Group lift-outs, where a team of employees leaves a company to join another, can present notable challenges for businesses. These events have become more common in various industries, including financial services, insurance, technology, and design.
In addition to the operational disruptions caused by group lift-outs, payroll management also plays a role in maintaining employee morale and financial stability. Ensuring accurate and timely payroll is essential for preventing dissatisfaction and retaining key employees.
In a recent discussion, William A. Nolan, a trial lawyer and partner at Barnes & Thornburg, provided insights into the causes, prevention, and recovery strategies related to these events.
Employee impact
Reasons for group lift-outs
Group lift-outs often begin with a leader or senior person seeking better opportunities, such as higher compensation or greater growth potential. This decision can lead others to follow. Nolan explained, “It often starts with a leader, the senior person or rainmaker, who thinks the grass will be greener somewhere. More money, or more growth opportunity. And often it is dominoes falling from there.”
Additionally, younger employees may leave if they don’t see immediate opportunities at their current company. “Another common scenario is a couple of younger up-and-comers who want to strike out and lead their own success story because they don’t see the opportunity soon enough at the current company,” Nolan added.
Early warning signs
Employers can identify early warning signs of a potential lift-out by maintaining good management and communication practices. Nolan emphasized, “There is no substitute for good management and communication, being in touch with your employees and making them feel like the company is looking to help develop and advance.”
Retention measures
To retain key employees and prevent group lift-outs, effective management and communication are crucial. Employers should focus on developing and advancing their employees, ensuring they feel engaged and appreciated. Nolan reiterated, “The basics before they start thinking of other opportunities.”
Employer strategies
Legal protections
Employers have several tools to mitigate the risks associated with group lift-outs. A robust trade secret protection program is essential for safeguarding confidential information. Nolan advised, “Employers have a lot of tools to limit the loss of customers, confidential information, and employees. You can’t make clients stay with you, but a vigorous trade secret protection program is a good starting point for any employer in any jurisdiction.”
Strengthening agreements
Confidentiality agreements are straightforward but crucial. Beyond these agreements, employers must implement processes to protect confidential information. Nolan noted, “Confidentiality agreements are just the starting point, and they are straightforward. From that starting point, the processes employers put in place to make sure that confidential information is protected are critical.”
Overall impact
Long-Term impacts on culture and morale
Group lift-outs can significantly impact company culture and employee morale. However, focusing on the remaining employees and clients can reveal a silver lining. Opportunities may arise for team members who were previously in the shadows, allowing them to step up in unexpected ways. Nolan suggested, “You’ve got to focus intensely on the people and clients who remain. There is often a potential silver lining in that you may be opening up opportunities for teammates who were in the shadows.”
Rebuilding and recovery
After a group lift-out, companies should concentrate on the people and clients who remain. By investing energy into these relationships and not dwelling on those who have left, companies can rebuild and recover effectively. Nolan advised, “Companies need to put their energy into those people and not dwell on the departed.”
