What is a corporate crisis? While exact definitions may differ, a corporate crisis is generally defined as “an event, situation, or public initiative that threatens the company’s ability to effectively operate its business. A crisis can escalate into a disaster or long-term impediment to business growth if not handled with efficiency and sensitivity to all involved.” This is a large umbrella that encompasses many of the internal issues we associate with companies, including (but not limited to) fraud, theft, misconduct, and harassment of all kinds.
A majority of corporate crises fall into one of three categories: personnel, systemic, and contextual.
A personnel crisis is an internal issue that is a direct result of an individual employee or a group of employees’ bad behavior. Theft by personnel is one of the most widely-reported crises in corporations throughout America. The scope of this problem can be as small as stealing office supplies all the way up to executive embezzlement. Sexual harassment is a type of personnel crisis receiving a welcomed new level of attention in corporations. In the age of the #MeToo movement, corporations are viewing their workforce very differently when it comes to identifying potential predators in their midst in the name of a “pound of cure.” Prudent steps taken when vetting potential hires and current employees has saved companies difficulties down the line, especially in legal fees and public relations.
A systemic crisis refers to a major breakdown in operations negatively impacting business. A common example is food service corporations that receive a sudden influx of food poisoning complaints. Source of the outbreak may be traced back to how the supplier or distributor handled the food product, and suddenly, there’s a systemic crisis: A misstep in operations led to a large sum of incidents. Systemic problems manifest themselves in many forms, including external theft. Repeated theft, both in cyberspace and the real world, is often the result of insufficient security within a company. Consequently, the company incurs loss because they remain vulnerable. Companies who have chronic turnover due to employee misconduct may have flaws in their vetting system for potential employees. That is another example of a crucial operation where a breakdown occurs and erodes a company’s profits with labor hours to hire a new individual to fill a vacant position.
A contextual crisis has exponential consequences for a business relative to its size. These are the types of crises that companies cannot anticipate, because they influence public perception of their brand based on real-life events. A major news story like a mass shooting, or a major criminal case, or a lawsuit, can negatively impact a brand even if that event is not directly associated with that company. These external events can drastically change a company’s internal operations, and can weigh heavy on employees at every level. Sexual harassment is another example of this type of crisis in motion. The media coverage regarding high-level Hollywood executives like Harvey Weinstein and his alleged history of abuse have executives in companies of all shapes and sizes revisiting their human resource policies and practices when it comes to addressing sexual misconduct in the workplace. Internal operations receive a major overhaul to the benefit of a healthier work environment for everyone.
When it comes to corporate crises, not all businesses will be able to afford specialized investigators to work in-house to resolve issues that arise. Even if they can afford these professionals, investigators employed by the company—regardless of the quality of their work—by definition cannot provide a truly objective solution to any problem. Because they’re employed by the corporation, they have a potential stake in the outcome of the investigation, whether that stake be real or perceived. Hiring an independent professional, like a licensed private investigator, to conduct an external investigation is the best way to ensure that the solution is objective. This is particularly important personnel crises, because terminating personnel based on an unbiased investigation is kerosene for a disgruntled employee that can manifest itself with many devastating consequences—most commonly wrongful termination lawsuits. Private investigators can assist in systemic crises as well, like the example of repeated thefts with regards to security. Private investigators who specialize in different kinds of risk assessment can identify a company’s vulnerabilities to thieves and scammers, and provide them with a game plan to improve their security.
If your business has encountered a corporate crisis, call Lauth Investigations International today for a free consultation. Learn how we can provide you with an objective solution to your corporate crisis. Call 317-951-1100, or learn more about our services here.
When growing a business, executives and owners have to go the extra mile when it comes to protecting trade secrets. In the pursuit of their company’s business, a common practice for corporations of all sizes is implementing non-compete clauses in their employees’ contracts. This ensures, should an employee leave the company for any reason, they cannot utilize trade secrets for the purpose of building a similar business of their own. It’s in a business owner’s best interest to be preemptive in protecting themselves from client poaching, theft of company secrets, and possibly even slander when it comes to current and former employees who violate their non-compete agreements.
Though they go by several names and the laws concerning them vary state to state, non-compete agreements are generally a legally-binding contract between an employer and an employee, whereupon acceptance of a job offer by a company, an individual agrees during their employment and following their termination they will not enter into any competing business for a predetermined period of time. Whether it’s working for a company’s top competitor, or striking out in their own business, non-compete agreements protect trade secrets, sensitive company information, and prevent competing businesses from poaching successful employees with promises of a handsome pay-raise in exchange for the expertise they might have gleaned from their time at their previous position. This kind of information can range from client bases to business operations to future products and services. The duration of the non-compete agreement following an employee’s termination have to be well within reason, as no employer can permanently preclude a former employee from any line of work.
Not every company experiences difficulties by virtue of a former employee violating their non-compete agreement, and some companies do not see the need for non-compete agreements at all, but the consequences of trade secrets being used to steal a company’s business can have devastating effects, ending in the worst possible circumstances with a business closing and an owner in debt. Even if a company is able to quash a non-compete violation in court, the cost to the company in legal fees can be astronomical, especially for smaller businesses. That’s why it’s important for owners and executives to be preemptive and proactive when it comes to potential violators. Luckily, a private investigator can help at all stages of a non-compete violation investigation.
Human resource employees are the salt of the earth, and can have a great influence on how a company develops based on the individuals they select for their workforce. However, human resource employees are not lie detectors, and do not always have access to legitimate, comprehensive background screening tools. Background screenings and checks are among the most common service associated with private investigators. If there is something suspect in a candidate’s past, licensed private investigators have the tools and experience to find it out. Private investigators can pull a candidate’s criminal history, financial history, and interview persons in their lives who can speak to character and work ethic. They can also spot patterns in a person’s work history or lifestyle that could be high-risk factors in a hypothetical non-compete violation—things like transience, long periods between positions, or financial destitution.
Some malingering employees can’t wait to be terminated before violating their non-compete agreements. It’s not uncommon for these individuals to exploit trade secrets for their businesses own gain while on company time and dime. While on a business trip, an individual might use company per diem to buy drinks for a person who could be a potential investor in their new business. Employees might use company supplies to supplement their project, such as printers, fax machines, computers, and other equipment. Private investigators can conduct diligent investigations within a company’s workforce to root out the source of the theft. Private investigators can interview witnesses, including upper management and other staff, review vital documents like bank records, and conduct surveillance of the company’s operations as needed to expose the perpetrator. Their objectivity makes them an ideal candidate to conduct such an investigation because they do not have a stake in the outcome.
There are many circumstances under which a business owner might come to suspect a former employee has violated their non-compete agreement. Word might have traveled through business circles that a similar business is starting up. Employees might start disappearing in clusters. Clients may suddenly decide to sever business ties in favor of a new contender in the competition. Whatever transpires, one thing is certain—documenting and exposing this exploitation is imperative, because the consequences can be costly. Retaining a qualified private investigator who specializes in corporate crises is crucial to resolving non-compete violations quickly, before the exponential costs begin to erode profits. Private investigators can perform surveillance on suspected former employees to document their movements, record with whom they met, and collect evidence such as pictures of a brick and mortar establishment, marketing materials, vital documents, and filings with the Secretary of State. Private investigators can send undercover operatives to infiltrate a workforce to get information the business privy only to employees. They can also enlist the aid of a confidential informant—an individual already within the company to provide information. This requires quality interviewing skills and developing a natural rapport with potential witnesses, both important qualities in a qualified investigator.
When non-compete violations are at their ugliest, not only do violators seek to siphon off their former employer’s business by exploiting trade secrets and knowledge of their operations, but they can also play dirty by exposing this information publicly. Another method involves deliberately spreading lies about the competition in order to drive business towards the former employee’s company. That’s known as slander and it’s legally actionable. Documenting the perpetuation of these lies and proving they are in fact false are crucial in these cases. Diligent fact-finding is the cornerstone of any private investigator’s expertise. Private investigators can conduct cyber investigations to track down the users behind profiles that post false negative reviews, follow rumors back to their roots, and forensically track how information left the competition and made its way into the former employee’s business nucleus. They can implement many of the strategies aforementioned: surveillance, interviewing witnesses, documenting evidence. Slander cases tend to have a divisive they-said, they-said narrative, which is where a private investigator’s objectivity becomes invaluable once more. Private investigators have no stake in the solution of an investigation. Their independence coupled with their expertise and resume make them spectacular witnesses in any subsequent litigation.
When a company has a non-compete agreement in place, it’s important that executives and owners are proactive when performing a risk assessment on a potential employee. It’s important that a healthy company culture fosters good comradery, honesty, and a policy of “if you see something, say something.” Building a case against a former employee who violated their agreement can be time consuming at the expense of company resources. Dealing with the fallout from litigation can bring a reliable business to its knees. Private investigators can assist in all phases of any non-compete agreement violation, and retaining their services will go a long way towards a body of objective evidence and testimony that can resolve a company’s crisis.
If you have suspicions that a current or former employee has violated their non-compete agreement, contact Lauth Investigations International today for a free consultation on how we can help you! Call 317-955-1100 or find us online at www.lauthinveststg.wpengine.com.
Carie McMichael is the Media and Communication Specialist for Lauth Investigations International. She regularly writes on investigations, missing person, and other topics in the criminal justice system.
