1. Career Advice
  2. Career development
  3. What is a key employee and what factors are important?
What is a key employee and what factors are important?

What is a key employee and what factors are important?

  • Legal definition of a key employee
  • What is the role of a key employee
  • 3 Examples of key employees
  • Key takeaways

As a key employee, you hold a valuable role within a company. You will have influence and a direct effect on the company’s ability to succeed daily. In this article, we will learn more about key employees and what factors make them so important for a company.

As a key employee, you likely have a certain set of skills that make you invaluable to an organization. In addition to these skills, you have knowledge and experience in areas that others don’t. It is for these reasons that your role as a key employee is so important to your employer. In this article, we will learn more about key employees and what makes them such a valuable asset. 

Here’s what we will cover:

  • Legal definition of a key employee

  • What roles do key employees play in a company?

  • 3 examples of key employees

Legal definition of a key employee

Many factors go into deciding whether one is a key employee or not. This will vary depending on your location and industry, but there are also some legal factors as well.

One major consideration that goes into defining a key employee is the FMLA statute, which classifies a key employee based on their salary. The IRS, on the other hand, considers someone to be a key employee if they are a company owner or a highly paid officer. 

Here are other factors that go into defining a key employee:

  • Responsibilities. Along with your high salary, you will have a high level of control within an organization. You are likely the person who is responsible for securing capital for your company and the work you do may be vital to the overall business structure and functionality.

  • Insurance. In some cases, you may even find that your company is willing to take out a life insurance policy on you. This type of policy is typically reserved for an owner or a top executive, but it shows how critical your contributions are.

  • Strategic development. Another factor that might identify you as a key employee is how involved you are in the company’s strategic planning. If your ideas and contributions are used to shape the company, you likely hold a role as a key employee.

What is the role of a key employee

As mentioned, key employees most often play a role in a company’s leadership or ownership team. However, there are even more roles you may find yourself in when you are this type of employee. 

One is risk management. Identifying risks and coming up with strategies to navigate the challenges your company faces is often a big part of this role. Another is relationship building. It’s common for employees in this role to oversee most of the client and stakeholder relationships your company has. 

You might also be tasked with representing the company. Whether for external events or marketing strategies, you should expect to be the face—a part or otherwise—of your company. Similarly, it is often up to the key employees to set up the company’s culture regarding values, work ethic, and the workplace environment.

Finally, key employees play a crucial role in innovation. Keeping up with industry trends and developing ideas for the future is a big part of being in this role.

3 Examples of key employees

Now that we have a better understanding of what a key employee is, let’s take a closer look at some of the actual positions you may hold. 

Here are three examples of key employees:

1. CEO/CFO

Both the chief executive officer (CEO) and chief financial officer (CFO) hold key leadership roles in an organization because they are the people who drive the strategic planning and leadership goals. They are directly responsible for the company’s success and direction.

2. Technology officer

This type of employee is especially important in a tech-focused company where technology strategies and innovation are at the forefront of the company’s success.

3. Marketing officer

Marketing is a crucial part of any organization, which is why the person leading the marketing efforts for a brand is so critical.

Are you ready to start building your career so you can become a key employee? Check out our Pathway to Promotion service to learn how we can help.

Key takeaways

  1. A key employee is typically someone who is highly paid and has direct influence over the company’s success and direction.

  2. Key employees often oversee risk management, key client relationships, representation of the company, the company’s culture, and the innovation goals of an organization.

  3. Some examples of key employees include the company’s owner or key officers, such as the CEO and CFO, technology officer, and marketing officer.

Share this article