Is a trusted insider in your organization plotting a sneak attack? You may already require key employees to sign noncompete agreements and/or no-moonlighting policies. But even the best of those "paper handcuffs" can't bring your business back if a defecting employee is determined to compete against you.
To protect yourself from such sneak attacks, don't wait until the employee resigns. Be alert to the telltale signs of employees planning to defect, such as:
- They suddenly stop their patterns of staying late and coming in early. Instead, they use accumulated vacation and sick time to disappear for days on end.
- They take lunch at odd hours.
- They seem distracted at staff meetings and uninterested in the organization's future plans.
If that describes someone on staff, sniff around for evidence of his or her plans. Have IT check Web traffic and do a simple Web search for any indication that he or she has set up a business or consulting deal on the side. Chances are, if a side business exists, you'll find evidence. Then, take action before you lose the key player and a chunk of your business. As the following case illustrates, waiting can cost you money.
Recent case: Joseph Weinpert worked for American Logistics, a company supplying computer services to local businesses. While American charged $150 per hour for Weinpert's services, he was selling those same services out of his own home office for $85 per hour. Not surprisingly, some American customers defected.
That went on for a long time until Weinpert had enough business to strike out on his own. After he jumped ship, American Logistics sued Weinpert, citing the noncompete agreement he'd signed. The company won in court, but it recouped only a fraction of its losses. And with litigation costs, American will never see all the money it lost. (American Logistics v. Weinpert,, No. 85041, Ohio Court of Appeals, 2005)
Bottom line: Noncompete agreements are great, but it's important to spot the defector and stop him before he becomes serious competition.