Key Person Risk
This is the most common risk I see in every single business I come across and I know I’ve written about it before, however it’s so important l’ll cover it again.
What is key person of risk?
If some of your key staff you’re dependent on walked out tomorrow or were unexpectantly away from the office for a long period of time and you didn’t have systems in place so others could do the tasks to a high standard or others familiar with all aspects of the tasks they did.
The reality is, any staff member could leave at any time and if they have most of the knowledge for their role in between their head and not in procedures or other resources, then every day you don’t have systems, is a day you are gambling with your business. . Every key person risk in technical terms can equal a single point of failure, including the business owner or C.E.O themselves.
Without these tasks being done to a high standard, it most likely will affect your businesses ability to deliver both internal and external results and can cause huge stress to the existing staff, managers and the business owner. We all know when business owners and employees are overloaded or spread too thin, efficiencies go down and more mistakes tend to happen. Your reputation, brand and profits are then at risk and often affected. It also can affect retention rate of employees if things become too stressful in the workplace.
How can you identify a key person of risk?
It’s easy to identify the key person of risk when they are away ill unexpectantly or even when they go on holidays it puts the business in a stretch mode. Or can you imagine if someone couldn’t come in for a month as of tomorrow and you have no systems in place to easily train someone else to do that work to a high level and no one else knew all the aspects of the tasks they do. A business colleague of mine – her accounts payable girl got pleurisy right on year end. So she had to take batches of invoices home and was imputing them between 11pm and 2am.
Because of the timing, they couldn’t get a temp in or a replacement to do the work because she didn’t have procedures in place and the bandwidth during the day to train them one to one. The employee was away for a whole month and this caused huge problems, took vital time away from core functions of the business and caused loss of opportunities as well.
Equally, a client of mine whom had a business advisory and bookkeeping business – their main admin girl left at the end of the financial year and because they had all the proven – user friendly procedures ready to go, they hardly had to spend any time in training. They just handed over the procedures and the new girl did the tasks well from day one and was totally up to speed of where the past employee was at within two weeks.
Who generally are the key risk people?
For the smaller businesses, it could be anyone and sometimes nearly everyone in the business. (HUGE risk). Usually the admin and finance team are often one of the big risks. With businesses that are a little larger, they sometimes have the procedures for the staff in operations tight however quite often, have not gotten around to the C.E.O. or C.F.O. or the managers or even the business owner if they are still involved in the daily operations of the business.
What happens if your key person of risk leave?
If you have no proven systems to back you up, these people take not only ‘how they do their tasks’ but also ‘specialised knowledge’ with them right out the door! (ouch).
One client of mine, engaged me after their key person of risk had already left. The untrained new person to the role had no processes and was causing absolute chaos in the business because he didn’t know how to do the tasks properly. *Not his fault! The role was so crucial and important to the operations of the business and no one else in the business knew how to do it properly. I ended up working with the ex-employee in evenings and on weekends to create the procedures needed. The new person to the role was over the moon grateful, now he could do the tasks properly and order was restored in the business.
We were lucky the ex-employee was willing to work with us, they were paid well of course, however ideally, that should NEVER happen.
The lost downtime for several employees, the stress it put everyone under, the under delivery to clients and lost opportunities from this cost the business not only in money but their reputation as well.
What can we do to reduce key person of risk?
Capture key tasks in user friendly and proven, ‘How to’ procedures or resources and systemise your business as a whole.
If you’re thinking it’s hard to make time to systemise, choose your hard – time and money are wasted every day or week because the system is not set up right, this ongoingly costs you per month and per year in time, happiness and money and that’s harder.
See this equation – if you can systemise and save 30 minutes a day – over a month – saves you more than 10 hours, over a year – saves you over five days! Compound that to multiple systems and your back in control of your time.
*There’s a lot to capturing your systems, reach out if you’re a business owner with 5 plus staff and you’d like to have a chat around the quickest and easiest way to systemise, as this is what I specialise in, here’s how to contact me-
Linda McMahon
Time Management and Systems Consultant
0418 991 636