Instilling a knowledge-sharing culture, through effective management and collaborative tools, is key to combating key-person dependency in the long term.
If it’s when you fail to deliver that you recognise key-person dependency in your credit union, you’re already too late.
Key-person dependency can be the downfall of any organisation. And this is especially true of credit unions that often have complex and tailored processes and systems for reporting.
For instance, if the one, key-person who knows how to execute the month-end reporting process leaves the company, or is simply absent at a crucial time, this could impair decision-making and disrupt business.
This is why you should take these proactive steps to identify and rectify key-person dependency as a long-term defence.
Identifying Key-Person Dependency
Look Beyond Job Roles
Key people tend to undertake mission-critical activities that are both part of their formalised job role, and outside of their defined responsibilities. This means that, for an employer, the true scope of someone’s role may be misunderstood; it may only be when a key person is absent that excessive dependency is recognised.
Establishing the activities and processes that are crucial to business continuity, and then assessing employee skills and responsibilities is key to overcoming this. It should give a perspective as to whether operations are overly reliant on the expertise of one or a few individuals.
Alleviating Key-Person Dependency
After undertaking the process to identify key-person dependency, you should have a clear understanding of the skillsets of your team, which will highlight ‘siloed knowledge.’
It is then possible to begin to rectify this through training, building documentation of processes and, if need be, recruitment.
However, the most sustainable way to defend against key-person dependency is through promoting a knowledge sharing culture within any organisation.
As well as securing a degree of business continuity, instilling knowledge sharing will improve the performance and engagement of employees. It can also strip back individualistic mentalities to forge a unified, team-centric culture.
A knowledge-sharing culture won’t appear overnight, but there are two key ways in which it can be encouraged and supported.
- Effective Management
Senior managers in the credit union, across its branches, can be fully behind the notion of knowledge sharing. Leading by example, by actively sharing information, asking for advice, and engaging as part of a team, will encourage similar behaviour throughout the organisation.
Recognition for contribution also goes a long way. Managers can be attentive to those who share valuable information – a simple shout-out in the office is all it can take.
When employees feel they’re knowledge is of value, they will feel more confident and inclined to share it. This boils down to trust. Senior managers should demonstrate they trust their staff’s knowledge by using the information they’re supplied.
Employees need tools and applications that make it easy for everyone to collaborate and access information. Let’s build a scenario to demonstrate this.
A credit union uses Excel spreadsheets for its cross-branch financial reporting. In the early days, spreadsheets were relatively straightforward to use, and everyone who needed to use them could.
However, as the credit union grew and branches were opened, the spreadsheet system became increasingly complex, with many pages of data which would throw errors when changes were made.
Critically, only one staff member can now competently use the reporting spreadsheets. It takes this person a number of days to construct month-end reports and he or she is the only employee that has a full view of the credit union’s financial position.
When this person is absent, reporting has to be delayed, slowing management’s decision-making. Worse still, if this person leaves the business, the business is in a seriously vulnerable position, unable to construct reports for a period of time.
The reality is spreadsheets are simply personal productivity tools rather than dedicated credit union software applications and their use encourages dependency on the individual.
This highlights the need for a reporting system that doesn’t require esoteric knowledge to achieve financial insight – a business intelligence application that encourages collaboration by breaking down the barriers that prevent access to information.
The cloud has enabled such applications that provide access to centralised information from anywhere.
Cloud-based financial reporting software, such as BankBI’s software, provide a unified view of financial performance ratios, so senior management, branch managers and whoever else in the business has access to the same information.
These applications enable collaboration and knowledge sharing, which defends against key-person dependency.
As a product of a merger between two credit unions, Tandia experienced these problems, with a complex Excel-based financial reporting system that induced inefficiencies and prevented knowledge transfer.
Find out the steps Tandia took to revolutionise its financial reporting in this case study.