As a small business owner, you likely spend a lot of time thinking about your company’s future. From product or service development, all the way to identifying growth pathways – that big picture thinking is what being in business is all about! But how much time do you spend planning for negative scenarios, like losing a critical staff member? Even worse, what happens when YOU are that key person and your loss would mean disaster for your company? This is key person risk and it can make or break a small business.
Employees who have skills that are uniquely valuable to your company’s success can be worth their weight in gold. But what happens if they leave? Whether they are absent for several months or leave your company permanently, it could have seriously negative impacts on your ability to operate. Key Person Risk is a real problem for small businesses especially, which are often confined by small organisational structures. It doesn’t leave for much wriggle room, should one piece of your very small pie decide that they’re moving on.
What could losing a key person mean for your company? Can someone fill their shoes easily? Can the job description be easily recruited for? Is this person potentially taking away a whole bank of knowledge you’ve been relying on to operate? As a small business operator, you already know your staff are your biggest asset. But could they be your biggest downfall as well?
Read on to know the various ways you can manage key person risk within your business.
Make the time to regularly take stock of your organisational structure as a way of identifying your key person risk issues. For instance, as your staff stay with your business longer, they might start bringing more and more to the table. Their performance might evolve into something that, whilst beneficial, may start to be crucial to your success. You don’t want to diminish the importance of their roles, especially if they are performing well for you. But you do need to highlight them and then plan your contingencies accordingly. This way, if they do leave, their loss will be felt more like a bump in the road than a full blown car crash!
HINT – These key people may not always be among the highest-ranking positions in your company (managers or designated experts etc). Look at the go-to people whom other employees re