Strategies for Retaining Key Employees and Terminating Non-Performers In Key Positions

October 27, 2000


In today’s information age, companies are increasingly coming to realize that some of the most critical elements for their success are their key employees and the information, procedures, plans, developments and strategies which they hold as confidential. Aware of these facts, competitors have recognized that one effective, albeit not necessarily ethical, means of securing a competitive advantage is to entice away key employees of a competitor and seek to secure confidential information about that employer’s proprietary processes, business plans or strategies, customers and/or developmental projects. Even if there is no intent to "steal" such confidential information, there is normally the anticipation that by hiring away key employees, the new employer can benefit through the experience imparted to the employees by their previous employer and hamper that competitor’s plans by the removal of key employees. Further complicating these issues is the fact that today unemployment remains very low, and, correspondingly, employee loyalty is likewise minimal. According to a 1997 employer survey on employee retention conducted by the Society for Human Resource Management (SHRM), three out of four companies expressed varying degrees of concern about the number of employees quitting their organizations. BNA also reported survey results which indicated that in 1999 approximately 14% of the workforce changed jobs compared to roughly 8% in 1992. BNA Daily Labor Report No. 162 (Aug. 21, 2000).
Given these circumstances, how does today’s enlightened employer protect these critical assets? This question has several components. First, how does an employer maximize the prospects of retaining key employees? Next, if those efforts to retain such persons fail, what procedures could the careful employer have already in place before the key employee was enticed away to protect against disclosure of confidential information? Also, what steps can the employer take after the employee has been hired away? Finally, what steps can the employer take to protect confidential information where it has an employee with knowledge of proprietary information in a key position who is simply not performing and must be separated?

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