by Dr. John P. Grillo and Dr. James Linderman
It's bad enough to lose a good employee. But it's even worse when that person reveals your competitive strategies to his or her new employer. What can you do?
In today's economy, people are switching jobs at a dizzying pace. Losing a good employee is always a blow, but the damage really starts to mount up if that person tells his or her new employer information about your operations that you consider confidential. And the threat is obviously more serious if the new employer is a competitor.
Is there anything you can do to prevent this?
From both a legal and an ethical standpoint, a private sector ex-employee is generally unconstrained in revealing anything about your company to a new employer unless there is a clear and well-documented agreement to the contrary. From a legal standpoint, that's about all that can be said on the matter, other than stressing the importance of seeking qualified legal advice.
However, ethical considerations, which this article is really about, bear further discussion. The critical issue here -- and in every other policy in which adherence is essential to your company -- is getting personnel to subscribe to corporate policies. We refer to this as ethical subscription or assent.
SETTING POLICY Having a clear, well-documented policy on confidentiality is essential from a legal standpoint. If you don't have one, you won't have much of a legal leg to stand on if your company's confidentiality is breached by an ex-employee.
On the other hand, anyone who has ever gone through knock-down-drag-out litigation knows that contractual agreements are often little more than insurance policies. They offer retribution after the damage is done.
Contract law usually entitles you to collect damages and essentially acknowledges that the real damage has already taken place. Having the law on your side may offer some remedial gratification, but it's nowhere near as satisfying as having preventive measures that stop losses before they happen.
One analogy that comes to mind is a traffic accident in which you are seriously injured. Assuming you had the right of way, you're entitled to sue the other driver. However, you obviously would prefer that the accident had never happened in the first place.
In cases that deal with ex-employees who divulge confidential company information, there may be no possible financial remedy that compensates for all the damage that has been done. Our point is that litigation -- a corrective as opposed to preventive measure -- is seldom the control of choice for any business exposure, especially when it comes to loss of valuable proprietary assets such as trade secrets, strategic plans or intellectual capital.
Abetter approach is to prevent unwanted dissemination of confidential information by getting employees' assent to a policy that prohibits it, even after staffers move to other companies.
Having your employees assent to such a policy serves as a preventive control and reduces the likelihood of violations that would require corrective litigation. While the threat of litigation is itself a preventive control, the ethical impact made by having employees truly subscribe to a confidentiality policy is significant, whether or not the policy is legally binding.
The operative qualification in the foregoing statement is "truly subscribe." Accordingly, the rest of this column is dedicated to suggestions on how companies can get employees to wholeheartedly support confidentiality agreements -- or, for that matter, any company policies.
THE FIVE W'S Following journalism's "five w's" approach, we'll look at the who, what, when, where and why of employee assent to confidentiality agreements. We'll discuss these five w's in reverse order, and will assume that the previous section explained why you need such a policy.
WHERE: Where should employees look for important company policies? An obvious place is in employee manuals or handbooks. But, let's face it, most employees rarely read that information more than once, and that one time is usually when they start working for the company.
Handing out employee manuals may or may not cover you from a legal perspective, but it is woefully insufficient from an ethical viewpoint. That's because handing out such guidelines does not ensure that employees will read and subscribe to the policies in those manuals.
Therefore, many organizations have distinct and explicit agreement forms that employees sign. Staffers may even be asked to renew the agreements annually as part of their job contracts. This approach is clearly a lot better in terms of consciousness raising than simply including a clause or paragraph somewhere in the middle of an employee manual.
Other companies post their most important policies in highly conspicuous places -- and we don't mean sticking them on a cluttered bulletin board. Critical policies, such as those concerning company confidentiality, should be posted in highly visible places where employees will see them on a daily basis. For example, posters in cafeterias or elevators can remind staff to respect company confidentiality.
WHEN: It may seem simplistic to answer the when question with always. However, the old adage "out of sight, out of mind" applies to both the when and where considerations of ethical subscription.
If the only time employees see and sign company agreements is their first day on the job, they will eventually forget what they have agreed to do -- and not to do. Some enterprises require employees to re-sign confidentiality agreements annually, while others reiterate the content and implications of such policies during annual reviews or personnel meetings.
WHAT: Another key question is, What should be included in a well-written confidentiality policy? From a legal standpoint, the nuts and bolts details of the policy may be enough. However, if you consider it from that all-important ethical subscription standpoint, you should include some language that explains, justifies and motivates the confidentiality policy. For example, let your staff in on how much your organization relies on intellectual capital. Spell out the potential damage that could result from outside disclosure and encourage a team attitude toward confidentiality as a critical part of everyone's job description.
WHO: You also have to decide who should establish your company's policies on confidentiality and other key issues. Many organizations have recognized the benefit of employee participation in the drafting, justification and promulgation of such important policies.
These companies recognize the value of treating employees as business partners and team players. The resulting contribution to autonomy and empowerment goes a long way toward gaining ethical subscription to the resulting agreements.
It's also important to involve senior management in the creation of these policies. Their participation provides a solid and visible sign of management's commitment to ethical issues.
While recognizing that there are myriad demands on executives' time, it is critical for them to give adequate attention to this topic. After all, if top managers appear to slight ethical issues, how can they expect employees to subscribe to them? Management neglect in this area can lead to employee ignorance, indifference or non-compliance.
Executives must lead by example. Remember that the amount of time and attention management devotes to certain issues and the priorities they set send clear messages to employees about what is important to the organization.
Aposter at Bentley College proclaims: "This is not an ethics poster, you are." Our point is that actions speak louder than words, and management's actions have a greater impact on employees than any written policies possibly could.
To summarize, we'd like to reiterate an important principle: When it comes to key company policies, such as protecting confidential information, you should not be satisfied with a policy that merely covers your firm legally by introducing the specter of retributive litigation. The preventive control provided when employees wholeheartedly subscribe to company policies is invariably more effective, especially when it comes to the spirit and not just the letter of those policies.
To paraphrase a well-known maxim, an ounce of ethical prevention is worth a pound of corrective litigation.