What would you do if someone who was crucial to your business became seriously ill? Naomi Ballantyne, of Partners Life, suggests you take steps to protect yourself.
Every business has them – that key person or small handful of people who are so integral to the business that the mere thought of losing them is enough to send shivers down the spines of management teams and directors.
They may possess a rare technical skill, highly regarded industry expertise, an extraordinary sales capability, exceptional leadership ability, a second-to-none productivity level, or a market-leading personal brand and reputation.
Whatever it is that makes them indispensable, these are the people who give your business an advantage over your competitors, and you will do whatever you can to keep them.
But what happens when there is no level of compensation, employee benefits, or career development opportunities that can prevent the loss of these key people? What happens if they’re diagnosed with a serious illness?
Apart from trying to reduce workplace stress, ensuring the working environment is safe, and encouraging wellness, there’s not much you as an employer can do to prevent a significant, career-interrupting health event from happening to your ‘star’.
Recruitment is expensive
We often hear the phrase ‘no one is irreplaceable’ used in the business world. And while it’s true that there are plenty of great people who might be available to fill the space left by an unexpected departure, there’s a risk that the business simply can't find, or attract, an equal replacement.
Even if recruitment is ultimately successful, the process may take time and cost money.
Another risk is that other employees may decide that this is the catalyst for them to resign, or key customers may also leave, especially if their relationship was mainly with that person. Key projects may also be interrupted, or even derailed.
The impact on the business will be determined by its dependence on the competitive edge that the individual brings, and how long it will take for the person to become fully functional again, if ever.
For small or new businesses, the impact of losing a key person can be very damaging. At best, there will be a temporary, but recoverable, interruption to business plans. Perhaps more likely, the unexpected loss of one of their key people will cause a longer-term and, potentially irrecoverable, disruption to the business.
The insurance solution
So, if a business can’t prevent unexpected, serious health events from occurring, what can it do to reduce the impact if they do happen?
Business owners can insure themselves against the financial impact to their business that would arise – that’s what.
The loss of a key person will ultimately have a financial impact on the business, whether it’s compensation for the loss of potential profits or funding for the costs of; winding up the business; temporary locum cover; permanent recruitment; or additional marketing/customer relationship spend.
Business owners might also want to financially support their ill or injured key person to some extent.
‘Key person’ protection products are specifically designed to put the money back into a business when illness or injury leads to the unexpected departure of a key person, whether temporary or permanent. It’s that simple.
The premiums you pay for key person protection can be considered an investment that shareholders make, with the return being the financial safety of the business if the health of a key person is compromised.
We need only to look around our own circle of family and friends to appreciate how quickly and how often serious illness can occur, even to the those who seem the healthiest and happiest.
Key person protection insurance means you can plan for the unexpected. That’s a pretty comforting thought for business owners and directors.
Talk to your insurance adviser about the specific business and key person products your company needs to ensure your business can go on, even if your key people can’t.
For more information, call Partners Life on 0800 14 54 33.
JUNO Promotion with Partners Life
First published Autumn 2018
The editorial above reflects the views of the editorial contributor only and content may be out of date. This article is sourced from a previous JUNO issue. JUNO’s content comes from sources that it considers accurate, but we do not guarantee that the content is accurate. Charts are visually indicative only. JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions.