All of your business experience, including the advice you’ve accumulated from mentors and peers throughout your career, has made one truth abundantly clear: People are the lifeblood of a successful company. If you invest in the right people, you can make almost any idea work. Furthermore, by hiring the right individuals for your business, you can become more hands-off and shift your energy to bigger and better things.
But what happens when your business becomes so reliant on one person or employee that the future of the company rests on their shoulders? This is what business experts and consultants refer to as “key person dependency.” And if you don’t address this issue, it has the potential to erode your business from the inside out.
The Problem With Key Person Dependency
There’s nothing wrong with relying on your employees to run your business. After all, that’s what you pay them to do. Trust, delegation, and responsibility are all core tenets of a healthy relationship between management and staff. But when you become overly reliant on key persons, it crosses the line from healthy to potentially-destructive.
The problem with key person dependency isn’t necessarily the dependency. (There’s nothing wrong with depending on people.) The biggest issue is what happens if that person takes an extended leave of absence, leaves for another job, or decides to branch out and start a rival business.
It’s normal to miss a good employee when they leave. You can expect to see a drop-off in performance and results. However, if the person’s departure leaves you with gaping holes that nobody else has the skills or knowledge to address, this is problematic. In situations like this, the entire company’s future hangs on the decisions of a single person. It’s not a good place to be.
Who is Your Key Person?
The first step is to identify who your key persons are. Not all key persons are managers, executives, or leaders. They can work in any area of the business, including nontechnical domains. Here are some identifying characteristics:
A key person is someone everyone else goes to when they have a question or an issue about something.
A key person has usually been in their job for a long time and has delivered proven, superior performance time and time again.
A key person either has the knowledge to accomplish specific tasks or knows precisely where to find it. They understand the big picture, rather than just one step in the larger process.
Almost every business has at least one key person – though some have multiple key persons. Identifying them is the first step in reducing your dependency on them.
4 Ways to Lower Key Person Dependency
Have a specific employee or person in mind? Here are some ways you can lower your dependency on that key person:
1. Invest in Widespread Training
The key person isn’t the problem. The issue is that you don’t have other people who can step up in this individual’s absence. Rather than dumb down the key person, your focus should be on elevating everyone else. You can do this by investing in widespread training that specifically addresses the shortcomings you’re most worried about.
2. Develop a Knowledge Management System
Key persons typically have both knowledge and skill. But if you want to reduce dependency, you need to start with the former. Developing a knowledge management system that captures information and organizes it in such a way that it can be easily accessed and distributed is a good start.
Not only will this reduce your dependency, but it’ll also improve your company’s productivity. (According to a McKinsey Global Institute Report, a good knowledge management system can reduce information search time by 35 percent and enhance productivity by as much as 25 percent.)
3. Have Your Key Person Systematize
Always require key persons to document and record what they’re doing. By having them turn their actions into systems, you have something concrete to leverage in the future. And when the time eventually comes to replace your key person, you simply have to find a skilled individual who can follow the systems that are already in place.
4. Require Mandatory Leave
Many large companies require their key persons to take mandatory leave every year (typically somewhere between two to four weeks). Aside from allowing these individuals to refresh and recharge, mandatory leave forces the business to operate in their absence. This not only exposes shortcomings, but it also requires other employees to step up and learn new skills. Perhaps you should adopt a similar strategy in your own business.
Looking Toward the Future
Having skilled and reliable people on your team is always a good thing. The secret is to never rely too much on a single person. By lowering dependency and focusing on systems, you can stabilize your company today and pave the way for a stronger future.
