Let me begin this with a real-life example:
Last week I visited my neighborhood barbershop only to realize that my regular guy had quit his job and moved to another barbershop.
I'm so used to his services that I made the hard decision to follow him!
Staff resignations aren't a rare phenomenon in the hair and beauty business. In fact, people are constantly going solo or joining bigger brands to boost their resumes. Whether it is an amicable decision or whether you decide to part ways due to differences, it's quite common to see clients follow their favorite stylist, barber, or esthetician once they leave their current job at a spa, beauty salon, or barbershop. I did it too.
But here's the thing...
While the move may be the best decision for your employee it can have a devastating impact on a small business like yours.
It may leach your business of revenue as well as pose legal and security threats if you don't pay enough attention. In a nutshell, the effects may slow down your business growth substantially.
The question is are you prepared if an employee chooses to resign or worse if you decide to part ways?
In this article, we will look at four legal yet uncomplicated ways to protect your business when an employee decides to leave.
So let's dive in.
Your business invests a lot of time and resources in training your staff and getting them up to speed. Staff resignations, therefore, are bound to impact your business operations.
Your business will temporarily be less efficient, you might be unable to handle the same volume of clientele and you may have to reschedule your appointments especially if you have a booked calendar when your staff resigns.
In addition to this, you will need to invest in hiring and training expenses for someone new too.
Yet that’s not all. When one of your top employees packs up and leaves for a direct competitor, they could take their loyal clients as well as competitive insights with them. It could mean a list of your clients, insights into your proprietary data, as well as information related to your hair or beauty product research and development if you have them.
These are just a few of the many reasons non-compete agreements make a lot of sense.
A non-compete agreement is a legal agreement that forbids an employee from working for a competitor or opening their own business within a certain mile of your business location. A non-compete agreement is often valid for a certain amount of time after leaving your company.
A non-compete agreement will keep your former employees from revealing operational details, client lists, business strategies, employee salaries, and future products to anyone who would benefit from such information.
Like other employment agreements, your non-competes should comply with federal or state laws. To be considered enforceable, it should include:
Some states in the US such as California, disregard non-competes, while others have a list of industries that such contracts may cover. Before you make anyone sign a non-compete agreement, have a meeting with a lawyer. Your legal counsel should review the agreement to ensure that it is compliant with all relevant regulations.
When one of your staff resigns, you should restrict their access to all resources mostly your online booking software, access to shared devices, your ecommerce website, email, and networks. As a small business owner, you should promptly action the following:
When you manage a business, you have to take steps to ensure that when an employee decides to leave your business, they can no longer access your valuable resources, especially digital ones. You need to plan this phase of the offboarding process carefully to minimize the impact on operations.
Information has a way of getting around, even if your former employees don’t go to competitors right away. They might share sensitive company information. They might even seek employment at a non-competing business but pass on that information to your competitor through other means.
One way to prevent these information security breaches is by introducing a confidentiality clause into a contract. A confidentiality clause prevents people from leaking certain company information to the outside world.
An NDA, or Non-Disclosure Agreement, defines the type of information your company considers confidential. It then sets out the legal penalties for sharing such information. There is often a time limit set for how long information should remain confidential. It serves as a control mechanism for the flow of information to the outside world.
When you draft a confidentiality agreement, be meticulous about the items you include or exclude. For example, you may want to include internal communications, customer records, or something else in the NDA. You cannot include information that is already known by the general public or legally owned by your employee before they signed the agreement in your NDA.
The actions of an employee can harm your business. For example, your employment contract template should contain a clause stating that the employee will be subject to sanctions in case of security violations, ranging from reprimands to dismissal to legal action.
When drafting your contract, make sure to talk it through with your legal advisor to ensure that your employee termination procedures are strict but fair. Your legal advisor should also be able to help you in case you need to pursue legal action against an employee who decides to leave your business.
Ultimately, talking to your employees will help you find an amicable transition. Nelson Sherwin, manager of PEOCompanies.com promotes an open-door policy with employees - “People are free to come and go as they please to ask questions or share information.”
Not everyone who joins your company will stick with the business. It’s a fact of life. Whether they are leaving for better opportunities elsewhere or you terminate the contract, you need to ensure that former employees don’t take anything from your company aside from their separation pay. This includes sensitive data or the client list.
The steps above will protect your company from the negative impacts of employee attrition. By putting strict employee policies in place, you keep your data safe and ensure that your business will have minimal impact on your day-to-day operations even if you are impacted by staff resignation.
Editor's Note: This post is contributed by Jimmy Rodriguez who is the COO of Shift4Shop, a completely free, enterprise-grade ecommerce solution. He's dedicated to helping internet retailers succeed online by developing digital marketing strategies and optimized shopping experiences that drive conversions and improve business performance.
.png)
