As a business owner, you already appreciate what a key asset your employees are. Any business can sink or swim based on the strength of its staff force, and investing in the employees is one of the most productive ways a business can invest in its own future and growth.
At the same time, each business offers a range of different roles to a range of different staff, which – while all very valuable – can’t be considered equal in terms of their direct impact on the business. So, should a business treat its employees differently, based on how important they are in the running of things?
How key staff are differentiated within a business
In business, skill sets, expertise and experience still matter a great deal. This is already reflected in things like the salary, the company car and so forth. There is one additional area where a key member of staff may be treated differently, and that’s when it comes to future proofing the company from a financial perspective. A Business Director may well be covered through something called key man insurance, which a junior member of staff is unlikely to benefit from. This type of insurance policy is, essentially, life insurance cover paid for through the business and providing benefits to both the insured individual and the business itself.
The benefits of key man insurance policy
If a critical member of staff, such as the Business Director, were to become suddenly ill or die, the impact on your business could be severe. Not only are such key members of your team difficult to replace from within the company, as they have unique skill sets and knowledge, but replacing them externally can be costly and time consuming, which puts additional strain on your business. There may be business deals this Director was a key person for and if those should not come to fruition, it could directly impact your profits. There may be commercial loans and other borrowing secured in this person’s name, which are now at risk. Additionally, this type of key member of staff is usually a shareholder, and now their shares could be inherited by someone who, potentially, has no interest in and no knowledge of the business.
An appropriate insurance policy can go a long way towards mitigating, or even solving, the above problems. The lump sum, which is usually payable, can be used to protect the business and prop the business up financially during times of transition and the recruitment of a successor. It can cover any commercial loans secured against this Director, protect the profits and, of course, give some financial security to the bereaved family.
While equality in the workplace is absolutely an ideal to strive for, business owners must also bear in mind that not all staff have the same impact on the future of their company, should they suddenly die. Selecting the right kind of life insurance through the business can be the best decision you can make for peace of mind.
