Is IP walking out your door?

20 June 2018 Debbie Morrison

Intellectual property

Have you ever considered how much it costs to lose a key team member? Some studies show it can be anything up to 200% of the person’s annual salary. At ELR Executive we actually think that seems rather low, especially if you factor in the associated ‘IP Drain’ – that is, the cost of the knowledge that walks out your door the day they leave. From our experience across many industries this cost is very real. It can be felt for months if not years into the future and manifest itself in many ways.


Of course no amount of planning can guarantee key people will never leave. But you can certainly take steps to greatly mitigate the damage in such situations. The vital thing is to do it now – before the horse (okay, team member) has bolted.


Irreplaceable? No such thing.

It may not seem like it at the time, especially if the departure is sudden. But it’s worth remembering no-one is irreplaceable. Or, to put it more accurately, no one should be irreplaceable. Sure, they may have years of experience and knowledge, they may play a central role in critical client relationships, they may posses an outstanding work ethic and be hugely popular within your team. But while initially stressful, their departure may ultimately provide an opportunity to make some exciting changes and improvements in your business.


Are you Reactive or Proactive?

Reactive businesses generally assume they must immediately find a replacement when a key person leaves. This is frequently true, but only due to them having a lack of other alternatives. It’s also fraught with risk as it’s often a rushed process.

Regardless of how good they are, it can take many months for a new employee to ‘bed in’ and reach their full productivity, which again caries a cost to the business.


Proactive businesses, on the other hand, have already considered the impact of key departures – long before they actually happen. Rather than make knee-jerk decisions, this foresight allows them to calmly implement a relevant succession plan for that employee and/or department. Perhaps responsibilities can be shifted or divided? Maybe someone (already identified) can be promoted from within, with a less expensive employee hired to replace them instead? There are usually many options; the important thing is to have considered them well beforehand.


What does succession planning involve?

Organisations who do it best are typically those with robust internal processes for talent identification and development, especially in core departments and positions. They also make information sharing a real priority to help spread the reservoir of knowledge throughout the business and, as a result, minimise the effects of IP Drain. Sure, this all takes time and effort, but the rewards can be significant. As and when key employees depart, or perhaps the business experiences a surge in growth, they more often than not have very capable employees ready to step up and fill the breach.


Just a final thing to bear in mind. If your succession plans involve changing the job description or responsibilities of another team member, be aware of what might constitute a ‘redundancy’ or ‘termination’. Seek expert legal advice if you’re in any doubt.



Like to know more? Contact ELR Executive today.

There are many factors to be considered in implementing effective succession strategies. To explore the core challenges for your business, please contact ELR Executive at or call us on 02 9275 8855.