Risks come in many forms. As HR professionals we need to ensure people are protected and business risk is mitigated. Here are seven risk mitigation factors I have implemented as part of my HR strategic and operational planning.
1. Performance Management
What’s the risk: The Fair Work Ombudsman promotes harmonious workplaces where people are recognised, rewarded, and performance managed. The latter is about engagement, development and relationship building. Research indicates 74% of organisations with forty or less employees across Australia do not have a performance management framework in place. In the past employees perceived performance management to be threatening, and possibly a way for the organisation to oust them.
Why should HR care: HR needs to ensure performance management processes are in place to support managers taking the lead across their business units. Not having a system in place can be dis-empowering for employees and dis-connect productivity to targets in the long and short term.
HR Action: Develop an internal and performance management program and train all employees in the organisation on the benefits. Include as part of the organisational induction program. This will ensure new employees are aware of the process and why it is important. This will also encourage employees to be engaged in the process.
2. Ethics & Behaviour
What’s the risk: It seems hardly a day goes by without another organisation hitting the headlines for all the wrong reasons. And many of the scandals we’re seeing come down to unethical behaviour. In terms of brand damage, ethical breaches are the most difficult to recover from.
Why should HR care: If HR is to be an organisation’s sponsor of values and behaviours, it needs to build a culture where ethical behaviour is encouraged. It’s about doing the right thing, at the right time, all the time. Any reputational damage could also negatively impact all elements of the employee lifecycle including recruitment, retention, and organisational productivity.
HR Action: Implement a Code of Conduct Policy and establish an ethics committee. HR can develop a reporting metric to alert them to any potential incidents. Areas to monitor include working patterns, relationship development, leadership capacity, cultural change, and productivity levels in line with capital spend and revenue making.
3. Skills Shortage
What’s the risk: Not having the right people with the right skills can seriously hamper an organisation’s future. For many organisations, the major concern is not finding the right people and when they do, on-boarding can take many weeks. Working sectors with an ageing demographic such as health, with predictions of 50% retired by 2025, have even more to be concerned about.
Why should HR care: These are things HR does all day. HR also looks at workforce planning in terms of risk and people management, but how can HR translate this to the rest of the organisation.
HR Action: HR can collect data and analysis highlighting the need for a risk and people management framework. This framework should be included in the organisation’s strategic and operational plans and aligned with the organisation’s Workforce Management Plan.
4. Workforce Planning
What’s the risk: In Australia only 30% of organisations have a workforce plan in place. With 43% of Australian organisations admitting to having experienced downsizing of full-time employees in the last two years, this increases the risk factor. Not having a workforce plan in place can cause productivity to plummet and leave an organisation at greater risk if employees resign unexpectedly.
Why should HR care: HR plays a critical role in employees learning and development. In support of sustainability organisations should be investing time and money in the current workforce capability during the current down times. Getting involved and supporting workforce planning can decrease the risk.
HR Action: HR can use internal audits, objective evidence and adding to agenda for discussion in senior managers and risk committee meetings. This will gain attention and traction of the strategic and operational decision makers.
5. Health Safety and Wellbeing
What’s the risk: Research by Ernst & Young found that only 60% of organisations were aware of the Work Health Safety Act 2011. As with breaking any regulation, non-compliance with the Act could cost your business. The crime of an organisation failing to comply with the WHS Act is extremely costly.
Why should HR care: It comes back to people, policies, systems and ultimately the person conducting the business. HR has a responsibility to work with health safety and wellbeing teams to ensure employees are aware of the potential risks, are being informed and supported with wellbeing information and programs. At Human Resourcing Australia we design, develop, and implement WHS and Wellbeing learning programs for a range of businesses who consider they could be at risk in terms of the WHS Act 2011 or Fair Work Act.
HR Action: Make sure learning and development programs have adequate information on WHS and Wellbeing. Especially in these changing and challenging times where more people are experiencing mental health issues or illnesses. HR needs to make sure they are aware of any potential conflicts of interest, the inclusion of a question in the performance review or culture survey about health, safety and wellbeing could assist this.
6. Mergers and Acquisitions
What’s the risk: Mergers and acquisitions may come with all sorts of trouble in terms of people, and this can be promulgated across all business sectors where human capital is everything. I recall a saying, “You are lucky if you only have to buy the business twice.” M&A proceedings can include a host of people-related risks including disengagement, redundancies, and a decrease in morale.
Why should HR care: Many of the risks associated with M&A can come back to haunt HR in both the short and longer-term. Areas involving employment law, governance or industrial relations proceedings fall at the feet of HR. Issues including ensuring new employees are inducted, trained, and engaged must also be taken into consideration. People integration challenges must be tackled head on, or risk paying for the firm twice in redundancy payouts, recruitment drives or even, in extreme cases, employment tribunals which can be costly and troublesome.
HR Action: HR can often find themselves locked out of the M&A process. If there are negotiations going on, build a case for why HR needs to be involved with prospective financial, structural and organisational change stakeholders. Focus on the people strategy for integration, and plan ahead by considering any potential road blocks. Continuously consult with line managers about the changes and keep communication honest, transparent and accessible to all stakeholders.
7. Change and Continuous Improvement
What’s the risk: If your organisation is about to undertake further change, are your risks being assessed and how are you recording and recognising the change as a continuous improvement strategy? By instigating, developing and implementing the changes it is important to identify each element of that change and communicate it. The latter enables employees to participate in the change paradigm as they become part of that change. The lower the level of risk in change, empowers employees to take possession and reduces fear in what will happen as the change rolls out.
Why should HR care: If HR supports the change and leads the communication strategy, they will not only be consistently identified as the engineers of change and capability development, but the messengers of continuous improvement and transformation.
HR Action: HR needs to consult on, support and co-develop the change management communication strategy. HR needs to lead the change, train people in how to manage it, and ensure the changes themselves are communicated across the organisation. This creates ‘buy-in’ as well as ‘what’s in it for me’ factor analysis and develops people in line with continuous improvement strategies and cultural transformation.