Human Capital Related Services:

The Problem With Key Employees

What is a key employee, and who is worthy of such a title? Much has been written on the subject of  key employees, and in my opinion, most of it flat misses the mark. In fact, I’ll go so far as to say what most people refer to as key employees are not really assets, but rather large contingent liabilities. If you allow your organization to be held hostage by those employees who feel like they are indispensable, you are only exacerbating the problem. I’m not disputing the need to retain talent and reduce turnover, but I am vehemently disputing the conventional wisdom of how most businesses address the risk of managing key employees. In today’s post I’ll give you a fresh perspective on the age old dilemma of how to deal with key employees…

As a CEO or entrepreneur your problem with key employees begins the very second you publicly identify someone as such. In fact, I would go so far as to say the phrase key employee is an outdated, elitist term that creates angst and antimocity among the ranks. Good leaders view all employees as key, and great leaders cause all employees to view themselves as key. The fact that you single out someone as a key employee to begin with means that at a minimum you have a lack of transparency and continuity in your organization, and more probably that you lack depth of talent and are weak in process and knowledge management.

How would you answer this question…Is your company talent poor and key employee dependant, or talent rich or key employee independent? From my perspective a superstar is not necessarily the same thing as a key employee…There is a monumental difference between real tier-one talent and a primadonna who thinks of themselves as tier-one talent. Employees who represent true tier-one talent see themselves as part of the team seeking to make those around them more successful. Contrast this with those primadonnas who are interested solely in their own success without regard to those around them. Any company that bestows a primadonna with recognition as a key employee is a company about ready to experience a completely avoidable disaster.

Over the years I have learned that no one, and I mean no one, is indispensable. A well managed company is not dependant upon the performance of any single individual. Those individuals who attempt to hoard knowledge, relationships, or resources to attain job security are not to be valued as key, but are to be admonished as ineffective and deemed a liability. Corporate talent that cannot be shared, duplicated, distributed, or leveraged is not nearly as valuable as talent that can.

If you want to eliminate dependency on key employees don’t allow any individual to create ultimate domain over anything that is considered key or mission critical. Instead create a culture that values transparency, knowledge management, mentoring, coaching, and process. By doing these things you will add both depth and breadth to your organization and increase the overall level of talent across the enterprise.


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    Rebel Brown

    Rebel Brown

    November 3, 2009 at 12:57 pm

    Hi Mike and thanks for jumping on such an important topic!

    I’m sure many will disagree with you – but I’m 100% in your corner. Although perhaps for some different reasons.

    I’ve spent the last decade + of my career working with turnarounds. After all those years, I can state that one of the reasons businesses fail is because of their key employees.

    Key employees tend to be the executives, managers and workers who hang onto the status quo – which is the source of their power. They know that no one will fire them – they’re too important. They’re also usually afraid of changes that will diminish their power.

    So they lead the resistance against change – all the way til the company crashes and burns. It’s usually subtle; behind the door conversations, comments as asides in meetings, passive aggressive refusal to change processes and behaviors. Sometimes the behavior comes as outright refusal to adapt.

    Companies don’t want to lose these key employees – so they keep them no matter what they do. While the business is trying to adapt and salvage itself – the key employees are hanging onto their power and position with all their might.

    Worse yet, people are following their lead. Such division in an already troubled organization can be the final death knell.

    I’m ALL FOR rewarding and recognizing contributions – from all employees. I believe the idea of key employees needs to be well managed so that everyone understands the boundaries of behavior – even if we are the ‘teacher’s pet’.

    When key employees become empowered as the defacto leaders of others – we can easily end up heading in the wrong direction for our businesses. Then we all lose.

    Thanks again for the great post Mike!




    November 3, 2009 at 5:12 pm

    Thanks for the articulate thoughts Reb. Much of what you’ve expressed is what I refer to as fear based leadership.

    You are absolutely spot-on in your assessment that in an effort to maintain control over the status quo, weak leadership inadvertently begins to send the company into a decline. Such regressive practices are almost always driven by a fear of change.

    Thanks again for your comment Reb.


    John Newland

    April 4, 2011 at 7:08 pm

    I think it makes sense for a CEO, at least in their own mind, to identify who their key employees are. Especially if you are using the definition of “company won’t run very well without them”. This is the canary in the coal mine. Whenever you see that you have someone like this, you need to rethink your talent strategy, or you need to make that person a partner.


      Mike Myatt

      April 4, 2011 at 8:48 pm

      Hi John:

      Thanks for sharing your insights. I would say that if a “company won’t run well without a certain employee” then while you might have an entity, you don’t really have a company. A good enterprise is not dependent upon any single person. A leader that builds such a venture will eventually get what they deserve. I’d like to think I do a lot of valuable and positive things for N2growth, but if I got hit by a truck tomorrow I have but no doubt the company would barely skip a beat. Thanks again for stopping by John.


    Micah Yost

    April 4, 2011 at 7:08 pm

    Great post, Mike. I really resonated with this one. I lead a team of 65 volunteers and I just replaced “employee” with “volunteer” as I read your post. It’s great insight into what I have been learning in recent months. We have to be so careful as leaders when we choose to elevate certain people as examples, labeling them “key”. Thanks for sharing this.


      Mike Myatt

      April 4, 2011 at 8:40 pm

      Thanks Micah…I appreciate the kind words and thanks for stopping by.


    Jerome F. Bonser

    April 5, 2011 at 3:43 pm

    Enjoyed your post, Mike! I am just afraid that many organizations today, after severely cutting staff to the bone, may find themselves with this problem. If, say, 2 people are now forced to do the job of 6, at any level in the company, they surely do not have time to “process map”, “knowledge share”, etc. By default, they have become “key employees” simply because they keep the wheels turning. If these employees decide to leave, a huge whole is created. Balancing the need to reduce personnel costs with the need to avoid the “key employee” syndrome is critical and very difficult indeed.


      Mike Myatt

      April 6, 2011 at 3:12 am

      Hi Jerome:

      Thanks for your comment and I appreciate your insights. What’s interesting about your observation is the effect the pendulum swinging from over-staffed to under-staffed has on the enterprise. Great leaders don’t treat people like furniture. It is simply impossible to be a highly prized asset one day, and then hold no value the next. If companies would stay right-sized at all times the need for radical hiring and firing binges would be unnecessary.


    Mike Myatt

    April 6, 2011 at 3:13 am

    Thanks for stopping by and for the kind words.



    April 6, 2011 at 6:17 am

    Great post, Mike and I mean it!
    Just wanted your views on another point – what if a company does not publicly or overtly mention who are a part of this “top talent” team? So, these “key employees” are not informed that they are a part of this top tier. But, then the company tries to foster their development, give them opportunities and regularly review their performance against high standards. What are the pros and cons of that approach?
    Are we saying that Talent Management, as practiced by companies around the world needs some serious redefinition?

    […] From Mike Myatt: The Problem with Key Employees “What is a key employee, and who is worthy of such a title? Much has been written on the subject of key employees, and in my opinion most of it flat misses the mark. In fact, I’ll go so far as to say that what most people refer to as key employees are not really assets, but rather large contingent liabilities. If you allow your organization to be held hostage by those employees who feel like they are indispensable, you are only exacerbating the problem.” […]

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