Center for Management of Emerging Companies

Protecting Your Trade Secrets in Relationships with Employees

Trade secrets are generally one of the most important assets of any business and it is essential for companies to design and implement trade secret protection procedures.  One of the areas of greatest concern is protection of trade secrets in the employment relationship.  Employees need access to the company's trade secrets in order to help the company execute its strategic plans; however, access should be carefully controlled and employees must be placed on notice that the company expects them to maintain the confidentiality of its proprietary information and refrain from any unauthorized use or disclosure of such information.  The report this week describes the steps that should be taken with employees to ensure that they are informed partners in the company's quest to maintain the value of its trade secrets.  For a discussion of how to identify trade secrets and some ideas about protecting customer lists, see my recent post on that subject on The Business Counselor Blog.   

Challenges of the Internet for the Workplace

While the Internet has created significant advantages for all types and sizes of businesses it is important to consider the appropriate way to regulate Internet access in the workplace.  This is generally done through the use of company Internet and e-mail policies that identify acceptable uses, and prohibited misuses, of the company’s communications tools.  Many firms adopt a comprehensive policy covering all aspects of the business-related uses of the Internet as well as the company’s in-house computers and networks.  The attached report discusses some of the issues that management must consider and include a sample of a basic Internet access and use policy.

Creating Effective Information Systems

A comprehensive and effective information system is essential to the success of any business.  The term “information system” refers to processes and tools that companies use to collect data, interpret and process it into information, and disseminate the information to those who need it on a timely basis and in a form in which it can be used by the recipient. The elements of an information system include personnel, data collection, storage and processing equipment, communications and dissemination facilities, procedures, security planning, and controls.  It is important to distinguish between “data,” which is essentially the raw material (e.g., facts and figures describing known events or occurrences) for “information,” and the “information” that is created from interpreting the data.

The first functional element of any effective information system is inputting the appropriate data.  Managers should establish procedures for timely collection of all data necessary to generate the required information.  The data should be checked carefully before it is entered into the system.  The second functional element is referred to as data maintenance.  The goal of this function is to be sure that data in the system that is no longer current or relevant will be replaced.  However, the maintenance function should include the capacity to archive and preserve historical information for future reference.  The third functional element is the output function, which focuses on creating and disseminating useful information for consumers within the organization.  In order to be prepared for output, the data must be retrieved, selected, processed, and reported in a manner that conforms to the information requirements of the organization.  The output can be disseminated in a variety of media, including written reports, newsletters, speeches, and as part of an electronic “infobase” that can accessed as needed.

Once the essential functions of an effective information system are understood, management must proceed with designing and implementing a system that satisfies the unique requirements of the company.  This process begins with conceptualization of the goals and objectives of the information system, including the specific types of data generated by the company’s activities and the outputs that are most valuable to the managers and employees of the company and outside stakeholders (e.g., regulators, lenders, investors etc.).  The next steps include feasibility studies, an analysis of the current systems used by the firm, and creation of a project team to coordinate the effort.  The project team must then select one or more vendors to design and construct the system.  Before the system goes online, the responsible managers and technical staff should be provide with intensive training, and provision should also be made for further in-house training of other personnel as needed to effectively utilize the system.  Also, the system should be thoroughly tested alongside the company’s existing systems and procedures to be sure that it works efficiently.  An information system is not static and should be regularly evaluated to ensure that it continues to meet the needs of the company as it grows and evolves.

The content in this post has been adapted from material that will appear in Business Transactions Solutions (Fall 2008) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

The Role of Compliance Programs in Avoiding Employment Law Liability

Obviously the main reason that employers should implement, maintain and vigorously enforcement compliance programs in employment law areas is to ensure that employees can work and thrive in a workplace that is free from the distractions and pressures caused by harassment and discriminatory practices.  The idea is to eliminate, or drastically reduce, harassing or discriminatory behavior in the first place.  However, if a supervisor or other agent of an employer does engage in activities that result in a complaint of harassment or discrimination, an employer can significantly avoid certain potential liabilities to the alleged victim if the employer can demonstrate that they have implemented and maintained effective compliance efforts.

The employer should be able to demonstrate beyond dispute that it has an anti-harassment policy and that employees, including alleged victims of harassment, are familiar with the policy.  An employer will likely not be able to meet this standard if there are factual disputes with regard to such things as when the alleged victim personally received a copy of the anti-harassment policy; whether she received any training or other oral notice of the policy, and when the policy was posted in the employee break room.  Moreover, the fact that an employer made some effort to distribute its anti-harassment policy after an alleged victim was hired, such as during the employee’s new employee orientation program, would not be sufficient if evidence cannot be introduced to show that that these efforts extended to the alleged victim and other persons already employed prior to the time that the anti-harassment policy was implemented. On the other hand, however, an employer is likely to be granted summary judgment if it can show that it had a comprehensive anti-harassment policy was adequately disseminated and that it conducted regular training regarding harassment issues.  Support for demonstrating dissemination of information can be obtained by showing that employee’s received a written summary of their rights under applicable anti-harassment laws.   In addition, companies should implement formal anti-harassment training programs either to comply with specific state regulatory requirements (e.g., California) or simply to provide further support for an argument that it has educated managers and employees about the issues surrounding harassment in the workplace.

The content in this post has been adapted from material that appeared in Business Counsel Update (March 2007) and is presented with permission of Thomson/West.  Copyright 2008 Thomson/West.  For more information or to order call 1-800-762-5272.

Using Marketing Savvy to Strengthen Your Human Resources

Talented managers and employees are an essential key to the success of any business and this is particularly true for emerging companies seeking to move rapidly to become competitive in dynamic industries and markets.  One of the problems for emerging companies is that the human resources they most covet (e.g., skilled scientists, engineers and software developers) are hotly pursued by a number of other firms and in order to be successful companies must be prepared to integrate sales and marketing into their recruiting strategies.  In fact, this process has been referred to as “employer branding” which means creating and maintaining an image of the company as “a great place to work” in the minds of current and prospective employees as well as other important external stakeholders such as investors, suppliers and customers.

Larger companies may have difficulties in get veterans of marketing and human resources to work together.  Experienced marketers are rarely asked to spice up the look and feel of job postings and human resource professionals have little or no training or experience in actively selling and promoting job opportunities within their companies.  However, smaller companies may be able to forge the link more effectively because they have not yet reached the stage where marketing and human resources have been formally separated and the founders and CEO still have sufficient contact with all of the managers to make sure that they are working together on identifying and fulfilling the company’s essential staffing requirements.

One major problem for smaller companies in creating an employer brand is that they are usually still involved with staking out their niche in the marketplace and often do not even have a finished product or service to use as a centerpiece for explaining their goals and objectives to potential employees.  In fact, traditional recruiting efforts generally do not work very well for many companies during the start-up stage because they are unable to direct candidates to products, services, established customer relationships or a network of strategic alliances.  In that situation the company needs to be smart about the way in which it invests resources in recruiting and this often means going directly to those persons who the company is most interested in hiring.  For example, a software company may compile a “wish list” of skilled, creative developers and send them a specially prepared package of materials that carefully and fully describes the mission of the company and the specific reasons that the recipients should consider joining.  The materials should include instructions on how to get further information, such as by logging into a dedicated part of the company’s website, and should have enough of a “wow factor” that word will quickly travel outside of the initial group of recipients.

Another simple and effective way to bring marketing and recruiting together is to ensure that all prospective employees, regardless of where in the company they may be working, will be interviewed by representatives from the sales and marketing groups as well as by human resources professionals and managers from the group doing the hiring.  This process provides an opportunity to deliver a strong and consistent message regarding the company brand and image to everyone that the company thinks highly enough about to invite in for an interview.  Candidates who receive and accept an offer will join the company with a clear understanding of its employer brand and those who do not join the company may nonetheless have a sufficiently favorable impression of the firm that they will steer business to the company in the future.  In addition, ongoing participation in employment interviews provides sales and marketing personnel with an change to continuously reinforce and refine the “company story” that they want to get out to customers and other business partners.

The important thing to do is to make sure that a “marketing angle” is explored for every contact with potential employees.  Once the company has a product or service and has developed a brand that it is prepared to market to customers information on the brand should be incorporated into the text of every job listing distributed by the company.  Sales and marketing representatives should deliver a short and concise sales pitch during employee interviews and candidates should be provided with samples for their own use and gift cards to give to colleagues who might have an interest in the company’s products.  The marketing department should be closely involved with planning and promoting recruiting events and such events should be given the same level of importance as new product launches and celebrations of other company milestones.  Finally, consistent with the goal of being known as a “great place to work,” companies should regularly sponsor community oriented events in order to create a positive image and provide information about job opportunities.

Developing Human Capital for the Future

The ability to recruit and retain talented and skilled managers and employees is essential for emerging companies to become and remain competitive.  Unfortunately, companies are increasing challenged in their attempts to tap into pools of qualified candidates from outside due to the increasing global demand for talent and the lack of a sufficient number of Generation X workers to replace retiring baby boomers.  As a result, companies are turning inward and attempting to identify potential leaders from within their workforce that can be trained to assume more important roles.  In order for this strategy to be successful, companies are allocating more resources on management and employee development programs and creating what are, in effect, human capital investment projects.  As with any other type of investment, companies must establish specific goals and objectives, which requires forecasting the future human resource requirements of the company; prioritizing how the available monies are spent on specific development programs; and creating tools that can be used to measure the effectiveness of the choices made relating to the investments in development programs.

There are a number of options available to companies wishing to provide professional and career development opportunities for their managers and employees.  For example, many companies offer courses to their personnel covering a wide range of topics and the increasing ease of use of online learning has made it easier for companies to tap into specialized programs that are available through universities and private education companies.  Universities are also mobilizing to provide a customized curriculum, including made-to-order degree programs for a specific company, which would be available through in-class courses and online.  However, even companies with substantial financial resources are questioning the efficiency of trying to create and offer learning programs for everyone in the organization and there is a growing recognition that the scope and focus of these programs must be closely aligned with the long-term goals of the company.  Specifically, companies are being advised to reduce the amount of funds allocated to training for rank-and-file employees and instead concentrate their efforts on the positions that the company has identified as being most critical for the success of the company five to ten years down the road.  In order for this approach to be successful, however, the company must have a good idea of where it intends to go including what new products, technologies and markets will be central to the company’s business in the future.  Moreover, human resources professionals must be able to assist managers in identifying those persons who are most likely to emerge as leaders at some point in the future and the company must be prepared to provide those selected for development with sufficient incentives to remain with the company to the point where there skills become most crucial and important.

Interns for Your Emerging Company

Emerging companies often establish internship programs as a cost-effective way to find additional help for general administrative activities and specific projects for which the intern may have particularly useful training and experience.  Internships are often made available to the students and may or may not be sponsored by a university or other type of academic institution.

If the company intends not to pay the intern it is important to consider whether or not the internship will nonetheless be characterized as an employer-employee relationship, which means that the intern must be paid at least the minimum wage and may also be eligible for other benefits mandated by federal and/or state law for employees.  If companies want to have a higher level of certainty that interns will indeed by treated as interns under the labor laws the following guidelines from the federal Fair Labor Standards Act should be taken into account when structuring the intern’s activities and responsibilities:

• While interns may be trained in the use of the specific equipment the company uses in its business the equipment must be similar to the equipment that would usually be available in a vocational school.
• The decision to bring an intern on board should not displace or replace any regular employees of the business.
• The intern must be specifically informed, and should acknowledge in writing, that he or she is not entitled to a regular job at the end of the internship period.
• Both parties should acknowledge in writing their understanding that the intern is not entitled to received wages for receiving training during the internship period.
• Any training provided to the intern must be primarily for the benefit of the intern.
• The company should not derive any “immediate advantage” from the internship and the work performed by the intern.

The key to making sure an internship is characterized as such is structuring the activities as an “educational experience,” rather than a poorly disguised strategy for obtaining free help.  It’s OK if the business gets some benefits out of the internship; however, be sure that training and educating the intern is the top priority.  If you work with a university to obtain interns they will usually have their own specific criteria regarding the activities of the intern that must be satisfied in order for the intern to receive academic credit. For example, students from a public policy program are usually limited to internships that provide them with an opportunity to research substantive legislative or policy issues.  By following the university’s guidelines companies can generally be comfortable that they will not run afoul of the labor laws.

Build Connections--Increase Productivity and Morale

A recent study published by Deloitte Research titled “It’s 2008: Do You Know Where Your Talent Is?: Connecting People to What Matters” explores the interesting issue of how to build “connections” between people within organizations that will provide the highest return in terms of productivity and innovation.  Managers have long recognized the importance of communication and collaboration between employees, particularly in these days when companies are becoming more global and employees who need to work together are located in distant locations.  For example, companies often strive for teamwork through the creation of project teams and make substantial investments in IT resources that facilitate rapid communication and information sharing.  However, Deloitte claims that there are certain types of connections that are more valuable than others and argue that companies must recognize and support three very different kinds of connections with their organizations—connections with other people; connections with a common and worthwhile company purpose; and connections with necessary resources.  A few specific recommendations in this area follow:

• Give managers the time that they need to engage in networking activities and communications and encourage all employees to create and maintain networks and relationships within the company to learn more about their colleagues and share new ideas that can ultimately be used to enhance company performance.  This can be done by making new networking tools, such as video and various forms of e-communications, readily available; however, be sure that employees understand the need to keep their networking relationships to a manageable level of the time will cease to be effective.
• Build the connection with a sense of purpose by making an effort to provide employee with fulfilling job activities and opportunities to expand and use their talents.  This means implementing focused and continuous enrichment programs that are designed to prepare employees for new challenges as opposed to simply training them to do their current jobs more quickly and efficiently.  This approach can reduce turnover and keep motivation within the workforce at higher levels.
• Make sure the employees have easy access to the information that they need to perform their jobs.  This means investing in technology that allows employees to work efficiently with delays caused by waiting on others to provide answers or data.
• Connection to resources goes beyond access to information to include access to the support and time that employees need to learn, think, rejuvenate and collaborate.  This means assisting employees in overcoming personal challenges that may prevent them from focusing on work, such as finding suitable daycare for their children, and making sure that time is set aside for them to tinker with some of their own ideas for products, services or processes that may ultimately provide value for the company.  Office layout decisions should be made with an eye toward creating spaces for collaboration as well as areas where employees can go to be free of disturbances so that they can concentrate on a specific problem or idea.

Signs of a Miserable Job (or Employee)

Why do companies have trouble keeping valuable employees?  At least part of the answer may be that the person has simply become miserable in his or her position.  The concept of the “miserable job” is the subject of best-selling author Patrick Lencioni’s latest book—The Three Signs of a Miserable Job.  While I prefer non-fiction when it comes to discussing business issues, Lencioni’s “fable for managers (and their employees)” regarding the sources of job dissatisfaction provides food for thought, but not a complete answer.

Well, just what are the three signs of employee unhappiness?  According to Lencioni, the first is “anonymity”--the feeling that your supervisor doesn’t really know or care about you at a personal level.  The second is “irrelevance”—the feeling that your job simply doesn’t matter.  The final sign is “immeasurability”—a feeling of lack of control caused by the absence of objective measures of job performance and professional development and the need to rely on the unpredictable whims of others to learn just what is considered to be successful behavior within the company.

Not surprisingly, Lencioni believes that the three signs are closely related—as companies grow people more distance develops between people leading to a growing sense of anonymity; then, as people begin to lose touch with one another they get less and less feedback on the quality and importance of their work, which leads to the feeling of immeasurability; and, finally, as people lose track of how their work fits into the total picture they gradually begin to feel irrelevant.

Can the “miserable job,” or more correctly, the “miserable employee,” be avoided?  Let’s hope that managers can do so by understanding and apply some basic techniques of empathy, attentive oversight and proper job design.  The fictional manager in Lencioni’s book tries to get to know his workers through outings and asking simple questions about their day-to-day lives.  He also makes an effort to remind employees about how valuable their work is to customers and other departments within the company.  Finally, he devises ways to enable employees to grade themselves against objective measures of customer satisfaction.  These are all good lessons; however, they need to be genuine and part of the larger process of evaluating employee performance and distributing rewards.  For example, allowing employees to grade themselves does not solve the immeasurability issue if bonuses and promotions are dolled out based on subjective factors over which employees have no control and may not even be aware of.

Obviously there is more to job dissatisfaction (and preventing it) than just the three signs identified by Lencioni.  The book itself touches on other motivators such as the size of the paycheck that an employee receives and it is widely known that managers are admonished to offer their employees more autonomy and opportunities for advancement in order to retain them and keep them from seeking greener pastures.  Nonetheless, the book is an interesting read and a reminder to managers to regularly consider how employees are being impacted at a personal level as the company grows and changes.

By the way, ever feel miserable (or something else) after you receive an e-mail from a colleague?  Well, that’s no surprise to Kristin Byron, the author of “Carrying Too Heavy a Load?: The Communication and Miscommunication of Emotion by E-Mail,” which will appear in the Academy of Management Review in January 2008.  Based on her research, which is briefly summarized in a note appearing in Fast Company, she reports that e-mail messages are consistently perceived by recipients as being more negative than the sender intended and even e-mails that the sender wrote to convey a positive message are often misinterpreted by the recipient as more neutral.  The lack of formality associated with e-mail—short terse sentences, misspellings, and no opening or closing to the message—contributes to the perception that messages are more negative than they are intended to be.  Sounds like this is another reminder that face-to-face contact or a phone call should be used at appropriate times to make sure that there are no misunderstandings even if you think your e-mail messages have been clear and concise.  Moreover, the personal touch is a good way to reduce distance and avert the problems of anonymity discussed above.