Hartford Business Journal

www.HartfordBusiness.com • April 9, 2018 • Hartford Business Journal 21 THE RAINMAKER Seven factors to determine if you can afford to lose a key employee By Ken Cook E very business has some key individuals who are important to the company's success. In a small company it starts with the founder. A successful salesperson is im- portant; the head of production or operations is important. As businesses grow, the number of people critical to ongoing success increases. The loss of key people is a great vulnerability that can wake up senior leadership at 4 a.m. If you can't get back to sleep, then maybe take advan- tage of the extra hours by thinking through these seven factors. 1. Is the person replaceable? The an- swer to this question lies with the level of proprietary knowledge a person has, and the skills they bring to the busi- ness. The more unique the knowl- edge or skills, the more difficult to replace them. 2. What would it cost to replace this person? Recruiter fees; attractive compensation packages; signing bonuses. Consider the time — not only interview time — it takes for someone new to be fully effec- tive. In some instances, we're talking years here, not months. 3. What's the loss if she or he is not replaceable? This should be a measur- able variable. For example, if a manu- facturer loses legacy knowledge with a retiring employee, and that knowledge has not been passed on, then it is lost. What is that knowledge worth? 4. Is there a community/sphere of influence impact if this person is lost? For example, a key salesperson is a board member for the industry association. Or, they own the relationship with the top source of referrals for the firm. Will there be a negative perception in the industry? Will the referrals slow down or stop? 5. What is the internal impact if a key person leaves? Would other people leave if this person left the company? Do other employees look to a key person for information, support, morale boosts, leadership, etc.? Even if other people don't leave, what would the ongoing negative impact be if a key person left? 6. What revenues would be lost? This is a direct measurement of client impact. In almost every instance where a key person leaves a company, there are clients who react negatively. Some may leave immediately because their relationship with the company was tied to that person. Others may not leave right away, but would open the door for competitors to bid for their business. 7. What business relationships would be lost? There are relationships that are direct revenue relationships. The previous question addressed this concern. There are also indirect revenue relationships. In this instance, we're talking about sources of busi- ness/referrals, industry influencers, media, and partners to name a few. You've taken the time to think through these issues and questions, and develop some solid data and quantitative assess- ments. It's time to head into the office. What do you do with this information and data? First, ensure that key personnel are satisfied employees. If there are points of discontent, address them within reason- able bounds. But, don't be held hostage. Second, for key people who are on the verge of retirement, make sure their legacy is retained in the firm. Figure out how to codify their unique knowledge. Third, protect the firm. Doug Mc- Clure, president of Global Investment Strategies, is my go-to person for complex insurance issues. As is almost always the case, McClure took this complex question about key people and streamlined it to a clear solution. His advice: Investigate key-man insurance policies on the critical per- sonnel who would have profound and lasting negative impacts on the firm if they left or retired. As McClure shared, a business in- sures the trucks, buildings, equipment, etc. needed to keep the company going. If people are truly the most impor- tant asset a company has, then it only makes sense to insure the key people in that asset pool. Doing otherwise is fiduciarily irresponsible. Ken Cook is the co-founder of How to Who, a program on how to build strong relationships and how to build business through those relationships. HARTFORDBUSINESS.COM POLL LAST WEEK'S POLL RESULT: How will Yard Goats attendance do in 2018? NEXT WEEK'S POLL: Should U.S. Rep. Elizabeth Esty resign from office? To vote, go online to hartfordbusiness.com BIZ BOOKS How to keep old brands fresh By Jim Pawlak "Iconic Advantage – Don't Chase the New, Innovate the Old" by Soon Yu with Dave Birss (Savio Republic, $25). Iconic brands exist in local business and on the global stage. What makes them icons? Yu's been-there-done-that advertising and brand-innovation ex- perience with Clorox, Chiquita Brands, and numerous, big-name apparel brands has identified three interrelat- ed qualities that create and ultimately reshape icons. The three fit under the umbrella of "emotional connection with their audience." 1. Distinction: They are different than their competition; they are memorable. 2. Relevance: Their distinction creates a loyal customer base. People trust the brand to deliver on its prom- ise. Trust and sales go hand-in-hand. 3. Recognition: They're readily recognized by consumers in and out of their target market because of 1 and 2. The strategy required to keep an icon an icon centers around three principles: 1. Create noticing power: Icons grab attention; usually using something sensory. Nike uses holes in the heel sole to show off its cushioning technology. Fer- raris don't look or sound like Toyota Camrys. 2. Developing staying power: Connect the brand to the users through the human element. Let employees tell the story of com- pany heritage and ongoing product creation; use consumer testimonials, too. Use social mission to connect, too. Example: Buy TOMS products and you'll give those in need shoes, sight, water or kindness. 3. Building scaling power: Forget "glitz" advertising; your brand's signa- ture elements should dominate every message. Word-of-mouth passes it on. You can also tier-up by offering an added-features version, or tier-down by offering a just-signature-elements version. Tiering opens the door to new consumers. The bottom line: Capitalize on the ongoing value of your existing products/services. A few tweaks can keep them from entering the maturity phase of their product life cycle. 13.2% Decrease from 2017 72.1% Increase from 2017 14.7% Flat Ken Cook Jim Pawlak Book Review

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