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  April 27, 2015  

Strategic HR Weekly "Sales" Tip #22

Maximizing Profits thru Revenue Protection...

HR's job is to help maximize profits through its well planned out initiatives.

One piece of the P&L that should get more spoken attention in HR's ongoing mission to do this is Revenue Protection. Don't confuse that with the typical Compliance siren many HR people love to sound. That's a cost avoidance function. Not the same thing at all.

A great example of Revenue Protection pulls in turnover, non-competes, and non-solicitations. (Remember the "loss of customers" line item in last week's Turnover Cost example?)

A friend of mine recently voluntarily left his senior position at the company he'd worked for for 20 years. They'd had some big changes in the direction the firm was going, and several other top senior folks left too. This company has a handful of very large contracts on the east coast, and my friend had been totally responsible for and intimately involved in one worth $40 million - about 15% his ex-employer's total revenue.

Over lunch he told me he was probably going to go work for a competitor, and that big contract was going to be one of the first things he'd bring to his new employer. He was aware of his non-compete agreement, but he said he'd heard that they generally don't hold up well in court. And he didn't know if he had a non-solicitation requirement. "I mean you can't prevent a man from making a living, right?", he said. I suggested he be very cautious in whatever he did, and I offered to review his non-compete and give him some general (non-lawyer type) feedback, since I've read many of these before.

Well I'd never read a tighter, yet very fair non-compete agreement ever! It was for 6 months, and my friend was receiving "non competition payment" equal to his FULL PAY for that whole term. Non severance pay, but contractually agreed to "non competition pay". (He had never mentioned any type of post-termination payment over our lunch.) I talked him through the HUGE implications of that, and he's now rethinking his plan, at least for the next 6 months.

Back to Revenue Protection... his prior employer (and let's give their HR team credit for this) has created for themselves a 6 month window during which they'll have every opportunity to have someone else in their company build a lead relationship with this $40 million customer, with the intent of protecting it and retaining it, even after my friend's non-compete ends. And their HR folks structured it in a more-than-fair manner that should minimize what could be devastating interference from the prior employee.


Rob Blunt       View our profile on LinkedIn
President, 4-Profit-HR

phone: 866-868-5885