19. Protecting Business Secrets - Stop Insider Leaks
How to prevent employees from leaking sensitive company information.
Imagine this - You notice subtle but concerning signs—one of your employees, who has access to confidential business information, has been seen meeting with a competitor after hours. A client mentions that a competitor has suddenly started offering strikingly similar services and pricing. Internal reports, once secure, seem to have been leaked.
At first, you think it might be a coincidence, but your gut tells you something isn’t right. You begin to suspect that a team member is sharing sensitive business information with a competitor.
As an SME owner, this presents a critical challenge -
How do you confirm if your suspicions are valid?
What steps can you take without jumping to conclusions?
How do you protect your business while staying within legal and ethical boundaries?
HR psychology tells us that breaches of trust in the workplace often stem from factors such as -
Disengagement – The employee feels undervalued or mistreated.
Financial incentives – A competitor may have offered them benefits in exchange for information.
Opportunism – Some employees believe they won’t get caught.
The cost of data breaches can be severe—from loss of clients and revenue to reputational damage and legal battles. That’s why acting swiftly, strategically, and lawfully is critical.
The Solution – A Strategic and Lawful Approach to Protecting Your Business
Handling suspected internal leaks requires a combination of investigative discretion, legal compliance, and strong leadership. Here’s how SME owners can protect their business while maintaining professional integrity.
1. Stay Calm and Gather Objective Evidence
Before confronting an employee, avoid acting on suspicion alone. False accusations can destroy trust, morale, and even result in legal consequences.
Steps to take -
Review access logs – If digital files were leaked, check access records and download histories.
Examine suspicious behaviour – Are they frequently printing sensitive documents or emailing files outside of work?
Monitor client conversations – Have customers mentioned similar offers from competitors that sound too familiar?
At this stage, avoid emotional reactions—your role is to gather objective data before making assumptions.
2. Conduct a Discreet Internal Investigation
Once evidence suggests a potential breach, it’s time to investigate professionally and discreetly.
Actions to consider -
Consult your IT or cybersecurity team – They can track email activities, login histories, and document access.
Cross-check information leaks – Identify whether confidential details that only your team knew have surfaced elsewhere.
Seek legal advice – Ensure that any actions taken comply with New Zealand employment law and data protection regulations.
HR best practice suggests that employees should not be aware of the investigation until clear evidence is established to prevent further leaks.
3. Have a Private, Professional Discussion with the Employee
If evidence strongly suggests intentional data leakage, a confidential meeting with the employee is necessary.
How to approach the conversation -
Present facts, not assumptions.
Example - “We have noticed unusual access to confidential files that were later reflected in competitor activity. Can you help clarify this?”
Give them an opportunity to explain. Some leaks happen unintentionally (e.g., an employee discussing work in public).
Avoid aggressive confrontation. Instead, focus on understanding their motivation and response.
If they deny involvement but evidence suggests otherwise, proceed with formal disciplinary action while remaining compliant with employment law.
4. Enforce Employment Agreements and Confidentiality Policies
All employees should sign clear confidentiality agreements as part of their contract. If your business lacks this, now is the time to introduce or strengthen such policies.
Your confidentiality clauses should state -
Employees cannot disclose trade secrets or sensitive business information.
Legal consequences apply for breaches, including potential dismissal or legal action.
The company monitors access to sensitive data.
If a breach has occurred, consult legal experts to determine if termination or legal recourse is necessary.
5. Strengthen Internal Security and Prevention Measures
To prevent future leaks, implement security measures that ensure sensitive information is protected -
Restrict data access – Not all employees need access to all business data. Implement role-based access controls.
Monitor external communication channels – Discourage employees from discussing company matters in unsecured spaces.
Educate employees on confidentiality expectations – Many leaks happen due to ignorance rather than malice.
HR psychology research suggests that employees are less likely to betray company trust when they feel valued, engaged, and fairly compensated. Therefore, investing in positive workplace culture is an essential long-term prevention strategy.
Reflective Scenario – What Would You Do?
You’ve discovered that confidential pricing information has been shared with a competitor, and only a handful of employees had access to it. One employee, in particular, has been meeting with a competing company outside of work, and their performance has been slipping.
Using the strategies above, you might -
Review data access logs to see if they downloaded or shared files.
Consult an IT or legal professional to ensure you proceed lawfully.
Hold a private conversation with the employee to understand their actions.
If the breach is confirmed, you would take disciplinary action while ensuring your business is protected moving forward.
Golden Nugget - "Trust is built in years but lost in seconds—protecting your business means balancing discretion with decisive action."
By implementing strong confidentiality policies, conducting professional investigations, and strengthening workplace security, SMEs can reduce risks while maintaining ethical leadership.