Inevitably, talent is going to leave. Whether they are departing to start their own organization, embark on another chapter in their life or join a competitor, all employers will feel the sting of losing their heavy hitters at some point.
At a recent conference, law firm Holding Redlich outlined the potential damages to an organization when an executive moves on, as well as how they can minimize risk.
Stephen Trew, partner at Holding Redlich, said organizations risk the loss of intellectual property, “know-how”, strategies and sensitive information, as well as contacts and goodwill when an employee leaves. It may also damage staff morale and result in other workers leaving.
“Once you get one or two leaving the fact is employees [think]… ‘maybe I’m missing out on something too if others are leaving’,” he said.
All of this can also result in a competitor gaining an advantage. Departing executives who wish to stay in the field will invariably either start a competitive organization or join one, bringing with them the assets they have accumulated from their former employer.
A key tool used to prevent this is a restraint of trade. This is a contractual term which limits the commercial activities of an individual. This can be during employment, but predominantly applies afterwards. These often appear in employment contracts, but may also appear in other agreements such as shares or separate agreements regarding confidentiality.
On Page Two: Key takeaways for HR