BusinessTN

It is the Tiffany's of private security — a company whose brand is nearly synonymous with its industry, serving companies in the financial, health care, transportation and utility industries with guards, investigation, drug-testing, background checks and architectural design consultation. Founded in Memphis in 1963 by Ira Lipman, Guardsmark has become one of the world's largest security firms with more than 155 offices throughout the United States, Canada, Puerto Rico, the United Kingdom, France and Singapore. (The company still maintains one of its three primary offices in the Bluff City, with the other two being company headquarters in New York City and Beverly Hills, Calif.)

Guardsmark has for nearly 30 years posted double-digit growth, with more than half a billion dollars in revenue the last two years. The company is crowing about its record-setting performance in 2006, growing to more than 19,000 team members — including more former FBI agents than anyone in the world — and a record low turnover rate of nearly 35%. But while the private firm's accountants must be tempted to indulge in little Snoopy dances around their office credenzas, the PR department has its hands full with trade-union flare-ups.

Ironically, the PR headache has come in the very same area for which they have been often lauded — personnel. Time magazine praised Guardsmark for its rigorous selection process in an industry it called "a virtual dumping ground for the unstable, the dishonest and the violent." The company earned that reputation for its extensive background checks and its primer on quality employees. And it's noted for employee loyalty, something it earned by implementing programs such as the industry's first no-cost health insurance for all of its employees.

But Guardsmark's non-compete clause has left a dint in employee satisfaction. So much so, in late June Connecticut's governor, Jodi Rell, signed a bill into law striking down the clause, which restricted employees who wished to move to another firm.

"I thought, as did a lot of people, that it wasn't fair that someone making $12 an hour should be held to the same contract as someone making a lot more who had access to inside company secrets," said Connecticut State Rep. Emil "Buddy" Altobello, who sponsored the bill.

The bill was first proposed when Guardsmark lost the contract to provide security at Bristol, Conn.-based ESPN, and then refused to release guards from a non-compete clause allowing them to join the new contractor. The clause forbade guards from working for another firm at a location where they had worked for Guardsmark in the preceding 12 months. The company has successfully defended the clause in that state's courts, maintaining it's a necessary competitive device.

"ESPN didn't think it was fair," Altobello continues. "They tried to get them to drop it. Even the [Connecticut] attorney general tried to get Guardsmark to drop it."

Guardsmark has shown its quality and business savvy in a competitive industry, but like most leading firms, it comes up short sometimes — in their case, employee relations. The firm obviously cares about retention, but a no-compete clause for low-level staff is fairly Machiavellian.