It’s your business’s prerogative to attract really good talent, and that’s particularly true when looking for your upper-level management. Presidents, CEOs, CFOs, boards of directors—you probably want the best of the best within your operation. To protect both yourself and other principals in case their decisions lead to mistakes, consider buying directors & officers (D&O) insurance. It’s not only helpful to the business, it can also be a way to attract new hires to the operation. Here’s a bit more information.
What’s a D&O Policy
Even if you are the very top, there will be people under you who can make equally-weighty decisions. If they make the wrong choices, it could reflect poorly on the business. Bad leadership decisions might lead to lawsuits from different parties, both internal and external. A properly-tailored D&O policy can prove to your high-level employees that you recognize their importance, and respect their security.
Liability insurance, in any form, exists to help the insured party—in this case, your business—repay third parties who sustain damage that is your fault. For example, if a client slips and falls in your business, they might sue, and liability coverage can help cover the resulting costs.
D&O insurance is a liability policy, but it is for more specific instances of trouble—those that arise from the mistakes or decisions of business principals. In a general sense, if the director makes a mistake, like misreporting earnings, this could harm the company, shareholders and many others outside its walls. D&O policies help the director in question respond to such losses.
Why D&O Policies Support Talent Development
In many cases, a lawsuit targeting the company might target the directors as well. If a director is named individually, then should they have to make restitution to the affected party, then their own money and assets could come under threat. A D&O policy can ensure that the party in question has additional resources available to protect themselves.
This is a strong benefit for businesses to offer to their current directors and their prospective hires. It can help company leaders feel more secure in their decision-making capacity. It also can show them that the company wants to invest in them as someone they can trust.
Therefore, in order to hire the best talent, you might decide to offer this as a perk of the business. Even if you are the top of the business structure, you can individually benefit from these policies. That’s why it is an important investment to make.