7 founder risks you gotta manage

Greetings and salutations.

When’s the last time you thought about managing risk?

If you’re like most founders, you probably had to squint to really think about it.

Don’t worry - I got you. I took a verrry boring topic, made it accessible and then added some actions you can take to manage risk. It wrote itself, which always feels good.

Here’s the first of seven bullet points, then head to LinkedIn to read the rest.

1. You get sued by an ex-employee for unfair dismissal

In Australia, you can expect a meaningful financial impact (~$80k for a max penalty - this is not legal advice), moderate operational disruption (delayed projects due to time loss), and significant reputational risk (employee distrust, negative Glassdoor reviews and maybe you'll end up in the AFR).

If you settle out of court, you're looking at $50,000-$100,000, plus legal fees of $10,000-$20,000. Let's not forget the hundreds of hours lost to legal meetings, stress, and reputational damage among current employees.

For startups, there is a moderate probability of, say, 20% given lax HR processes, hiring 'ninjas' and CEOs who are spread thin.

The risk begins in hiring but then weaves through management practices, poor documentation of employee issues, and unclear termination processes.

Your next steps: you might still get taken to Fair Work or an equivalent US body like NLRB, DOL or EEOC, although the "at-will" nature of many US employment contracts can help reduce this risk. The risk management practices I'd suggest are:

• Implement a formal performance management system with clear KPIs and regular reviews (e.g., quarterly check-ins)

• Establish a defined warning process: verbal warning, written warning, performance improvement plan (PIP), and termination protocol

• Train managers on dismissal practices to comply with Fair Work Australia 

• Use lawyer-reviewed employment contracts with clear termination clauses

BTW - a handful of y’all set up a free call with me last week, so thanks for taking up the offer. I’ll keep it open for one more week and then I am locked in.

Reply to this email if you want to grab sixty minutes w/ me, for free!

Cheers,
Claff