Brain drain
- Article 55 of 77
- Information Age, November 2002
What's to stop IT staff leaving to turn their innovative project work into a commercial venture?
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It is a simple fact of life: employees quit. So it stands to reason that, on any long-running IT project, members of the team will leave the organisation - and the project - for any one of a hundred reasons.
But from time to time, developers and mangers involved in creating bespoke applications leave the organisation only to start work on a near-identical project at a competitor. Almost as threatening, they resign in order to form a start-up that plans to make the fruits of the project available to a wider market on a commercial basis.
UK high street retailer Marks &Spencer, for example, lost a number of key developers earlier this year. They had worked on a new security system at M&S that has reduced till-related fraud by 10%. The system analyses transactions based on rules and buying patterns, highlighting ones that stand out as unusual and alerting security staff by SMS message if it detects behaviour that matches a number of pre-defined rules. The system has been hailed by Microsoft as one of the most advanced implementations of its much talked-about .Net architecture. However, most of the development team behind its creation have now left M&S to create their own retail-focused high-tech venture.
Employees rarely leave their jobs purely out of malice or a desire to sabotage their employers. Some feel frustrated that their innovations are not being exploited to their full potential. Some believe their hard work deserves greater recognition and reward. And some even leave with their employers' blessings.
But whatever the employees' motivation to leave, their departure may result in a loss of valuable intellectual property - and competitive edge - for their employer. So what measures can companies take to prevent their intellectual asset seeping away as employees move on to take up new opportunities or capitalise on their past in-house work?
Dramatic departures
If a group from one specific project quits in a relatively short space of time, only to end up working together at a new organisation, their former employer may have grounds for legal recourse, according to Ann Bevitt, a lawyer in the labour and employment group at legal firm Morrison &Foerster. In these circumstances, departed employees can be accused of soliciting former colleagues, she says.
But more common are cases where an individual employee joins a competitor, either through their own initiative or after an approach from a headhunter. Some organisations have already taken measures to prevent such recruitment consultants locating and hiring the employees who produce the majority of their intellectual property (IP). 'Non-compete' clauses, for instance, are standard practice for many employers.
“The traditional thing is to put a clause in the contract that says the employee can't work for a competitor or in the same industry for six months [after leaving their employer],” says John Handby, chief executive of IT directors' forum CIO Connect. “But you have to be careful not to impose too wide a definition. If the employee leaves and can't find a job because the clause makes it impossible for him to do anything else, he can take you to court.”
According to Bevitt of Morrison and Foerster, a non-compete clause provides an employer with some measure of protection. But, “there is an onus of reasonableness. The tougher the clause, the more senior the employee has to be,” she says. For example, geographical non-compete clauses, once popular ways of prevent employees working in locations where their former employer competes, are becoming less common as remote working becomes more prevalent.
Since they have this requirement of reasonableness, non-compete clauses almost invariably have expiration dates and cannot prevent an employee from working at a company that does not directly compete with his or her former employer.
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