The loss of a key person is always going to be a big blow for businesses of all sizes and across all industries. In extreme cases, some companies have taken years to fill the void left by the loss of one person who had the experience, knowledge or even the reputation that kept the company going.
Managers can find it very difficult to replace that special, unique skill set possessed by the brilliant advertising strategist, top salesman, co-founder or even CEO.
When someone in a key position leaves, they are usually bound by their employment contract to remain for a period that allows time to find a suitable replacement. Sometimes the replacement can work alongside the person who has resigned as they pick up the reins. But unforeseen circumstances such as a serious illness can throw the best-laid plans into chaos.
And it’s not just financially where the impact may be acutely felt. Shareholder confidence can be shaken, team culture can be destroyed and established clients may defect to rival companies. You can see the risk in a small company, where one skilled individual can really make a difference. But it’s also a risk for the very largest of companies.
Take the case of Apple, which found its pipeline of game-changing innovative products severely weakened when its founder Steve Jobs died of pancreatic cancer in 2011.
Jobs was the heart and soul of Apple, rescuing the tech giant from the brink of bankruptcy and developing a line-up of products that had consumers all over the world clamouring for more. Apple has not had a big product hit since his death, but what Apple has in abundance is financial might and the market-leading resources to bide its time until the next real innovation is developed.
It’s a different story for companies in the SME space, however. Neither time nor resources are going to be on your side when that key person is lost. You operate on a smaller scale and you will be hard-pressed to plug the gaps that open up with such a loss. And it happens all the time.
As your risk adviser, we recommend that you consider taking out key person insurance cover. Most businesses are aware of and do take out cover to protect equipment, plants, machinery, buildings and other physical assets, and other types of common insurance.
But insuring your human assets, which is equally vital to a company’s success, is usually put on the backburner.
By insuring that key person or people, the business will be compensated in the event that they cease to be a part of the company through illness, death or injury. For small companies, such compensation is often crucial. The payout can help the company work through the setback, as management looks for a replacement and meets its financial obligations.
We can help you get started on a key person program to protect your most important talents. Give us a call now and we will be happy to work out a cover that meets your business needs.
Contact us on 1300 My Adroit.