Operations

When Employees Become Competitors

Posted on October 15, 2013 by

Page 1 of 2

Limousine company owners know that they put lots of people into the business. Your chauffeur, reservationist, dispatcher all have their eye on the pie — self-employment. You have made it look easy and they want their chance to show how much better they can do it than you. Think about the limousine manufacturing business. Why do you think Springfield, Mo., is a hub for building limousines? One employee goes out on his own down the road from his old employer.

There is nothing wrong with this. That’s what America is all about. It is okay as long as they are not doing that at the expense of your business. We all know people who have started businesses while they are still employed by someone else. They are telling everyone at industry events what they are doing on the backs of their old employer and on his dime. Competition is not always bad but ethics and respect should go hand in hand.

Think about your staff. Could this happen to you? Of course it can, and it probably has if you are good at hiring star performers. You want ambitious people to work for you because they will work the hardest.

Non-Compete Agreements
Not all states honor non-compete agreements. Many do not stand up in a court of law. Check with an attorney. If they are allowed, make sure that the language you use stands up in court. Typically, non-compete agreements are a condition of hire.  

The problem occurs when you have a career industry person who only knows this business, and should you part ways, he or she will need to find a job. Non-compete agreements can hamper your hiring process. While interviewing, you should be able to get a feel if the person you are hiring aspires to be an owner. Ask the right questions and you will get the answers you are looking for.

Consider Non-Solicitation or Non-Disclosure Agreements
Non-solicitation agreements would restrict the employee from soliciting customers and employees in the event that they leave and go either to another company or start their own. This may be more palatable as you are not hampering the individual from earning a living but instead are stopping them from plucking your business.

A non-disclosure agreement is a contract in which the employee agrees not to disclose confidential company information. In this, you should spell out what you feel is confidential company information. Additionally, you should tell them what the penalty for breach of this will be. Again, consult with an attorney to make sure that the agreement is legal in the area where you do business.

Family
Our industry is filled with family run businesses. Nepotism is rampant and often encouraged. How many families have been severed when an employee family member strikes out on his own? Trust is often the biggest factor. The perception is family members shouldn’t betray you, but they sometimes do. Be diligent and don’t relax your practices and policies just because they are a trusted family member. If other employees must sign non-compete or non-solicitation agreements, so should your family member.  

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