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How To Minimize The Damage When a Key Salesperson Resigns August 03, 2013 (0 comments)

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Merrick, NY—After years of dedicated service and with a full client book, your top salesperson walks into your office and resigns.

While this scenario is a nightmare for any jeweler, it can be especially tough for a luxury jeweler with a limited pool of affluent consumers in the community. But even the impact of a blow like this can be mitigated—both with an ounce of prevention before and some careful managing at the moment it happens.

When a star salesperson quits, the first thing that springs to mind for a luxury retailer is not even who is going to take his or her place—it’s whether the star is going to take his or her clients as well. Luckily, there are some proactive steps that will minimize the chances of him or her luring your top customers to the new employer.

One way is to consider having your employees sign an unfair competition agreement, such as a non-solicitation, non-compete, or confidentiality agreement.

According to this article on monsterthinking.com, unfair competition agreements cannot unduly restrict an employee’s right to earn a living and/or work for a competitor (which they can do anywhere, at any point), but it can give you a head start in retaining the customers he or she used to serve in your store.

The key words are “unfair competition.” The departing employee can be restricted from taking sensitive data like customer lists or trade secrets—and from soliciting customers with whom the company worked. Trade secrets, says the blog, are not limited to secret formulas, they include any information that has economic value, including long-term customer relationships. A company that paid an employee to build customer relationships does have the right to protect those relationships. And an employee cannot use the employer’s time or resources to compete against the employer.

But you may have to demonstrate how the information is a trade secret, especially if there’s a lawsuit. The easiest way to do that, says the blog, is by restricting access to sensitive information, whether literally by keeping it locked in a file drawer or virtually by requiring a password online.

Even so, to be enforceable an unfair competition agreement has to be, well, fair. To prevent an employee from working for anyone you consider a competitor, or even from doing so for a year, might be deemed excessive, says the blog. But to prevent an ex-employee from contacting any customers he or she had a relationship with for one year could be considered reasonable.

Even if your customer lists and relationships are protected, you still have to minimize the disruption a star employee’s departure will cause.

According to this blog on intuit.com, start with an exit interview. Author Tim Parker suggests you begin by emphasizing no hard feelings and support for the departing employee’s career advancement, but you need to find out why they’re leaving. Issues like money or work environment are within your control, but if a competitor made an offer you can’t (or don’t want to) beat, be gracious and remind them the door is open.

If the employee is leaving for more work-life balance, a part-time or freelance solution may work for both of you.

To minimize disruptions, no single employee should be sole source of essential knowledge. Proactively, make sure more than one person knows key operational processes. Ask the departing employee to write out their full job description before they leave—even if you have to pay for their time to do it, says Intuit.com.

If they haven’t already signed a non-disclosure agreement, ask them to sign one when they leave.

Finally, don’t let the rumor mill get the best of your team, says the blog. Announce the departure, request the employee’s help in training his or her replacement, and consider the opportunity to change things up for employees who have been doing the same work for a long time and need a new challenge. And remember that for all your star employee’s strengths, there probably were some weaknesses too—and this is your opportunity to address those.

Top image: blog.walkerinfo.com

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