Personal Finance

How employers can protect their investment in workers

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Organisations have the option of having their employees sign non-disclosure agreements to protect their investments. PHOTO | FILE

Finding the right talent for your business is an uphill task for many employers, yet the human resource pillar has been viewed as one of the most important for any business.

The challenge is not only in finding the right talent but also nurturing and managing that person for your businesses’ benefit. It is inevitable for employers to invest in their employees when they are nurturing and growing them. This could be through trainings, capacity building and skills acquisition.

How then do employers ensure that their investment in remains protected? For example take a scenario where you sponsor one of your employees to undertake further studies and they then leave employment once they have finished the studies.

How does your business balance between nurturing and growing talent vis a vis protecting its investments?

There are a number of tools that an employer can use to mitigate this risk and one is by the use of a contract. The employer needs to decide if the investment he is going to pay will be in the form of a grant or a loan.

This means, do you expect the employee to repay back the amount after sometime or is the cost of further skill acquisition on your business? If it is a loan then it is good to sign a loan agreement with the employee and have the him offer some sort of security for the loan.

This ensures that once the employee leaves employment, you can always recover the pending dues from him.

If the employer is sponsoring the employee, then what is commonly known as employee bonding tactics come into play. This is where the employer trains the employee and the employee has to work for the employer for a specific number of years during or after the training.

If the employee wishes to leave before the period of bonding is over, then a few punitive clauses would apply for example a repayment of the amount invested.

Deserving employee's

However motivational tools are the most effective in nurturing talent while mitigating risk to the employer. Motivational tools serve to attract and retain talent in your organisation. Some simple forms of motivational tools include promotions and salary increases.

A more complex tool is the employee stock ownership plan (ESOP) which allows your employees to own some shares in your business. It is very effective in maintaining good talent. The formation of an ESOP is a bit complex as it is a vehicle that allows willing and deserving employees to participate in share ownership.

Use of intellectual property also effectively mitigates risk in capacity building. One way is by use of trade secrets.

When you build an employee’s capacity you can have that employee sign a non-disclosure agreement and also have a few restrictive clauses on the way he can use the information. A non-disclosure agreement means that the employee cannot use the skills acquired from your business for the benefit of third parties.

It in essence ensures that the skills you have invested in your employees through trainings are not used for the benefit of your competitors.

Restrictive covenants also serve the same purpose as they limit the disclosure of the skills to third parties and go to the extent of even limiting the geographical area in which such acquired skills can be used.

Ms Mputhia is the founder of CMputhia Advocates. [email protected], www.cmputhiadvocates.com