By Jim Cory
You've got a home run hitter on your sales staff. He closes just about every other appointment. You can't get him leads fast enough. He's on fire. Then, suddenly, he emails his notice. Now you find out he's working for your competitor.
Investigation reveals that the competitor, well aware of your superstar, had wooed him with desperate ardor. Phone calls, notes, a face-to-face in a Starbucks with promises about volume bonuses and a bigger commission. Your golden boy's still wracking up sales, but they're on your competitor's balance sheet.
Poaching "happens all the time and it's mostly salespeople," says Ger Ronan, president of Yankee Home Improvement, in Chicopee, MA. He once had a sales manager quit, taking the entire sales staff with him, an episode that prompted Ronan to sue. He won. One other result was that his company's non-compete agreements were updated. You can have new employees, from the service tech to the sales manager, sign non-competes, in which they agree not to work for a competitor for either one year or two (the time limit varies by state) after leaving your employ. But what if your current employees signed no such agreement? That's another story. Back in 2012 Mid-Atlantic Waterproofing, which operates in multiple states, had salesperson David Socko sign a non-compete while he was already working for the company. Socko left to take a job with Mid-Atlantic competitor PA Basement Waterproofing, Inc. Mid-Atlantic sent PA Basement Waterprooofing a copy of Socko's non-compete, along with a threat to sue. PA Basement Waterproofing terminated Socko who, in turn, filed a suit against Mid-Atlantic Waterproofing. The case was fought all the way to the Pennsylvania Supreme Court, which ruled in Socko's favor, saying that Mid-Atlantic had provided the salesperson with no "consideration" (i.e., legalese for something given in return) when he signed that non-compete while he was already their employee. (For a summary of what the case means, click here). Above and beyond that specific issue, there's the general trend whereby courts often view non-competes and similar restrictive covenants with the suspicion that they're not about protecting trade secrets so much as intimidating employees from leaving. As the use of restrictive covenants has grown in the last ten years—about one in five American employees are now covered by one—so has judicial pushback. File for a Cease and Desist order and the judge might want to know, before he agrees to enforce, just what proprietary information—unique to your company—your project manager is privy to? This trend is state-by-state. In California, for instance, "non-competes are effectively illegal unless you're selling a business," according to Heather Bussing at the HR Examiner.
Non-competes may or may not stop employees from leaving you for a competitor, nor competitors from actively recruiting your employees. And it's not always salespeople competitors are after. Scott Siegal, owner of Maggio Roofing, in Tacoma Park, MD, says that for him, the bigger problem is production poaching. "It's happened to me," he says. "And I don't love it." Good production people, including regular subcontractors, are highly valued. "If they're subcontractors," Siegal says, retaining their services could be simply a matter of moving that pay scale. Say from $85 a square for roofing to $110 a square." Subcontractors go where the money is. If you want the best in the market, pay the best in the market. They're yours. Employees, on the other hand, rarely leave, or stay, for money alone. Money's the catalyst. They'd stay if they liked working there. And what a study cited by the Washington Post last October showed was that less than a third like where they are. Of those polled—17,000 workers in 19 U.S. industries—71 percent were looking to change employers. Why? Two-thirds say the job has "a significant impact on their mental and behavioral health." I.e., they're stressed out. Sixty-four percent say supervisors are unsupportive and 44 percent say they're "always or often" overlooked.
If that's the state of things in the workplace, no wonder we live in a world of poaching and non-competes. But while a non-compete might provide your company with protection, that protection isn't bulletproof. What works as well or better is managing people as individuals and letting them know you care about what they think and feel.
"I have a relationship with my people so that they would at least come to me and tell me that this was happening," Ronan says. Ask yourself this: if the sales manager at your major competitor called your best sales person today, would that salesperson confide in you? Would your production manager, if he got that call? Or would they email their two-week notice? Here's the up side: if 7 out of 10 employees would like to work somewhere else, why not be the happy home they're daydreaming about? "If they want to leave, you're doing something wrong," Siegal says. "You have to do a great job of creating a culture where they don't want to leave. If you create a culture where [employees] want to go to work and work for you, and know you're fair," Siegal says, "you're going to keep more people than you lose." Because no one stays forever.