How to cope when an employee dies

Written by David Silverberg

It’s the tragedy you never thought would happen: one of your trusted staff dies suddenly. How will employees react? What do you tell clients? What will insurance cover?

Tom Ogaranko, CEO of Edmonton-based Redengine Inc., a website and Web-applications developer, got that dreaded phone call two years ago. One of the firm’s part owners, Livia Stoyke, had died in a kayaking accident. She was only 32 years old.

Grief rippled to every department, and Ogaranko had to mourn while also balancing operations. “[An employee death] makes you questions things in the morning,” he says. “But it also taught us a lot of things about insurance policies, wills and helping the staff cope.”

The shock of a death in the business can fracture a company. Forward-thinking leaders can avoid problems by preparing for the worst.

Think about the unthinkable

It’s the classic “won’t happen to me” situation: most of us regard accidental deaths as aberrations that only strike the unlucky. But it’s in everyone’s best interest to consider it a real possibility and to prepare for the worst. “If you believe in [your] company,” says Ogaranko, “put in mechanisms that will survive as a vision beyond individual efforts.”

Don Zinyk, a partner at KPMG LLP in Edmonton, highly recommends building a contingency plan when the management team is alive and well. “Map out what would happen if a death occurred,” he says. “Ask yourself ‘What would be the problems tomorrow?'”

Review your policies today

Redengine was insured against the death of the owners (at a cost of approximately $35 per month for a two-year policy). When Redengine bought the policy, its value had been calculated using the value of the firm. “But with our rapid growth,” says Ogaranko, “the value of the company exceeded the value of the policy within two years. We were in the process of increasing the value five times when Livia died.”

Lesson: review your policies semi-annually, and when doing so, don’t neglect to consider hidden costs. When an employee dies, you won’t only pay to replace him or her. At Redengine, administrative, human-resources and marketing costs all increased directly after Stoyke’s death.

Take care of your employees

Redengine received assistance from Victims Services, a branch of the Edmonton Police Services. Ogaranko praises their work in helping his employees get through the tragedy. They provided common sense advice such as turning the phones off to allow for uninterrupted staff meetings.

Andre Latour, president of Human Resources Professionals Association of Ontario, says the biggest mistake an entrepreneur can make is not including employees in meetings about restructuring and reorganizing duties. “Don’t just send staff away as if it isn’t their business. That makes them feel like a number and nothing more.”

Think about damage control

Clients will be sympathetic — they’re human, after all — but they will also look for quick recovery. Zinyk suggests phoning customers and stressing how another manager will assume the deceased’s responsibilities.

Don’t forget the bank. “What sinks a business is a bank losing confidence,” says Zinyk. “Reassure them the loan is not in jeopardy.”

If it’s appropriate, honor the deceased

Being IT experts, Redengine decided to post memories of Stoyke on a website dedicated to her memory. At www.livia.ca, staff and clients contributed stories about working with Stoyke, and Redengine managers found the site cathartic. Says Ogaranko: “It was critical to healing.”

Read other pointers on How To contribute to your business success!

© 2004 David Silverberg

Originally appeared on PROFITguide.com