The holiday season can bring unexpected challenges for businesses, particularly when it comes to managing unexpected, externally coordinated, or hostile staff departures.

A sudden wave of employees leaving for greener pastures can be a nightmare for company directors, creating a myriad of issues for management, such as financial setbacks, the loss of key clients and sensitive information, and significant damage to reputation, and staff morale.

A recent high profile matter involving accountants in a specialist area in Hong Kong is proof positive of this concern.

As the end of the year approaches, with the added stress of the current economic uncertainty and increased competition, the risk of organised staff defections is higher than ever. Unhappiness as to year-end bonuses, coupled with the desire for a fresh start in the new year, makes the holiday season a prime time for employees to consider making a move, or to be easily manipulated by competitive or hostile organisations.

Key Risks

In the current climate, all companies, including those in financial services, accounting, insurance, corporate services, banks, and legal sectors, are vulnerable to such coordinated staff defections.

Various factors can contribute to such departures, such as employees feeling exposed due to layoffs, the entry into the market of financially strong competitors, or concerns about possible future job cuts in a negative marketplace.

The continuation of remote work opportunities has only expanded the possibilities for ease of defections. Employees can now easily explore job opportunities at digitally accessible firms, while cost-cutting measures may prompt them to leave. Remote work and poor data security also increase the risk of sensitive information being stolen.

Geopolitical tensions compound the threat. Relocations due to regulatory challenges and political uncertainties can also trigger staff departures. Employees may even feel justified in leaving with confidential information, if they feel their employer is facing significant challenges. This is, of course, purely criminal activity but many employees don’t consider this to be a risk.

Warning Signs

Early detection is key to mitigating the impact of coordinated staff departures. SVA are specialists in helping counter such threats, and in spotting and mitigating the dangers ahead of time.

Early indicators include examples such as a small clique of staff leaving together, unusual late night or weekend work patterns, aggressive competitor behaviour, strange demands for access to client databases, and the unusual coordination of resignations – all could signal serious trouble.

Companies that operate a “matrix management system” face particular risk, as multiple reporting lines and confusion over accountability can obscure the full picture, making it challenging to take decisive action. This risk is particularly acute if those involved operate across several jurisdictions and time zones.

What can practically be done?

A common reaction when such issues come to light is panic and paralysis, not least as the core defectors and their backers may launch hostile action when defences are down – over a long holiday, say, during an annual off-site management meeting, or at similar periods when management is absent or distracted.

Management may struggle to respond, given their focus on steering the business through a tough environment. Worse, in-house legal advisors or external counsel may hesitate to act until “hard” evidence of malfeasance emerges. Some may opine that such behaviour is only the “industry norm”, or that “nothing can be done”.

However, taking no action is a decision in itself, and amounts to a tacit admission of defeat. In that context, SVA recommends that the management team should quickly assess damage, and formulate a rapid and robust response. Calling SVA early is always wise.

The key is to anticipate and counter hostile initiatives – and thereby protect shareholder and company interests. This is where SVA can step in and support Boards of Directors, and help to prop up the remaining loyal management team by combatting the hostile actions of such unethical parties.

The SVA Crisis Containment Team

SVA recommends the establishment of a crisis containment team, comprising senior executives, experienced external counsel, and other advisors, to handle day-to-day crisis issues, and to coordinate responses.

This team should consider how to coordinate a robust reaction, which goes beyond legalistic responses that focus on “process” and downplay “results”. Moreover, team members require thorough vetting, to ensure those remaining behind do not collude with defectors, or otherwise acquiesce in their activities. Emotive feelings over recent redundancies or poor bonus payments can magnify such bad blood.

SVA consultants can help facilitate team formation, can help deal with disparate departments, and can organise and report progress, thereby freeing up senior management time to focus on the company’s core business activity throughout what can be a protracted crisis.

Staff Interaction and Dialogue

A concurrent step is conducting discreet and ethical investigation into these conspiracies, by interviewing staff members, so as to identify those “friendly” to the company, and those not. Such interviews are crucial, as, in some cases, a “second wave” of employees is preparing to depart, and may continue to feed information to a rival. These unethical employees are sometimes known as “cling-ons”.

Moreover, interviews can identify operational intelligence, such as external offer letters for employment or details of offers of cash advances, and, if carefully planned, can deter some wavering staff from leaving.

Often, staff caught in the middle of such unsettling events may welcome the knowledge that the core company intends to defend its interests. So, doing nothing is never the right option in such situations.

Collecting Electronic Evidence & Drawing Up a Timeline for Evidential Purposes

Another concurrent step is to collect electronic information. Defections take time and resources to organise, and often leave traces of abuse on data systems. Defectors often copy confidential information, or delete files in a malicious attempt to damage the firm or its ability to recover.

In particular, unusual use of external storage devices, such as USB “thumb-drives”, external hard disk, cloud storage and suchlike, generally leaves a trace. Accordingly, SVA data forensic analysts can collect associated electronic evidence of the theft of intellectual property, or breaches of fiduciary duty by current directors or regulated persons.

A timeline can also assist observers in understanding the genesis and development of a defection conspiracy, aid in planning counter-measures, and comprise a key piece of evidence in subsequent legal action, civil or criminal.

Now is the time

The festive season is often a time when individuals consider new opportunities. With ongoing financial sector retrenchments, the risk of staff departures with critical confidential information is heightened. Ethical breaches like soliciting colleagues for departure pose a threat to businesses, necessitating firm leadership from companies.

Bringing across valuable and confidential information, and soliciting colleagues for departure is obviously unethical, and can threaten a business. Often, however colleagues will stand by in the face of such activity and will do nothing, unless the company shows a strong lead.

Firms can mitigate the impact of any organised exodus by implementing counter-measures, and developing contingency plans to reduce exposure, though; and SVA has both the experience and the operational capacity to assist with key staff defections, efficiently, legally, and ethically.

Again, a firm that is unwilling to protect its data and staff is a firm that will encounter serious difficulties.

SVA

SVA (www.stevevickersassociates.com) is a specialist risk mitigation, corporate intelligence and risk consulting company. The firm serves financial institutions, private equity funds, corporations, high net-worth individuals, and insurance companies and underwriters around the world.

SVA has three core lines of business, which are: Business Intelligence and Political Risk; Corporate Investigations; and Special Risk.

SVA also has a dedicated crisis management team which, for our retained clients, stands ready to assist companies during crisis situations.

SVA is based in Hong Kong, Singapore, and London and operates globally.