Sometimes the unplanned absence through death or critical illness, of a single key employee, may come close to bringing your business to a standstill.
Here are a few tips you may wish to consider to help mitigate the effects of such a thing happening:
- take the risk seriously – perhaps the biggest risk to your business continuity in this respect is indifference or a lack of awareness. If necessary, research case studies where organisations have suffered huge and sometimes catastrophic problems as a result of the loss of a single individual;
- avoid elitism and assumptions based upon it – some organisations recognise the importance of certain senior or executive people but ignore the fact that massive exposures may arise through single points of failure at any level of an organisation. In other words, it is not only senior people who may be critically important for your company;
- don’t make guesses – looking objectively at your organisation and identifying mission critical personnel is not always easy. Sometimes an external review may ask hard questions and challenge assumptions;
- plan for successions – every organisation should have a clear picture as to who are the critical individuals and what is being done to groom other people in the organisation to replace them both as part of natural progression and as contingency planning against disasters etc;
- avoid fiefdoms in your organisation – sometimes your exposures may arise as a result of internal empire building in your company. These fiefdoms may intentionally make their functions opaque to the rest of organisation and that may make individuals within them difficult to identify as being specific risks;
- have contingency external support planned – in today’s tough economic environment, you may find it practically difficult to ensure that all key people in your organisation have an in-house fully trained backup standing by just in case. You may find it more cost-effective to have such emergency support available on-call through external organisations;
- consider key person insurance – if the worst happens, you may face some significant expense in implementing your contingency arrangements. For example, external support staff may prove to be very expensive. This form of insurance cover pays out a lump sum that might help your company cope with the immediate financial consequences of losing a critical individual;
- test your contingency plans – it is not unheard of for contingency plans to collapse in a heap, due to serious flaws, when first called upon. This is not something that you will wish to discover if you are trying to use them for real, so, make sure that your contingency plans are periodically tested in a non-crisis situation. You may find it very worthwhile and perhaps worryingly enlightening!
About the Guest Post Author
Peter Smith is a 20 year insurance and business veteran and now, semi retired, writes about a range of topics useful for small business owners including Key person insurance and a range of other business insurance topics.