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Being startup company, How to stop our employees joining competitors. We suspect One of the employee joining our competitor. Please advise

17th June 2013 From India, Chennai

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We suspect one of the employee joining our close competitor. When we ask him for reasons for relieving, he tells some personal family problems.
How to convince, retain him.. How to make sure, he is not joining our competitor. Please advise me on the industry practice.
Thanks
Mohan
17th June 2013 From India, Chennai
Dear Mohan ji, You can not stop any body joining anywhere. My answer to you in one sentence since I want this discussion to continue by other members.
17th June 2013 From India, Mumbai
Dear Venkatesh Mohan

Employees quit their job for many reasons.The root cause to leaving the organization by the employee(s) is specify below

Relationship with boss

Employees don’t need to be friends with their boss but they need to have a relationship. The boss is too much of an integral part of their daily lives at work for an uncomfortable relationship. The boss provides direction and feedback, spends time in one-to-one meetings, and connects the employee to the larger organization. To have a toxic relationship with the person an employee reports to undermines the employee’s engagement, confidence and commitment. A bad boss is also the number one reason why employees quit their job. Here's how to get along with your boss.

Bored and unchallenged by the work itself

No one wants to be bored and unchallenged by their work. Really. If you have an employee who acts as if they are, you need to help her find her passion. Employees want to enjoy their job. They spend more than a third of their days working, getting ready for work, and transporting themselves to work. Work closely with employees who report to you to ensure that each employee is engaged, excited, and challenged to contribute, create, and perform. Otherwise, you will lose them to an employer who will.

Relationships with co-workers

When an employee leaves my company, every email that is sent to the whole company, to say good-bye, includes a comment about passionate coworkers who the employee cares about and will miss. Second only to an employee’s manager, the coworkers with whom he sits, interacts, and serves with on teams, are critical components of an employee’s work environment. Research from the Gallup organization indicates that one of the 12 factors that illuminate whether an employee is happy on their job is having a best friend at work. Relationships with coworkers retain employees. Notice and intervene if problems exist.

Opportunities to use skills and abilities

When employees use their significant skills and abilities on the job, they feel a sense pride, accomplishment, and self-confidence. They are participating in activities that they are good at and that stretch their skills and abilities even further. Employees want to develop and grow their skills. If they’re not able to do this in your jobs, they’ll find one where they can. This includes opportunity. If an employee can’t see a path to continued growth in their current organization, they are likely to look elsewhere for a career development or promotion opportunity. Make sure that you’re talking with them and that you know their hopes and dreams.

Contribution of work to the organization’s business goals

Managers need to sit with each reporting employee and discuss the relevance of the employee’s job and key contributions and deliverables to the overall strategy and business plan of the organization. Employees need to feel connected and that they are part of an effort that is larger than just their job. Too many managers assume that the employee will receive the communication from executive staff and make this leap. They don’t. They need your help to understand and connect their job to the bigger picture. If they’re not part of it, you’ll lose them.

Autonomy and independence

Organizations talk about empowerment, autonomy, and independence, but they are not something that you can do to people or give them. They are traits and characteristics that an employee needs to pursue and embrace. You are responsible for the work environment that enables them to do this. They are responsible for doing it. A colleague presented a session about the Oz Principles at a recent company event. He pointed out that by creating a culture of accountability, you create empowerment as employees own and execute their responsibilities. Without this, your best employees will leave.

Meaningfulness of job

Ah, yes, meaningful work. We all want to do something that makes a difference, that isn’t busy work, or transactional work, and that contributes to something bigger than ourselves. Ambitious and doable. But, managers must help employees see where their work contributes to the execution of deliverables that make a difference in the world. With some products and services - cancer research, feeding the hungry, animal rescue, diagnosing and curing illnesses, producing milk or crops - meaningful is obvious, but everyone’s work needs the same meaningfulness. Help employees connect to why their work has meaning or they will find an employer who will.

Organization’s financial stability

Financial instability: a lack of sales, layoffs or reduced work hours, salary freezes, successful competitors highlighted in the news, bad press, employee turnover, mergers and acquiring companies, all lead to an employee’s feeling of instability and a lack of trust. Employees who are worried tend to leave. Make every change and potential change transparent. Let them know how the business is doing at all times and what the organization’s plans are for staying on track or recovering in the future.

But, the most important issue here is the employees’ trust in and respect for the management team. If they respect your judgment, direction, and decision making, they will stay. If not, they will leave. After all, they have the financial stability of their families to consider when they decide which executive they will follow – or not.



Overall corporate culture


While it’s not the top item on employee lists, the overall culture of your company makes a difference for employees. Does your organization appreciate employees, treat them with respect, and provide compensation, benefits, and perks that demonstrate respect and caring?

Is your work environment for people conducive to employee satisfaction and engagement? Do you provide events, employee activities, celebrations, and team building efforts that make employees feel that your organization is a great place to work? Employees appreciate a workplace in which communication is transparent, management is accessible, executives are approachable and respected, and direction is clear and understood. Your overall culture keeps employees – or turns them away. Which gets you what you want and need for success?



Management’s recognition of employee job performance


Many place employee recognition further up the list, but this is where recognition scored in a recent Society for Human Resources Management (SHRM) survey of employees. While recognition is important, it is not among employees’ chief concerns. A lack of recognition can affect many of the above factors, especially culture, but it’s probably not the deciding factor in an employee decision to leave your organization. Provide a lot of genuine appreciation and recognition as icing on the cake for employee retention. But, pay attention to the more significant factors, the cake, if you wish to retain your best employees. Make recognition the way you live in your organization to keep your best talent.

And the question is why employee(s) joining your competitor might be possible that your competitor is providing them best scope, perks & working culture. So, try to understand the working culture salary structure, bonus & incentive policy and other facility provided by your competitor. These things help you to find root cause to join your employee(s) in other organization or your competitor organization.

With Regards
17th June 2013 From India, Ranchi
Dear Venkatesh,
You may implement a Non-compete or Non-Disclosure agreement. However, it will remain a paper tiger , unless you work on deeper issues.
Why is the employee so motivated to join your competitor ? You may not be able to influence external factors such as money or even brand name. However, Loyalty remains a different game. What have been your stumbling blocks towards it ?
If you put yourself in the employee's shoes what reason do you see ? Looking forward to hear from you
17th June 2013 From India, Mumbai
Hi Venkatesh Sir,
There may be many reasons for your employees to join the competitor..
I want to know whether your competitor are also new to the industry. Then coming to your issue,in our business to we came across such issue now.
whether employee who is leaving now was in a powerful situation now.Whether he know the nuances of your business.do reply me so that i may give suggestions what we did aftr tat issue.
18th June 2013 From India, Coimbatore
Why do people leave?
1.Poor Management style
2. Lack of career growth.
3. Poor communication.
4. Lack of recognition of work
5. Lack of training
6. excess work load.
7. lack of tools and resources
8. lack of team work
9. underpaid
Its time that you do a employee satisfaction survey to identify the reasons for attrition. Please note that this survey should be confidential and no employee name should be asked, else you will not get the real picture.
18th June 2013 From India, Chennai
Anonymous 
Dear Venkatesh,

I see some suggestions for a non compete or NDA. We had the same problem. We also had a Non compete and NDA. One of our senior employees joined a competitor. We sent him a legal notice and then went to court, thinking he would quit. But the competitor decided to fight the case on behalf of the employee. The courts verdict was that no one can restrain anyone from joining the competition. And in case there is a restraint, then it has to be time bound which can be restrictive for a maximum period of two years. But this restraint can be there only if the employer can prove that the employee was part of a strategic long range planning committee in the company and was part of evolving strategy. A person implementing strategy cannot be restained from joining the competition, since he will not be privy to the overall strategy. We also had to pay a fine and pay the employee an amount of Indian Rupees 5 lakhs for the harassment that we caused to him. He had asked for one crore.

So all these companies which sign a NDA or Non compete agreement are committing an act which is not illegal. When challenged in court, they would be reprimanded. The media did not publicize the case much. So these NDA and non compete agreements can only be a mental barrier, but in true sense are not implementable when one goes to the court.

So, we came up with one scheme, wherein we built in a variable component in the compensation. According to this a sum equivalent to a minimum of 4 months of compensation is deferred and we pay 2 months in July and 2 months in January. This is based on the performance of the company. We call this EPLIS ( Employee Performance Linked Incentive Scheme). This amount can go upto 10 months equivalent salary in a whole year. In the first year, 50% of the EPLIS declared is retained by the company. It could vary between 2 to 5 months depending upon the performance of the company. This retained 50% is paid as rollover in the following year and the next years 50% is retained. This retention is for a period of 4 years. After 4 years, we do not retain anything.

But, we being in a very specialised industry, people skills are extremely critical. Apart from the statutory gratuity, we have our own ex gratia scheme. For an employee who has competed minimum 5 years of service, we pay them an amount equivalent to one month last drawn salary of ex gratia for every year of service rendered when they separate. The upper cap is 12 months last drawn salary in case an employee completes 12 years of service or more. This is paid when he leaves the company or when he retires from the company. But this is subject to he not joining the competition. When he retires or dies, it is paid instantly. While, when he resigns from the services of the company, then there is a waiting period of 6 months. At the end of 6 months, it will be paid in case he has not joined the competition.

We had to rework our entire compensation package in such a manner that we absorbed the above elements, on account of we losing the case in the Supreme Court.

In fact there is a live case in Singapore which gained wide publicity. The Country manager of Adidas resigned to join Puma. Country manager is a senior position. There was a non compete and a NDA also signed and taken. Adidas went to court. But, this employee, who was an Indian took a stand that all overall strategies were done in the Head office, while he implemented them locally and hence he did not have access to overall strategy, but had access to only some local short term strategies which were created in his office to complement the parts of overall strategy.

The court raised a query as to whether Adidas had built in an amount equivalent to two years of salary for him to not join the competition when he separated from the company. The answer was no. So if the employee was not willing to compensate him for the two years of lay off period, then they cannot expect him not to join the competition. This is violation of the fundamental right to employment. We in India also enjoy this fundamental right.

If you look at globally, if a company gets a person to sign a non compete agreement, then they ensure that enough compensation is given to him during the lay off period.

One of the land mark cases was of that Mark Hurd, the CEO of HP. He joined Oracle as Co President. HP went to court, but it was thrown out. The reason was that the person had joined the competition, but the division that he had joined and the role he had in Oracle was where he cannot use the strategy information that he gained from HP in his role. Mark Hurd had joined a division which was in a business different from HP.

Now, this is indeed a landmark judgement. This means, the court clearly states that in a non compete agreement, while the company can state that he cannot join the competition, they have to prove that the employee has joined a role which will create a material loss to the previous company where he worked.

I find, that, after the above judgements, the NDA or Non compete agreement can only be enforced at a very top level where a person has access to all the strategy and his exit and joining a competition can cause material loss to the company. Guys at senior, middle and junior level do not get affected by such agreements since it is null and void. Knowing a part of the strategy does not restrain him from joining the competition. Such NDA's and Non compete agreements is made out of desperation to retain people, since there is non availability of talent.

Ultimately, it boils down to have good HR policies where you make the Place of Work a Place of Joy, so that the employee does not leave.
18th June 2013 From Indonesia, Jakarta
Dear Kumar Malay Kishor
Please excuse me for taking your post as an example to inform other members how to post copy and paste messages to avoid plagiarising or violating copyrights. As my wont, I checked on the web to see if what you have posted has already been posted there. I found, not to my surprise, that it is the work titled "Top 10 Reasons Why Employees Quit Their Job: A Checklist for Talent Retention" by Susan M. Heathfield. It was found at
Top 10 Reasons Why Employees Quit Their Job
I would have briefly stated that there are 10 reasons as explained by Susan M. Heathfield and given a link to the website above.
18th June 2013 From United Kingdom
Dear Mr. Mohan
Possible ways to cut down on such exit are as follows:
i. recruit through known references. This way, the candidates would be loyal to you.
ii. recruit candidates whose family background is with low profile.
iii) Implement the Non-Compete & Non-Disclosure Agreement and initiate action against violators
iv) Ask them to surrender their educational qualification certificates right from 10th standard onward till the highest qualification and it should be as if they are in dire need of a job and they are volunteering themselves to surrender their certificates for this job, which they want to make it as their career on the long run.
v) Last but not the least, identify the privileges that other corporate companies are offering and then try to match with them.
Good Luck
Arcot
18th June 2013 From India, Hyderabad

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