EmployeesAny real, honest-to-goodness business has employees.  And until cyborgs replace humans in the workforce, any business with employees has real, honest-to-goodness challenges with those employees.

How do you meet those challenges?  Establish appropriate employment policies and procedures. Those policies and procedures should, at a minimum, contain three key components.

Hiring and Firing:  Well-conceived hiring practices help you hire talented workers who can make your business grow and succeed.

Do you have a regular procedure for interviewing candidates and checking references?  Who ensures that I-9’s are properly filled out and that a new hire is legally authorized to work?  Once an employee begins working, who ensures that she is properly trained and informed about company policies?

On the other end of the employment relationship, do you conduct regular exit interviews with departing employees?  If you must terminate an employee for poor performance, have you adequately documented instances of poor performance and given the employee a legitimate opportunity to improve?  Do your evaluations reflect the employee’s true performance, or do they suffer from the “halo effect” where all employees (even the poor performers) are well above average?

Develop practices that will help you hire talented people.  Provide them with the tools and training that they need to do their job well.  Evaluate them fairly, help them establish appropriate goals, and encourage them to succeed.  Proper employment practices will help your employees thrive and prosper.

Employee Handbook:  Document your policies and procedures with a well-drafted employee handbook.  Let your employees know what you expect of them.  Explain your company’s history and culture, and outline policies that will help your employees succeed in the workplace.

Employers who implement and enforce anti-discrimination policies may be able to avoid legal liability for sexual harassment and other types of employment discrimination.  Talk to your lawyer about how you can protect your business.  Then implement those policies and procedures, and ensure that your managers follow them.

Many managers ask “how far” they can go before their conduct becomes illegal discrimination.  In doing so, they miss a critical point.  Do not worry about whether conduct is legal or illegal.  Rather, focus on whether the behavior is appropriate for the work environment.  Behavior may be inappropriate and still not constitute illegal discrimination.  But appropriate behavior never constitutes illegal discrimination.  Stay away from the edges.

One important note:  your handbook is only as good as your efforts to follow its requirements.  The most carefully drafted handbook is of no use if you do not follow it.

Intangible Assets:  Your intangible assets make up 75 percent or more of the value of your company.  If you do not adequately protect those assets, you place your business at risk.

Conduct an audit to identify your trade secrets.  A trade secret is information that (1) is generally unknown in the industry, (2) has independent economic value from being unknown, and (3) is subject to reasonable efforts to maintain its secrecy.

Trade secrets may protect any type of confidential information from recipes (think Coca Cola or the Colonel’s 11 Herbs and Spices) to customer lists, marketing plans to schematics, chemical compounds to business strategies.  Your business undoubtedly has valuable trade secrets it must protect.

Consistency is critical.  If you ever fail to treat your trade secret as confidential, it ceases to be a trade secret.  You worked hard to distinguish your business.  Don’t dissipate your intangible assets through carelessness.

Draft and enforce reasonable restrictive covenants and confidentiality agreements with your employees.  Make those agreements enforceable by strictly limiting their time and scope.  Rather than try to grab as much as possible, make your restrictive covenants as narrow as possible.  Review and update your agreements at least once a year.

Develop and implement sound employment practices, and your business will boom.


Scott F. Gibson is a partner at Davis Miles McGuire Gardner, PLLC and an adjunct professor of law at the Sandra Day O’Connor College of Law at Arizona State University