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IN DETAIL: RISK MANAGEMENT

Staff Defections SVA offers a guide for directors and senior management when facing critical personnel losses. –By Steve Vickers

T

he threat of losing executives to a rival is a nightmare for directors, and a test of management resolve. Any defection can engender financial harm, loss of information and clients, and damage to reputation and morale. Adding insult to injury, the risk of defections following Christmas and before the Chinese New Year – times at which staff pocket their bonuses and leave – has become greater than ever. Directors should take account of the threat.

The Risks Many companies are at risk, including those in financial services, insurance, corporate services, banks, law firms, and professional services businesses. The circumstances vary, but often include certain factors – middle-ranking employees have been feeling vulnerable; the emergence of a cash-rich player has come to the fore; or a perception of lay-offs is in the wind, among others motivators.

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Of course, the movement of staff is normal, but it must be understood swiftly that any departure accompanied by unethical, or even illegal, activity can threaten a business. In that context, SVA has noticed an upsurge in unethical activity of late, which includes theft of corporate data and the deliberate soliciting of staff.

Warning Signs Spotting the danger is possible. A small clique resigning together, unusual late night or weekend work patterns, aggressive behaviour by a competitor, strange requests for access to databases – all and any of these activities may foreshadow trouble. A “matrix management system” (managing crossfunctional, cross-business groups) augments risks, as multiple reporting lines and confusion over accountability can mean that few executives see the whole picture. Consequently, no one will spot the threat.

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