Looking back on the smaller businesses I've worked for and consulted with, I couldn't help noticing that nearly every company has that one person. You know the person I'm talking about. They're the one everyone seems to go to when they don't know the answer. They know which vendor to call, which customer always needs a little extra attention, how to fix that strange issue in the accounting system, where the passwords are kept, and why there's a certain process everyone follows even though nobody quite remembers how it started. If something goes wrong, someone inevitably says, "Go ask them. They'll know."
Having someone like that on your team feels great. In fact, as owners, we tend to take a lot of comfort in knowing there's a person we can rely on when something needs to get done. Over time, though, something interesting starts to happen. Without anyone deliberately deciding it, that person accumulates more knowledge, more responsibility, and more access. Eventually, they don't just become a key person in the business, they become the "key person with all the keys." That's where a tremendous asset can quietly become a tremendous risk.
Think about that person for a minute and ask yourself a slightly uncomfortable question: What happens if they don't come to work tomorrow? Nothing terrible has to happen. Maybe they're taking a well-earned two-week vacation. Maybe another company offers them an opportunity they simply can't turn down, or maybe you're afraid to promote them to a bigger role because you don't want to have to replace them in their current role. Would everything continue operating normally? Could someone else handle their customers, run their reports, contact their vendors, access the systems they use, and make the decisions they normally make? Or would certain parts of the business simply sit there waiting for them to come back?
There's a real term for this*: key person risk. Forbes has discussed how concentrating critical knowledge, responsibilities, or relationships in a single individual can expose a business to significant operational and financial risk. Some of the simplest ways to reduce that exposure aren't particularly complicated: cross-train employees, document important processes, distribute responsibilities, and have a succession plan for critical roles. However, there's an important point here that I think owners sometimes miss: the employee isn't the problem, the dependency is.
In fact, that employee probably became indispensable because they're exceptionally good at what they do. They're dependable, so we give them another responsibility. They solve problems quickly, so everyone starts bringing problems to them. Customers trust them, so relationships become centered around them. They figure out a clever workaround, and because it works, nobody thinks to document it. This happens little by little until, years later, an incredible amount of institutional knowledge exists in one person's head.**
The solution isn't to create a 300-page operations manual that gets printed, put on a shelf, and never opened again. Start much smaller. If someone performs a critical task, have them document the basic steps. If one employee owns an important vendor relationship, introduce someone else to that vendor. If only one person understands a particular system, cross-train another employee. If important information exists only in someone's inbox, notebook, or memory, give that information a permanent home where the rest of the organization can find it.
There's another side to this that I think is equally important: doing this is good for your key person, too. Being indispensable sounds like a compliment, and it is, until it means you can never really leave. Vacations become interruptions. Days off come with phone calls. Promotions become harder because nobody can take over what you're currently doing. Your best employee ends up spending valuable time answering the same questions over and over because the organization never built a way for those answers to exist without them.
I'd much rather see a great employee use their knowledge to build the people and systems around them. Let them document what they've learned, train someone else, delegate the repetitive work, and move on to bigger problems. That's not making them less valuable. It's allowing their value to multiply throughout the company. Ultimately, I don't think the goal should be to build a company without key people. Great businesses are full of key people. The goal is to make sure no single person is holding every key.
Owner's Challenge
Sometime this week, sit down and identify the three people in your company whose unexpected absence would cause the most disruption. Then, beside each name, write down three things that only they know how to do or that everyone else depends on them to do. Your best employees should absolutely be key people in your organization.
Just make sure they aren't carrying all the keys.
References: *Forbes Business Council, "Key Person Risk: What Is It Costing Your Business?" January 10, 2024. **Forbes Business Council, "Knowledge Transfer Is No Longer Optional: What Leaders Can Do About It," February 26, 2026.
