Some of these are employees who have the authority to directly or indirectly plan and control business operations, and significantly influence your day-to-day operations and processes. These essential workers are your key personnel.
What are Key Personnel?
Key personnel are individuals who perform essential functions in your business. Often, these employees in an organization are experts in specific areas. They may be the only ones who know how to complete specific tasks, or who have information about a specific part of your business.
Also called key employees, they directly, significantly, and positively contribute to the company’s value. They exceed expectations in fulfilling their responsibilities and making important decisions, which improves sales, profitability, product development, and other critical business drivers.
If these employees are not available in crucial times, it could affect your ability to do business effectively.
Who are your Key Personnel?
When you think of key personnel, you most likely visualise a company’s CEO, Vice President, and other key management employees or the people positioned at the top and have a say in the company’s long-term strategy and overall operations.
While small businesses usually have top executives, they also have other types of key personnel including mid-level managers and regular professional staff whose duties might involve carrying out top-level strategy, leading their departments, or even performing operational work.
A small business has non-management professionals who are also key assets for the company’s success. Some of these positions include:
Accountants and Bookkeepers. These roles are essential for monitoring the company’s financial status and may involve analyzing financial data, creating reports, handling day-to-day transactions, implementing security controls, and handling the company’s taxes.
Human resources professionals. While top managers have a say in the hiring process, HR professionals assist with recruitment, training, performance management, employee relations issues, compensation, and employee policies.
Marketing professionals. When the company decides to offer a product or service, these professionals are the ones who come up with how to make them appealing to customers as well as advertising methods and how to set the price.
IT professionals. These professionals are crucial to small businesses whether they keep the business’s systems running, secure confidential data, run the company’s website or ensure good performance of company networks. In small businesses in the technology sector, their presence is even more crucial.
Creative staff. Content creators such as writers and video editors have a key role in presenting important information about the company in an appealing way, while graphic designers focus on visuals seen in advertising materials and on the web.
How do you manage your Key Personnel?
It is no longer enough for businesses to simply put together an amazing team. The key to success and longevity in today’s competitive business environment begins and ends with managing your vital workers and ensuring employee retention. The financial implications of a high turnover rate, where the cost of training and recruitment is lost, are high. On average, employee replacement costs a company one-fifth of that worker’s salary. Since those numbers rise according to position and salary, retaining key employees is a critical financial, as well as strategic, consideration for your business.
Implementing workplace policies that benefit workers and help boost employee retention is not simply a “nice” thing for businesses to do for their employees. Maintaining a stable workforce by reducing employee turnover through better compensation and flexible workplace management and policies also makes good business sense, as it can result in significant cost savings to employers.
Here are a few ways on how to better manage your key personnel and ensure employee satisfaction and retention:
Identify your key players. Focus on key employees whose departure would have the biggest impact on your company. While high potential employees may seem to be the obvious choice, delve deeper, to include those with exceptional relationships, knowledge or expertise in critical areas of your business. Identify the skill sets of those you hire; you may find that certain employees could be contributing far more than their current position indicates.
Open the lines of communication. Nurture an environment in which employees are comfortable providing honest feedback or offering ideas or suggestions, knowing their voices will be heard. In addition to an annual employee review, make time to meet with staff individually to find out what’s working and what’s not, to ensure your key employees are challenged and motivated and that their needs are being met.
Overcompensate. Be clear about the structure of pay, bonuses, and raises, and when they can expect to receive compensation, as well as what they can do to achieve their compensatory goals. Have this type of conversation on a consistent basis to avoid any misunderstandings or employee frustrations. Additionally, one of the best pieces of advice for managing key employees is to pay them a salary equivalent to or above the market value. A well-compensated employee will be much less likely to start looking around for greener financial pastures.
Give them room to grow. Your best employees are the ones that aren’t “satisfied” with their job, but want to grow and develop, taking their careers to the next level. Provide them the opportunity to learn, advance and contribute in new ways, nurturing those talents discovered along the way.
Provide a healthy environment. Financial compensation provides employees with a sense of value. But continue to nurture that value by showing appreciation through formal employee recognition. Positive feedback and acknowledgement can go a long way towards instilling a sense of pride and accomplishment and provides incentive for employees to remain a vital part of your organization.
Do you have a backup?
Employees with skills that are uniquely valuable to a company’s success are worth their weight in gold, but what happens when they leave, taking that institutional knowledge with them?
Relying on key personnel carries risks that, if not properly managed, may cripple profits, productivity, and confidence among remaining employees. Also, at stake is the company’s image, which is particularly critical for those that rely on earning and keeping trust.
Succession planning is critical in these situations. Identify, in advance, who will be responsible for important decisions and assign at least one back up. For example, who can approve and/or access funds for emergency services or supplies if the individual who normally makes those decisions is unavailable. In an emergency situation, the department manager may not be the only key personnel. You may have personnel who operate specific equipment or that have received specialized training/certifications.
Assign cross training as a professional development activity and include it as part of your performance evaluations. This helps back up personnel understand how the business functions within networks, builds appreciation for roles and relationships, and supports retention by increasing opportunities and flexibility within your workforce.
Provide alternate or backup personnel with opportunities to practice the assigned tasks during normal operations. This builds experience, confidence, and trust before they have to step in during a disaster.
Dai is a Master of Business Administration graduate of the University of New England, Registered BAS Agent and member of the Institute of Certified Bookkeepers. For 16 years he owned, operated and managed businesses in the tourism and hospitality industry – particularly Accommodation, Event Management, and Food & Beverage Management. In recent years, Dai has worked in the Not for Profit sector, Real Estate, Motorsports, and Motor Trades industry and business services, in Finance, Administration, and Practice Management roles, before becoming a Professional Bookkeeper in 2009.