People Risk is Risk to your Business - Cornerstone Connections ...

Traditionally business risk as always been calculated in terms of finances but this is no longer true. People risk constitutes a significant part of a company?s overall risk portfolio. Think about reputational risk?(Woolworths vs. Frankie?s over the alleged imitation of a soft drink product), operational risk?(the debacle over the distribution of text books in Limpopo) or business continuity risks?(the strong link between the lack of management skills and the high failure rate of SME businesses in SA).

In the past HR has been focussed on the compliance side of risk, ensuring that the company ?stays out of trouble? by managing the administrative, legal and regulatory requirements under its domain. But as the previous examples illustrates, if you dig a little deeper you will find that people related risk is at the core of many a collapsed strategy. There is a need to develop a plan to mitigate people related risk as part of each strategy that your business implements.

If Woolworths would have had managers who were a little more in line with the company values, a little less focussed on profits and a little more appreciative of the reputational risk, their decisions wouldn?t have come across so heavy handed and arrogant towards the ?little guy?.

There are a few reasons why people risk has increased over time ?

People risks are headline news ? when poor decisions are made by inexperienced people, it becomes headline news. And headline news means the TV, the newspapers, the blogs, the social media sites, the radio stations ... need I go on? And just because you are a smaller enterprise doesn?t necessarily mean you are exempt from this. Hello Peter and Facebook posts can also ruin your reputation.

Action:

• Recruit people with the rights skills and don?t promote them till they are ready
• Recruit people whose values fit in with the organisation
• Provide good training

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Good skills are hard to find ? not only is it hard to find certain skills in the marketplace, there is also the issue of not losing company specific knowledge. Have you got a plan for your sales exec who holds all the key account relationships to pass on some of his knowledge?

Action:

• Create an attractive employment proposition and a good working environment to improve recruitment prospects and retention
• Identify business critical skills
• Recruit people with the right skills
• Put in place a succession plan and mentoring plan to pass on skills

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Unusual events are becoming more common place and have further reach ? in a hyper connected world, small trigger events that in the past may have been more locally isolated, now have potential for a much wider impact. The tsunami in Japan had an impact on motor spares in South Africa and Eskom?s power outages appeared out of nowhere leaving businesses stranded without power. These are not isolated incidences and only people can make the plan to carry the business through these changes.

Then of course, there is also the increase in the regulatory compliance expected of business.

Action:

• Make risk management part of the business strategy
• Consider people risk one of the important components to the risk management plan
• Develop leadership that is able to manage business strategy together with change

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The increase in people related risk may be a challenge, but it is also an exciting opportunity to develop and engage people as well as for HR to add value to business strategies.

Source: http://www.cornerstoneconnections.co.za/news/news-a-blog/item/102-people-risk-is-risk-to-your-business.html

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