Advantage employee

An employer has to offer a lot to get the right talent in tight markets, but a company can take steps to protect its interests
By Jeffrey R. Smith
|Canadian HR Reporter|Last Updated: 06/01/2007

The much-talked about labour shortage means, in some markets and industries, employees hold most of the cards when it comes to negotiating employment contracts. That can put employers in a bind, making it difficult to strike the right balance between putting together an attractive offer and not giving away the farm.

When the employee has the higher negotiating position, it’s the employer who has to impress. Workers with unique skill sets are becoming more important to employers, particularly large organizations, said Steven Mendelssohn, president of Sage HR Solutions, an HR and labour relations consulting company in Oakville, Ont. These highly skilled employees are in demand and therefore have the freedom to pick and choose where they want to work.

To attract top workers, employers need to be flexible and open-minded, said Mendelssohn. An employer may have to improvise in order to seal the deal with the person it wants. If it sticks rigidly to traditional company rules, it may risk settling for inferior employees.

“Don’t be married to internal policies, processes or job scales,” Mendelssohn said. “Don’t give up on good talent.”

Employers should be ready to offer financial incentives such as signing bonuses, salary bonuses, relocation expenses and accommodation. However, money isn’t everything for highly skilled employees, particularly when it comes to the younger generation.

Workers trying to choose from a number of interested employers will often look for quality-of-life factors such as the employer’s corporate values, culture and opportunities for training and development, said Mendelssohn. Whether or not the employer is a good fit is often more important than how much money is on the table.

“It’s important to understand the demographics of the workforce,” said Mendelssohn. “(Younger employees) want more of a work-life balance where the previous generation worked longer hours for good money.”

An employer looking to attract these workers must understand what they are looking for in a workplace, he said.

Employers have to be prepared to offer a lot to attract employees in demand. But employers can take steps to protect their interests. Jeff Goodman, an employment contracts specialist with the law firm Heenan Blaikie in Toronto, recommends financial incentives that cement employees to the company, such as vested stock-option plans, end-of-year bonuses or back-end loaded salaries. These things would cost an employee money if she left the company and would give her more reason to stay. Also, employers can try to include restrictive covenants such as non-compete clauses to prevent an employee from jumping to a competitor with sensitive information.

Recruitment firms good for finding but not negotiating

Many employers use outside recruiters to help find the right employees. But organizations should never let recruitment firms handle employment-offer negotiations, said Goodman.

“The biggest mistake employers make is to rely on executive recruiters (to handle negotiations),” he said.

That’s because, if the recruiter is doing the negotiating, there is too much temptation for it to sweeten the pot to ensure it gets paid for finding the employee, he said.

That’s a sentiment Mendelssohn agreed with.

“Misrepresentation could get an employer into trouble and (leave it) open to litigation over false promises,” said Mendelssohn. “In my opinion, employers should do the negotiations.”

Luring workers requires effort, caution

Whether the candidate is recruited by an outside firm or the employer itself, extra effort and caution must be taken if the employee is lured from another employer. In order to attract someone from an existing job, the employer needs to get her excited about the new workplace and its environment as well as opportunities for development, since she is essentially coming from security to uncertainty, said Mendelssohn.

Poaching workers can lead to all kinds of legal trouble for employers if things don’t work out, said Michael Fitzgibbon, a partner with the labour and employment group at Toronto law firm Borden Ladner Gervais.

“If an employer recruits someone from secure employment, this is inducement and the employer is open to a heightened risk of damages,” he said. The employer should be mindful of any restrictive covenants the potential employee may already be subject to and that she isn’t breaching any contracts by coming over.

Goodman said employers also need to be aware of the landmark

Wallace v. United Grain Growers

case, a 1997 decision by the Supreme Court of Canada.

Wallace

not only established damages for unacceptable conduct by the employer, but it also changed the type of damages that can be awarded if an employee is lured from secure employment. This can mean including service time with the previous employer when considering reasonable notice.

Jeffrey R. Smith is editor of Canadian Employment Law Today, a sister publication to Canadian HR Reporter that looks at employment law from a business perspective. For more information, including a special introductory subscription offer, visit www.employmentlawtoday.com.

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