How to protect your business from losing key talent
Along with attracting top talent, retaining key talent and individuals who have a significant influence on the business has become a major area of concern for human resources (HR) practitioners in a challenging recruitment market.
For the top business influencers that may be difficult or even impossible to replace, there is the option to take out key person insurance. Such a policy is designed to cover a company in the case that a specific employee passes away or suffers a critical or terminal illness. However, there are preventative measures a business can take to ease the risks associated with the loss of key talent.
As a first step, a company needs to identify its core business influencers – and the most influential and knowledgeable individuals in a business may not be the obvious ones.
How to identify top business influencers
Most companies operate from the top down, a strategy that assumes that the knowledge and capabilities are concentrated among senior leaders. This may not always be the case though. All organisations have informal networks beside their more formal structures, the latter of which may not reflect the talent powering an organisation.
In smaller companies, the key person is most likely the owner and/or founder, but it could also be a key employee. This could be a salesperson who handles 90% of revenue or a general manager who is the only one who can run the operation. It could be the IT manager who is the only one who knows all the passwords or, in some organisations with old equipment, the repair technician could even a key person.
Identifying key persons in larger organisations with a longer history is likely to be more complicated. The most influential employees can be described as those that most employees turn to with questions, seeking advice, and relying on to get work done.
They may be middle managers or individual contributors who are deeply embedded within the organisation. They may be overseeing or operating in an area that has become core to the business without this being reflected in the formal hierarchy. They may not have the formal authority to make decisions but do have the leverage to influence important decisions.
Knowing who these individuals are can be particularly important when companies are going through a potentially disruptive period such as mergers and acquisitions (M&A) or when the business is shrinking and planning redundancies. But it can also be important when the business is facing a tight labour market and competition for talent is fierce.
There are a few different ways to find out who these key influencers are - many of them will include an employee survey.
Thomson Reuters partnered with Innovisor to conduct a survey when they brought together technology employees from various business groups under a singular structure. It asked employees to list 15 people with whom they connected regularly; six people who they found to be highly sympathetic and six people whom they found highly competent.
They were also asked to name one expert in several key areas. This resulted in a list of individuals who seem to have the most influence and play prominent roles within their teams.
Reducing the key person risk
Reducing the reliance on one or a few people in a company can facilitate growth and reduce risk. While in smaller organisations the founder/owner may have incredibly valuable information and skills, the business may be more successful if qualified employees are allowed to take on more responsibility as a concentration of power creates significant risk for a company.
This becomes particularly evident in mergers and acquisitions (M&A) transactions where a key person may decide to leave. It also poses a risk when a key person suddenly develops health issues or even more tragically, loses their life.
Another risk is if a key person decides to leave for a competitive job offer from another company. An option to reduce the risk in this instance could be through reward initiatives and workplace culture. If a key person feels overloaded or undervalued, they may consider leaving the company.
To counter this, the business can provide top influencers with a salary increase or a promotion or, if they are overwhelmed with work, they could offer them additional resources. Reducing their workload by giving them a team can also allow the company to scale their know-how. This might result in the adjustment of job titles and hierarchy to better reflect the true power dynamics within an organisation.
Overall, this is likely to make an organisation more transparent, efficient, and effective.
Key person insurance offers companies a way of providing stakeholders with confidence that the firm can operate as usual despite the loss of an essential employee. For further information on how we can help protect your business, please visit our Business Protection and Key Person insurance page.
In partnership with Lockton People Solutions
Lockton provides creative people solutions that make life better, for your business and your people.
