Key employees, or “key people” in your company are people who are critical for your business’s survival. If they left, or if something left them unable to perform their regular duties, your business might not wither and die right away, but you’d find it extremely difficult to continue—and it might take years to get back to “normal” or reinvent the company from the ground up.
You haven’t hired a key employee specifically; this is a characteristic, rather than a job title, so it can be difficult to tell who really counts as a key employee, or if you even have one. So why does the distinction matter in the first place, and how can you tell if you have one?
Why the Distinction Matters
It’s important to recognize key employees within your organization because it gives you the chance to prepare for their potential departure. Key person insurance, for example, can provide your business with funds to compensate for the person’s absence; these may grant your business enough cash to temporarily survive without the position filled, may continue the employee’s salary for their family, or may be used to recruit and train a replacement. If you lose a key person without proactively recognizing their importance to your organization, you could miss out on these benefits and leave your business even more vulnerable.
Types of Key Employees
These are some of the top examples:
- Senior executives. Top-level executives in your business are typically responsible for overseeing day-to-day operations and managing the ongoing direction of the company. Without their experience, your business would have a hard time continuing successfully.
- Idea generators. People responsible for coming up with new ideas to push your business forward, whether they’re inventors in R&D or creative geniuses in your marketing department, are similarly important.
- Top salespeople. Your best salespeople are working not only to bring in more revenue, but also to protect what clients you already have. If you lose one of your top members, it could result in a sharp drop in revenue.
- Leaders within your organization who rally your employees may also be key people; if they leave, for any reason, your entire workforce might be tempted to follow.
- Financial stakeholders. Any owner or partner in your organization with a strong financial stake in the company—or those responsible for keeping the company financially solvent—can also be a key employee.
Important Questions to Ask
If these examples don’t match anyone in your organization, or if you’re still confused about who really qualifies as a “key person,” ask yourself these important questions regarding the employee in question:
- How would their untimely death affect the business? It isn’t pleasant to think about the death of one of your partners or employees, but it’s an important hypothetical to explore. If this person died unexpectedly, how would your business be impacted? Would you have a short-term increase in other employees’ workloads, or would your business be left without direction for the foreseeable future?
- How much of the organization depends on their performance? Currently, how much of your organization depends on the existence and continued performance of this employee? Is their influence relegated to one section of one department, or is the main product sold by your business wholly dependent on this employee’s ongoing work?
- What contingencies are in place to deal with their sudden departure? What plans do you currently have in place to deal with this employee’s death or departure? Is there another person who could step in and take over their responsibilities? Or would you have to come up with something on the fly in response?
If you have a key person in your organization, as most startups and niche businesses do, it’s in your best interest to protect them the best you can, and create contingency plans for your business to continue on even after the key person dies or departs. Business continuation planning is vital here, as is having a solid key person insurance policy. You can’t assume that your best employees will be around forever.