ALL the Fallout: What Happens When a Key Person Leaves Your Business

I've heard a lot of "chatter" this past month regarding "fractional executives."

They are all the rage these days.

And not in a good way.

Fractional executives are necessary when a key leader leaves a company and there is no one who is capable of replacing them.

Is that a risk you want to take?

It surely means you (the business owner) are not in the driver's seat.

More often than not, running an independent business means relying heavily on a few key people. But what happens when one of them leaves?

Whether they resign, retire, or become unavailable unexpectedly, the ripple effects can be serious. For many businesses, losing a key employee isn’t just inconvenient—it’s a real threat.

Here are just a few of the risks off the top of my head....

1. No One Else Knows What They Did
If a key person leaves and takes all their knowledge with them, your business can hit a wall fast. Maybe they handled the books, managed operations, or had deep relationships with customers or vendors. If their role isn’t documented or shared, you're left scrambling.

2. You Might Lose a Key Customer
Some customers stick with your business because of the relationship they have with that person. If they leave—and especially if they go to a competitor—that customer might follow them. It's not just a lost relationship - it's lost revenue.

3. Operational Bottlenecks
When one person is the only one who knows how something works— a system, a supplier process, or a critical workflow—they become a bottleneck. Once they’re gone, that knowledge gap can slow down or stop operations entirely.

True Story: A few years ago, I was working with a senior leadership team of nine. As I got to know their roles and responsibilities better, I realized there was one guy who was a huge bottleneck. He was great at what he did and had been doing it for almost two decades; everybody left him alone and nobody could really explain what he did. I realized that he commanded so much of the operation (which meant he commanded a lot of the revenue!) that if he got hit by the proverbial bus tomorrow, that company would have had to downsize immediately. He was one of leadership team of nine, but truly, he kept the operation running.

4. Loss of Institutional Knowledge
Every small business runs on a mix of formal systems and informal know-how. That includes client quirks, vendor tricks, and workarounds that never got written down. When a key person leaves, so does all that off-the-books knowledge.

True Story: I have a fellow consultant friend who does what I do - but with buildings. Huh? Let me explain: Right around the time that I realized companies were losing a lot of leadership capabilities, he realized that the facilities managers and building engineers who were retiring were also taking a lot of knowledge about the building with them. When was this wall erected? What's behind it? When was the last time the furnace was replaced? What's its remaining life expectancy? Where are the sewer pipes? Does anybody know where the blueprints are for this building? etc., etc.
Pretty neat, huh? Your key people aren't always leaders in the company. See this video for more on key roles and key people.

5. Morale Takes a Hit
People talk. When someone important leaves, the rest of your team may wonder why. Was it burnout? A better offer? Trouble in the business? This uncertainty can lower morale—and might even lead others to start looking around.

True Story: Working with a small engineering firm last year, we consistently told the CEO that he had to make some kind of announcement regarding why we (consultants) were there. He scoffed that it was unnecessary - they were like family and would surely come to him if they had concerns. He changed his tune when a key division leader left just two months into our engagement, because he was going to a "safer" job with the state.

6. Overload on the Remaining Team
Their work doesn’t just disappear. It gets passed on to others who may already be stretched thin. That creates stress, leads to mistakes, and can cause more turnover if you're not careful.

7. Projects Get Delayed or Cancelled
If they were managing key projects or had specialized skills, progress slows. Deadlines get missed. Customers get frustrated. And recovery takes longer than you think. In the case of the company mentioned in #5, above, the company simply shut down the division. The employee who left was the only one who knew the direction of the division he was starting up.

8. Leadership Vacuum
Sometimes a key person doesn't have a "fancy" title. They’re the informal leader—the problem-solver, the motivator, the one people turn to. Losing them can disrupt team dynamics and create confusion about who’s in charge.

9. Cost of Replacement
Hiring isn’t cheap. You’ve got recruiting fees, lost time, onboarding, and training. And it can take months for a new hire to get up to speed. All of that affects your bottom line.

You can’t prevent people from leaving, but you can prepare for it:

• Document roles and processes. Start writing things down. Even a simple checklist or shared doc can go a long way.

• Cross-train your team. Make sure more than one person can handle each critical task.

• Build strong customer relationships across your team. Don’t let one person be the sole connection to key accounts.

• Have a succession plan. Think ahead about who might step in—and what they'd need to succeed.

Losing a key person doesn’t have to be a crisis—but only if you plan ahead.

This article was originally posted on LinkedIn.

The Importance of Breadth and Depth in Your Succession Plan

Succession planning 𝗶𝘀𝗻'𝘁 𝗮𝗯𝗼𝘂𝘁 𝗳𝗶𝗻𝗱𝗶𝗻𝗴 𝗿𝗲𝗽𝗹𝗮𝗰𝗲𝗺𝗲𝗻𝘁𝘀; it's about creating leaders. 𝗜𝘁'𝘀 𝗮𝗯𝗼𝘂𝘁 𝗶𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 𝗶𝗻 𝘁𝗵𝗲 𝗽𝗼𝘁𝗲𝗻𝘁𝗶𝗮l within your organization today, to ensure a strong leadership pipeline for tomorrow.

In all the years I helped companies with their leadership development there was always one burning question: Can you really teach leadership? 

The answer is yes – but it’s not easy and it’s not fast.

The same is true of succession planning. 

Although I would say it IS easy – if you have the right plan… but it’s still not a fast process.

Part of the reason it is not fast is the need for breadth and depth in succession planning.

Breadth of Organizational Knowledge/Experience

Breadth in a succession plan refers to the variety and diversity of experiences and expertise that individuals in the succession pipeline possess. It involves having a pool of potential successors who have gained a wide range of experiences across different areas within the organization. These individuals should understand the functioning of the organization as a whole rather than simply being experts in their specific roles or departments – which is what “leadership” looks like in most organizations today.

Having individuals with diverse experiences and backgrounds in the succession pipeline is crucial for several reasons:

1. Holistic Understanding of the Organization:

Employees with diverse experiences throughout the organization have a comprehensive understanding of how different departments and functions operate and intertwine. This knowledge is vital for effective decision-making at higher levels when organizational decisions must be made.

2. Adaptability and Flexibility:

Exposure to various roles and functions fosters adaptability and flexibility in future leaders. They are better equipped to respond to changes, challenges, and opportunities, which is especially important in today's dynamic business environment.

3. Cross-Functional Collaboration:

Individuals with experience in multiple areas can bridge invisible barriers and facilitate collaboration between different parts of the organization. Collaboration fosters teamwork and innovation which in turn enhances overall organizational performance. 

Depth of Generations

When you have depth in your succession plan, you have multiple layers and generations of potential successors. It is important to cultivate talent at different stages of their careers and identify individuals who can step into critical roles as they progress within the organization.

1. Long-Term Talent Development:

Identifying and nurturing talent early in employees’ careers allows for a long runway of development opportunities, which is crucial for learning behaviors. If you expect a future leader to be knowledgeable in the operations of the whole company – that will require many years of experiences to achieve.

2. Employee Engagement and Retention:

Employees are more likely to stay if they know that your company offers a future for them and a path for career growth.

Incorporating both breadth and depth into your succession plan ensures a comprehensive and robust approach. It's about not only having a diverse pool of potential successors but also nurturing them at different stages of their careers for a seamless leadership transition.

Remember, succession planning is about preparing for a sustainable and thriving future.

This article was originally published on LinkedIn

Step One in Your Succession Plan

When I work with clients or even when I am speaking at an event, I always incorporate an activity where I ask people to name things that they think leaders need to possess or demonstrate and ask them, What does a leadership skill look like?

Typical responses are...

* They have emotional intelligence.
* They are open-minded and willing to change.
* They have a growth mindset.
* They are charismatic and have influence.
* They are people focused.
* They are selfless.

Then I ask the audience to take a mental step back and look at that list overall and see if they see a theme or a label that they can give it.

Inevitably, there is an a-ha light bulb that goes off and they say, “These are all characteristics or behaviors.” These are not skills. So why are we always hearing in the popular press, in advertisements, in marketing that you must teach your folks leadership skills when really the ‘skills’ are behaviors?

We know a ‘leader’ because of his or her behavior. One of my favorites to bring up for discussion is “A leader is ethical.” When do we ever teach somebody to be ethical? How do you teach someone to be ethical? Across the board we expect a leader to demonstrate that they have ethics, but we never really define it or teach it to them.

That is step one in your succession planning.

First and foremost, you must define what a leadership characteristic or behavior looks like in your organization. The last part -in your organization- is the important part because every organization has a different style and culture, not to mention different stakeholders with their expectations. Ethics in a healthcare organization is going to have a little different flavor than ethics in a manufacturing organization or in a broadcasting organization.

So step one is to be very purposeful about defining how leaders in your organization behave so that you A) can start teaching it or B) know what you are screening/interviewing for if you must hire people from outside to fill leadership roles. Having a defined set of leadership behaviors (think of it as a leadership avatar) gives you peace of mind in knowing that you are hiring people who will align with the values and the culture of your organization.

Having a defined set of leadership behaviors (think of it as a leadership avatar) gives you peace of mind in knowing that you are hiring people who will align with the values and the culture of your organization.

One last thing to consider: The thing about behaviors is that you really cannot teach them. We develop behaviors based on experiences or belief systems or reflecting on things that have happened to us, that shape us into who we are.

You can see -just looking around you in society- that not everybody demonstrates the same behaviors. So please begin your succession planning by defining what leadership behavior in your organization looks like, so that you can train to or hire it from the outside if you need to.

Does your organization have a clearly defined set of leadership behaviors (most don’t)?

This article was originally published on LinkedIn