Seeing HR management through a ‘risk’ lens

Dicing with riskI have a personal interest in workforce risk. Having seen former colleagues experience their global firm (Andersen) collapse in a matter of months, subsequent to the actions and behaviours of management and staff (in failing to properly audit a lucrative client – Enron, and then trying to cover it up by shredding the evidence), I understand all too clearly the fragility of organizations.

What’s also clear is that until recently, dealing with workforce risk has been an exercise in ignorance. US Sarbanes-Oxley legislation for example (enacted post Enron), was just a process mapping exercise – the people management aspect simply looking at financial pieces of the HR jigsaw e.g. examining payroll processes.  Such legislation and regulation has done nothing to quell the almost constant stream of corporate failures we have had since. And more importantly, much of these failures have continued to arise, at least in part, from the actions and behaviour of management and staff – News International (phone hacking), HSBC (money laundering), North Staffs NHS Health Trust (medical negligence), and BP (Gulf of Mexico rig explosion and oil spill) are just some recent examples.

Only now are politicians, law makers and firms themselves starting to address the question of people related risk. The idea of ‘toxic’ or ‘polluted’ organizational cultures and ‘management’ failure is now entering the vocabulary of media, government and regulators; whereas previously a narrative of failed ‘procedures’, ‘controls’ or the actions of ‘rogue’ staff and ‘bad apples’ was routinely communicated as reasons behind failure. Perhaps this is the start of a more open and mature approach to looking at how we run our organizations.

For HR professionals, workforce risk is a lens through which it can, and should, view its role – for example, HR should be assessing and mitigating risk to their organization around HR activities such as recruitment & selection, poor performance management, and HR service delivery. It’s also a way to view the competence and capability of leaders and managers; and to address specific risk issues such as staff turnover, employee disengagement and unethical or inappropriate staff behaviour. With respect to recent corporate scandals, if HR doesn’t address culture problems that may create damage to an organization, then who will?

This way of approaching people management is starting to resonate and can be a route to make it central to organizational strategy and management decision-making. I recently commenced an in-depth review of workforce risk at a large private sector mental health care provider. Rather than fly below the radar of leadership, this exercise was immediately seen to be critical to the organization and it was easy to convene meetings with every board executive as part of the review process. It was also fascinating to discuss what value the organization believes it provides (a core maturity pillar for IHRM, and discussed in terms of caring for both staff and patients) and how this represents a huge challenge in the face of commercial necessities, quality of care and employee and patient safety. Fortunately, this firm has a mature attitude – while they recognize that they are on the start of a journey and have many improvements to make, it is evident that HR management will be central to how they design and implement strategic change.

Stuart Woollard – IHRM Council

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