What is one of the most influential factors affecting your company’s success? It’s your employees—the people in your organization who are right beside you, helping to build the profit and pursue opportunities for growth in your dealership. Physical assets—the buildings and equipment—support financial goals, but to carry out the directives necessary to reach those goals such as expanding a line of equipment or adding a dealership, a company won’t get too far without trusted employees.
And, if you’re like other dealerships, you have certain employees whose departure from the company could create genuine setbacks. They’re the ones with the management skills, technical know-how, experience, and customer relationships you rely on. How would your company handle the void left by a key employee’s departure or death, and the urgent need to find a qualified replacement?
Is one of your key people close to retirement, or absent due to a long-term illness or disability, which may prevent him or her from coming back? Perhaps one of your star performers recently quit. Or, perhaps, one of your key people recently passed away. With the anxiety of losing a valuable employee still fresh in your mind, it’s a perfect time to start putting a plan in place to help protect your dealership in the event another key person leaves.
Determine who your key employees are.
They are the workers you could describe as your “right hand.” They’re the people you can’t do without. The ones you trust to make the right decisions when you’re not available. They can be at any level or in any position. It may be your designated risk manager, your parts department manager, or your best mechanic. And, there currently may be no one who could take over their responsibilities with their level of expertise your customers expect. Remember, you’re a key person too! While it can be uncomfortable to think about your own mortality, focus on those left behind and what they could go through if you haven’t planned for your dealership’s future.
Decide how to protect your company after losing a key employee.
It’s an unhappy reality of running a business that good employees leave. And, if an employee has distinctive skills, the loss can be even harder to deal with. That person’s unique talents and expertise mean you need to fill some big shoes. Plan to spend a lot of time and effort finding a replacement. And, don’t forget money. It’s estimated that the cost to replace mid- to high-level employees can range from one-and-a-half to four times their annual salary.
Are you prepared to cover that expense out-of-pocket? Few employers have that kind of extra money lying around, “just in case.” Having an important employee leave is enough of a disruption to your business. Do you want to add a financial burden on top of that?
Insure the life of your company.
In the strictest sense of the word, life insurance insures someone’s life. But, when used as key person protection for your business, it can be thought of as insuring the life of your company, too.
Life insurance is a cost-effective way to help provide some welcome financial support toward your company’s need to replace a key employee. Life insurance can help to
- keep the dealership running and growing
- assure creditors that their loans are safe
- assure customers and employees that the retail sales and shop will continue
- recruit, attract, and train a replacement
- replace lost profits
- provide time and flexibility for survivors to make necessary business continuation decisions if the key person is you or another owner
The advantages of key person coverage go deeper than just the cash value of a life insurance policy. This type of protection can help smooth the way back to “business as usual” after your organization loses a vital member. In other words, this coverage can help you and your team gain peace of mind thanks to an added degree of stability and security. And isn’t that “key” to running a great business?
This article contains general information and recommendations regarding risk prevention only. The information herein may help reduce the risk of loss, but is not guaranteed to do so. This information should not be considered legal or other expert advice. Qualified counsel should be sought regarding questions to your specific circumstances. © 2018 Federated Mutual Insurance Company. All rights reserved.
Federated Insurance Safely Speaking
by Jon Medo