How to Handle Employee Sabotage

Not all employees resign gracefully. Some try to sabotage your company on their way out. Here's how veteran entrepreneur Norm Brodsky deals with it.

Dear Norm,

I have a problem with some former employees who've started a business that directly competes with mine. Not that I mind healthy competition. In fact, I welcome it. But I do object strongly to the way these people conducted themselves as they were leaving.

It began with a manager who, I later discovered, was starting a business and working on it while he was still my employee. He then began to recruit away other employees in key positions in sales, IT, and accounting. It turned out they were doing projects for the new business at the same time I was paying them-that is, using my company's resources to give their business a jump-start.

Of course, when I found out, I fired them. But the new people I've hired are having a challenging time putting out fires set by the ones I got rid of. Before they left, the latter sabotaged my business by delaying deliveries and otherwise not taking care of clients. Their motive, I believe, was to get my clients so frustrated they could be easily stolen away. How should I deal with this situation?

-Richard Gan, President, Computer Network Systems, Pasig City, The Philippines

As a business owner, I know of no worse feeling than the sense of betrayal you feel on learning that someone you trusted has stolen from your company. It's the same when people use your resources to start a competing business. They're thieves, too. Most of us have two gut reactions to such revelations: We think about getting revenge, and we feel we can no longer trust any of the people we work with. Those feelings are natural-but the worst thing you can do is to let them govern your actions.

My advice to Richard Gan was to focus on stabilizing the business, holding on to as many customers as possible, and winning back those who have left. The best revenge he can have right now would be to succeed at all three. Granted, he probably has grounds to sue his old employees, but it would be a mistake, in my opinion, to pursue legal action. For one thing, it would be expensive. It would also distract him from his most urgent tasks: protecting and rebuilding his business. Moreover, a protracted court battle would keep the wound open. He'd be much better off putting his energy, time, and money into overcoming the damage the defectors have caused.

At the same time, Richard needs to learn a lesson from this episode. He bears some responsibility for letting himself and his company get into such a vulnerable position. It's his job to make sure that customers receive the level of service they've been promised and feel loyal to the company, not just to the employees they interact with on a regular basis. If those employees are their exclusive contact with the company, the company's hold on the customers will be tenuous at best. The owner needs to touch them at least once or twice a year and let them know the company is looking out for them. Had Richard done that, he would probably have figured out much sooner what his disloyal employees were up to, and he could have minimized the damage they caused. Granted, he can't change the past. But at least he can avoid repeating it.

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