Welcome to a free edition of Start Up To Grown Up: Your source for ideas, insights and tactics to take back control of your business and scale it sustainably and profitably by Heather Townsend, award-winning author of The Accountants’ Millionaires’ Club and Founder of The Accountants’ Growth Club
You’ve poured your heart into your business. The last thing you want is for most of that business to walk out the door when a key fee earner leaves. When your business is young and your small (but perfectly formed) team seems highly engaged, and you all feel ‘in it together,’ it seems unlikely that this could happen. After all, your team wouldn’t do this to you.
Or would they?
In the 15+ years of helping small business owners grow and scale, on thing is certain: at some point, there will be a revolving door of employees. It’s a rite of passage I see time and time again.
While everything may feel great right now, and your team is incredibly close, you must prepare for the reality that, at some point, a key team member will leave. This means planning in advance for how you will handle it. I’m not ashamed to say that this planning has saved me more than once. For example, I once had a team member with a dark side. Ninety-five percent of the time, they were happy and full of energy. To the outside world, even now, very few people know about this side of them. But I did. It was this dark side that worried me. I knew that at some point they would resign in a huff and that would be that. In fact, 2 weeks before they resigned they publicly stated that they loved their role and working with me. And yes, their departure was more akin to a massive meltdown with me and the business. The more you can put in place now, the easier it will be to handle if the worst does happen to your firm.
It starts with your employment contracts and employee handbooks
First, I should clarify that I’m based in the UK, so my advice applies to UK business owners. Second, don’t rely solely on my guidance. Go and talk with an HR expert. This may be called a labour and employment specialist in your country.
I’ve been guilty of this myself - recycling an old employment contract for a new team member. In my defence it was my first team member. Maybe you’ve done the same, copying an outdated contract or even generating one with ChatGPT. Regardless of whether you copy an old contract or use ChatGPT this approach is risky because it assumes the template suits your firm’s specific needs. For instance, does it reflect your flexible work arrangements? Or does it assume you operate like a large corporation with extensive benefits and a rigid office structure?
ChatGPT and similar AI tools will likely provide you with a generic contract - one that may not even be legally enforceable in your jurisdiction. If you are serious about building a strong, resilient team, you need proper legal advice on your employment contracts and employee handbooks.
If you haven’t reviewed these documents recently, now is the time. Your contracts should include:
Watertight but fair restrictive covenants specifying what your former employee can and cannot do for six months after leaving. For example, preventing them from approaching current clients or recruiting team members. Anything over six months may be considered punitive and unenforceable in UK courts.
Responsibilities upon departure, such as returning company property at their expense and deleting any company data from personal devices. This has become more important since your employee may work remotely and not be able to physically hand back their kit on their last day in the office.
Clear expectations for remote work, such as stating that employees working from home should not also be the primary caregiver for young children.
Social media and company data policies, ensuring employees update their online profiles to reflect their departure on their last day.
Secure your IT systems
UK employers have the right to revoke an employee’s access to company systems, pending an investigation. As we’ve experienced in the past, you may need to exercise this right. With many employees working remotely, your IT provider should be able to instantly block access to key software and data. As you can imagine this step is pretty provocative! Activating this block is best done without the employee knowing. However, two-factor authentication can complicate things, so plan ahead.
As an employer, you want to be able to, if needed, read your employees' company email. For example if an employee is off sick. It is surprising how many employees will send the entire client database to themselves from their company email account. I've even heard of a departing Data Protection expert do this when they left a business they were co-director of! If the employee leaves you will need to be able to see their email account so that you can manage the handover of client relationships and also to check for any wrongdoing or outstanding tasks.
Put in place good people management practices
I'm not one for advocating that you have a computer based solution that records every keystroke that your employee makes. In fact, I heard about an accounting firm that did so. It was one of the factors that caused their expensive new hire to last less than a week in their employment. Trust goes 2 ways between an employer and an employee. If your employees don't think they trust you then this isn't going to end well.
When it comes to key fee earners leaving, the problems often happen in the weeks and months BEFORE the employee actually resigns. I once lost a great employee - one that I would have back - simply because I didn’t ask about their future family plans. They left our business for a bigger business which would give them a better maternity leave package. If only we had spoken 5 weeks earlier, as I would have happily provided them with a better maternity package. But that's the benefit of hindsight! This is where having a regime of ‘light touch monitoring’ with your people management can save you money and heartache.
‘Light touch monitoring’ includes:
Setting KPI targets every 3 months for each employee. Then sitting down with the employee to talk about how they are doing with these KPIs every month.
A weekly 1:2:1 with them to see how they are doing. This can be as short as 10 mins.
Reading ‘performance reports’ which tells you how an employee is doing on a key component of their role. For example, we can always see when someone with business development responsibilities is disengaging as their business development metrics tank. These reports are often the first indicator that an employee is disengaging.
Occasionally attending a meeting with your employee and their client. Remember you have every right to do this.
Insisting that every employee keeps their electronic calendar up-to-date. And visible to every team member.
Ensuring employees attend their team meetings and speak in the meetings. And if they are attending virtually, they turn their cameras on.
Root causing with the employee why they made a mistake or something didn’t happen as planned.
Checking that an employee is not getting overwhelmed. E.g. working long hours, lots of unread emails in their inbox or outstanding tasks on the practice management system.
Don’t ignore non-compliance or mistakes
When an employee disengages, mistakes often creep in. Or they cherry-pick the parts of the role they want to do. This could be:
Not keeping your Practice Management System up to date
Not completing all the steps in your firm’s standard processes. E.g. missing off the last step to update their timesheet.
Failing to promptly return phone calls to clients or team members or yourself.
You may be tempted at first to let things go. After all, you probably don't want to rock the boat. However, these little things always need a conversation. With the benefit of hindsight, it is often these little things that are the first indicator that something is amiss. But - and I speak from personal experience - it is easy to be in denial that everything is fine with your team.
Prepare for legal breaches
At this point you may think this will never happen to you. But like the employment law business whose departing Data Protection specialist left with the client list and therefore a data breach, this stuff happens. It also happens more often than you may think. Experience has told me that being upfront with former employees about what they actually can and cannot do is vital.
For example, I had a former employee break their contract by soliciting. I.e. having a conversation with a client or prospect of ours about becoming a client of their new business.
Part of your plan needs to involve having a conversation with your employee before they leave on what the clauses in their contract on leaving actually means in practice. In the case of our former employee where we had to get hard on them about the solicitation clause it became apparent that they hadn’t realised what it actually meant. It was an honest mistake on their part. This conversation needs to be formally documented and sent to them. Whilst this may feel nasty or draconian, it’s there to protect you and them.
Scenario plan the ‘hit by a bus’ problem.
Your business is always at risk from someone being, as we say in the UK, ‘hit by a bus’ problem. Therefore, once or twice a year it pays to run the ‘what would happen if so-and-so were hit by a bus’ scenario. If you don’t like thinking about the ‘hit by a bus’ problem, what about calling it ‘the won the lottery’ situation.
In this scenario could you or a team member quickly pick up their responsibilities without too much business interruption? For most small and growing businesses this often isn't the case. After all, who has the time and discipline in the early stages of your business to put this stuff into place? For example:
Ensuring that key processes and client relationships and critical knowledge are well-documented. This could be as simple as making sure that all client email conversations are automatically added to your business's CRM system.
Setting up standard operating procedures or workflows that any new and remaining team member can follow.
Being strict on asking your team to keep good quality notes on client files including notes on ongoing work and client preferences.
Making sure that team members keep all documents on the shared drive not their personal files or computer.
Cross train staff as best as possible.
Client communication strategy
A key fee earner leaving can often be a trigger for a client to review whether they want to use your firm going forward. Therefore, have a clear plan in place for how you will communicate the departure of a team member. This plan needs to consider what happens if the team member leaves abruptly. For example, we have had this happen to us a few times: Where the team member is not in the right mental frame of mind to stay and organise a smooth handover. But in an ideal world you would have your clients introduced to their new point of contact before the employee leaves
Final thoughts
Ensuring that safeguards are in place for when a key fee earners leaves is an essential part of protecting your business. Taking action before an employee resigns will help you navigate transitions smoothly - without losing valuable clients or momentum.
Your actions this week
It’s time to do some scenario planning. What would happen if a key employee upped and left your business tomorrow without a handover? How can you put in place steps to mitigate the negative impact of this happening.
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