The "Employee #4" Risk: Is Your Scale-Up's Growth Outpacing Your Legal?
It's a familiar story. Ten years ago you started in a coworking space. Today you're scaling fast. Tucked away in a dusty digital folder, though, is a real operational liability.
Employee #4 and #9 are still on their original contracts.
Back then, they were scrappy builders. Today, they are heavy-contributing executives. Yet, many of these "O.G." leaders are still on 4-week notice periods.
The Reality Check
If your C-suite or key department heads can walk out the door in 20 business days, you don't have a transition plan. You have a crisis.
In a hyper-growth phase, a 4-week handoff is impossible for:
Succession
You can't find and onboard a high-level replacement in a month. Executive search alone takes 6 to 10 weeks, and that's before day one.
IP Protection
These individuals hold the "tribal knowledge" and strategic DNA of your company. Four weeks isn't enough time to extract a decade of institutional memory.
Investor Confidence
During due diligence, "key person risk" is the first thing auditors look for. One month of coverage for a critical exec is a red flag.
The Solution: Professionalising the Partnership
If you've scaled significantly in the last 5 years, it's time to move your "anchors" to 3-month notice periods.
The good news? It's usually an easy conversation. Most early employees are already tied to the long-term mission via discretionary bonuses or equity. Updating the contract is simply about matching their legal status to the massive impact they already have.
Founder/CEO Tip
Don't wait for a resignation letter to realise your executive team is still on an entry-level contract. Audit your "legacy" contracts today. Your future self will thank you.
Need help with executive contracts?
We've been advising scale-ups on benchmarking executive notice periods, compensation structures, and succession planning for over a decade.
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