Employment and pensions

Will there be a post-lockdown surge of employee departures? What ten steps could help retain talent and minimise loss of business?

Published on 14th Jul 2021

As employees prepare to return to the office following 16 months of isolation and uncertainty, many will seek a fresh start and new challenges by moving to join competitors or start their own businesses

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Recent surveys about employee sentiment after more than a year in and out of lockdowns have found that many have learned to work independently and have thought hard about "what they want in life", while new tech has made working independently easier.

The experience of previous job market recoveries all point in one direction: many businesses face a potentially large wave of new competition from recent ex-employees. However, this time, businesses are at another disadvantage. It is no longer obvious when an employee starts to act suspiciously. Gone are the days when questions are raised because an employee starts to take calls in private, pops out for a long meeting in their smartest suit or views client files with an unexplainable regularity. Instead, employees are at home, conducting zoom interviews with competitors, photographing business sensitive information with their personal iPhones and speaking to clients about their future plans without their current employer's knowledge.

It seems a historical certainty that there will be a surge in litigation as businesses attempt to enforce their restrictive covenants against former employees who are soliciting clients or poaching key staff. There was a significant increase in this type of litigation after the financial crisis back in 2007 and 2008 – with the hallmarks of a similar trend today already beginning to emerge. So how can businesses retain their key talent, and reduce the risks to their business if employees do decide to leave?

Ten steps to consider

1. Restrictive covenants – are they fit for purpose? Remember, covenants are extremely hard to enforce and they need to be tailored to the individual employee. Courts do not rewrite covenants but will strike them out if they go further than necessary, leaving businesses without protection. It is vitally important to ensure that covenants have regular health checks to ensure they are in line with current legal requirements.

2. Confidentiality provisions – are they adequate? Do they deal with different working models, such as homeworking? Should you be imposing regular obligations on senior management / key employees?

3. Do you have an up to date social networking policy? Has the business taken steps to assert "ownership" over certain contacts?

4. Are your key employees already tied in? Financial retention packages or share options are an invaluable tool for retaining key talent. For many businesses, this is a good time to introduce share schemes because the last year will have made the share valuation aspect of this favourable.

5. Can you take other steps to retain key talent? Is hybrid working an option? Are the pay and benefits offered market standard? Might new commission or incentive schemes be an option? Remember the best time to introduce new restrictive covenants and confidentiality obligations is when the employees are being offered a benefit in return.

6. Are you monitoring your workforce? Do you have alerts that are triggered if certain information is copied or accessed frequently, and can you get a record of what has been copied or accessed? Have you "seeded" your client database?

7. Is a paper trail in place? It is important that not only do employees explicitly agree to comply with their covenants, but they are also regularly reminded of these terms – such as on promotions or pay rise. When an employee leaves the business, they should receive a reminder that very clearly sets out their post-employment obligations and the expectation that they comply. Do you have this paper trail in place?

8. Key client relationships – do you have multiple account managers for key clients? Are there client teams? The more employees who build relationships with a client at varying levels throughout its organisation, the more likely the business is to future proof its relationship and maintain influence.

9. Data protection policies – have you updated your data protection policy to protect your data in remote working environments? In hybrid working environments where employees can choose where they work, the risk of data breach is ramped up and steps are needed to mitigate against this risk.

10. 1:1 communication – it’s a very simple step to take. Regular 1:1 communication helps employees feel recognised and valued, which can in turn mean they are less likely to get itchy feet and make that move. One of the key complaints from employees over the past year is that they feel detached from their teams and management. Scheduling weekly 1:1s and other general catch ups and team activities is a great way to address this until physical 1:1 and team catch ups can occur as restrictions ease.

In today’s world it is vital that your business retains its competitive edge to succeed. Relationships, information, assets and opportunities can be irreparably damaged if business protection and talent retention mechanisms fail to evolve with the changing technological and legal landscape. We can help implement strategies to address these challenges.

For more information, please get in touch with your regular contact, or contact Claire Bowles.

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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