Key person risk: Lunch break? Holiday? Ha. Don't be silly... the business needs me!

Everyone knows the ‘go-to’ individuals that seem to be across everything. Their job description doesn’t go close to capturing what they do in the business; they’re the expert, the superstar and often happy to lend a hand, explain, train and in the heat of a busy moment say, “Don’t worry about this one, I’ll just do it and walk you through the next one.”

They’re the person everyone dreads going on leave – because who will ‘do the stuff’ while they’re off? And while these people are invaluable assets – they also pose substantial risk.

They might be the business owner themselves, a longstanding team member, or someone who just got across everything real quick.

Where the business becomes reliant on their skills and knowledge – and even where they don’t directly influence revenue – like the oil that surreptitiously keeps an engine running, without them processes break down or seize.

Key Person Risk is this over-dependence on a human – and mitigating this is more critical in 2023 than ever. Besides the ‘what if’ nightmare – you can’t sell a business with key person risk. The business will likely be less appealing to financiers and scale becomes almost impossible to achieve.

Even if the implementation of technology decreases the need for labour it can still mean reliance on the one person who knows how to use or fix it.

How would your organisation cope if a key individual resigned or took extended leave unexpectedly?

In an ideal world, with ample amount of time, you would have them write a comprehensive handover document that step-by-step recorded all the systems, processes and corporate knowledge they hold, including listing out tasks they action regularly.

Preferably you’d have a documented resource that can be picked up by anyone to ensure your business could continue as if nothing had changed.

Does creating this sound overwhelming? Do you feel daunted by this and keep putting it in the ‘too hard basket’?

PKF Newcastle’s Process Review team aims to protect your business from Key Person Risk – including concerns that can result from ineffective ‘Band Aid’ solutions. We know that everyone has a ‘day job’ – and there are so many things ‘on the list’ to do ‘one day’. And ‘one day’ never comes.

On top of lacking time, many of our clients simply didn’t know where to start. Our extensive processes and systems experience couple with the independent perspective that can bring surprising insights. We proactively and effectively step into your world and utilise best-of-breed techniques to assist you in developing, implementing and maintaining the tools, processes and systems required to ensure your business functions no matter who is in on the day.

Whether you could benefit from a nudge in the right direction or an end-to-end review – if you feel your business could be at risk and especially if you dream of being able to take leave or even a lunch break... Please get in touch with Stacie Shaw from your Newcastle Business Advisory Team and we’ll get you where you want to be.