competition 1

[peal724]

Getting Started in Consulting by Alan Weiss

This book has been recommended by many people on this forum, so I bought it and read most of it. At the end of each chapter, he has a Q & A. There is one that baffles me and I would greatly appreciate everybody's take on this issue.

"Q: Is it smart to go after clients and contacts from my past employer?

A: Yes, if you are not competing in any way. Otherwise, that would be unethical and illegal."

 

[MacGyverS2000]

Seems pretty straightforward to me... what bothers you about it?

Poaching clients from former employers is (usually) unethical... from your time at the prior employer, you have the benefit of not only inside knowledge of the client (names, sales figures, etc.), but also how the former employer works (shortcomings, etc.). If you were a janitor at said employer and later poached a client with zero inside knowledge, that would probably not be an issue. If you approached a former employer's client about providing food vending services to their factory workers when their business with the former employer is plastic molding, that would be a non-compete situation and also likely okay.

Dan - Owner

http://www.Hi-TecDesigns.com

 

[zdas04]

I think Dan got it absolutely right. If an engineer uses inside knowledge from a former job to offer engineering services to his former employers clients he is behaving unethically. If he offers lawn care services he's probably OK.

David

 

[IRstuff]

Is there an ethical dilemma there?

What part is baffling?

TTFN

FAQ731-376
Chinese prisoner wins Nobel Peace Prize

 

[MikeHalloran]

I think the book is wrong.

Using the former employer's client list is unethical, even if you're in a different business now.



Mike Halloran
Pembroke Pines, FL, USA

 

[looslib]

Those who can do, do
Those who can't do, consult
Those who can't consult, teach


"Wildfires are dangerous, hard to control, and economically catastrophic."

Ben Loosli

 

[flash3780]

Is it any less ethical than changing jobs to a company's competator? Either way you bring your expertise and professional contacts with you. I'd wager that many consultants build client lists while working for others.

I'm sure that there's a time horizon on this sort of thing. Sure, leaving your job on Friday and doing the same job directly for the client on Monday is unethical. But, if a year or two or three has gone by...?

 

[Ron]

The key to the ethical dilemma here is the use of the former employer's information.

There is no reason to assume you cannot approach a potential client, just because your former employer did work for them. The issue is how much info on this potential client did you gain from the former employer. If it is just passing knowledge, then I don't see it as an issue. If it requires inside information to get in the door, then that's unethical. Disclosure of intent is necessary in any case.

In my experience in leaving other firms, I typically maintained my own clients. Many times this is the case in consulting...the individual has the client relationship, not the company. Further to my case, I have been involved in forensic work in many cases, so it is not possible to change horses in midstream when there's litigation involved.

To allay any fears of impropriety in such cases, I would blanket all potential clients with the same qualification information and hope they bite. When they do, all bets are off, provided you don't exploit prior knowledge from the former employer.

 

[moltenmetal]

Wow, that's an idiotically black-and-white answer to a very grayscale question! No nuance at all. Lovely sound bite, but utterly useless.

If you signed no non-compete agreement when you were hired, I don't see why recruiting your former customers would be considered either unethical or immoral in a consulting context. If they were worried about it, they'd have tied you up with non-competes- or they should have done a better job of keeping you happy and hanging on to you.

I've followed consultants as a customer when they've moved into new employ: when seeking advice, I don't hire the firm, I hire the person whose advice I can rely upon. Nothing unethical about that, on my part or theirs.

You are not required to surgically or chemically remove the part of your brain that developed while you worked for someone else. Ripping off your former employer's trade secret knowledge- that's a very different matter.

 

[peal724]

First, thanks for all the replies.

What confuses me about Weiss's answer is this. If you start your own firm practicing the same exact type of engineering in the same geographic/demographic market, you're automatically in competition with your former employer. The answer doesn't make sense. Weiss says yes, target your former employers clients but don't compete with your former employer? It doesn't make sense.

I guess what needs to be debated are the words "go after" that are used in the books Q&A. There's always a right and wrong way to do anything. For those who have responded so far, would you please give some examples of what you think ethical competition and unethical competition would be.

There's been a lot of advice on this forum as to how to start your own practice. Once piece of advice is to have at least a few loyal clients that will "go with you" when you venture out on your own. I don't see anything unethical about this. And if you couldn't do this, people would be starting from absolute scratch.

Not that I would even try to poach some of my soon to be former employers most loyal long term clients (that seems to be on the unethical side), but is it wrong to target some of those fringe clients?

Point is this, I'm seriously considering going out on my own in the next 12-18 months and I just need to have a firm grasp on the ground rules. I want my new business to prosper but I also want to remain in good standing with my peers. Not only am I friends with all the engineers in my company, but I'm also friends with the other engineers who work for competing firms. I work in a market large enough to support mutliple struct engineering firms, but small enough that everybody knows each other.

 

[IRstuff]

Sounds like you need to review your English texts some:
"Yes, if you are not competing in any way"

It's an absolute "if," i.e., you can go after these clients, if and only if you are not competing against your former employer. There's no other way to interpret that.

So if your employer is strictly doing drawings and isn't in bed with a materials supplier, you could potentially access their clients to supply them the bulding materials, or something like that.

TTFN

FAQ731-376
Chinese prisoner wins Nobel Peace Prize

 

[ajack1]

I think this is far more grey than most people on here, but broadly agree with Ron’s post.

The first thing to find out is what is legal, basically what does your current contract say? Secondly what is seen as “insider dealing” in the country you live in?

As for what is ethical I am less sure, we all gain our skill base and contacts from previous employees how free are you to use them, even assuming you stay within the law?

If you offer a completely different service I would see no problem, for example to walk the dog for someone you designed buildings for, but that is highly unlikely.

So assuming you offer a service that your previous employer offered what is ethical? To not approach them, but for how long, a week, a month, a year, a lifetime? Are you excluded from dealing with anyone you have dealt with in the past, in other words completely throwing away your list of contacts?

What about if they approach you, is it still unethical?

If you say know the pricing structure and methods of the previous firm how is it possible not to use that information?

All in all a very grey area, my personal stance is to try and stay within the law and as far as ethics go to treat others as I would want to be treated, but even then that is only what I see as ethical, I am sure others would see things differently.

Most of running a business is down to what feels right to you and taking an educated guess as to how things pan out in the future, as long as you stay within the law I don’t see this as any different.

 

[rbulsara]

What moltenmetal said. What really matters is what type of contract, if any, you had with your previous employer. Even those are iffy.

Rafiq Bulsara

http://www.srengineersct.com

 

[csd72]

Whatif you worked for an industry such as oil and gas where there were only half a dozen or so 'clients'. It would be a bit hard not to compete then.

What if the company you were working for were not providing a very good service to the client?

Not that black and white really.

 

[Twoballcane]

I had a conversation with a banker a while back, and he said that his success is not realy what school he went to or what organization he belong to, but what and who he has in his rolodex (boy that goes way back). He would say that when he goes to interviews with his rolodex, he can almost see the interviewer drooling with excitement. But, in any case, banks have no ethics.

Tobalcane
"If you avoid failure, you also avoid success."
“Luck is where preparation meets opportunity”