not necessarily the single most important item.
4. Have actual employee reviews and raises annually. Even a small raise is better than burying your head in the sand. In my opinion reviews should be quarterly. How can someone meet performance expectations with no clue what they are being rated on? "Make as much profit as possible" is not a valid performance goal.
5. Eliminate or sequester any combative employees that create a toxic environment.
6. Respect vacation time.
7. As your firm becomes larger avoid the ivory tower mentality.
8. Train new employees. Every company is different. Speaking from experience it is quite easy to become frustrated and pull the plug in the first 3-6 months.
I can't say for certain that will prevent anyone from leaving, but it certainly would decrease the odds to near negligible.
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