Change is a constant factor in the modern business world, and with it comes the potential for risks. In an organisation, risk management is no longer the preserve of risk managers and is increasingly becoming a part of HR’s role. Human resources (HR) professionals and offices must become aware of the risks, as this will help them to proactively prepare for and avoid them.
Employees are among the most critical sources of risk in a company, as they are highly dynamic and not as easily controlled as machines or automated processes. Technology can be programmed to work in a certain way by knowledgeable operators, who are expected to implement corrective measures once issues appear. Human beings are vastly different; their ability to adapt to situations or think independently makes them valuable.
As such, managers and administrators in the workplace have the task of maintaining harmony and ensuring all aspects coordinate effectively. However, where diverse workforces are a factor, maintaining this harmony can be a challenge, if not a source of numerous risks.
As Thomas Noel Collister Jackson – a UK solicitor who is a member of Smart Law Solicitors LLP, a UK law firm – knows, HR has a significant part to play in managing these diverse work environments. As a contributor to Cases on Sustainable Human Resources Management in the Middle East and Asia, Mr Jackson highlights the case of an international bank’s ineffective HR compliance process in an emerging market that led to negative publicity and financial losses.
This is just one of many risks that HR can face in an organisation. Without effective mitigation strategies, these risks can cause damage to both people and organisations. Other forms of HR risks include:
Skills Shortage
The scarcity of qualified talent is a constraint for many organisations, especially multinational companies looking to expand into new and emerging markets. While the growth of a knowledge-based society is seen as a plus, it has also led to the realisation that human resources are just as valuable as financial resources in establishing a competitive advantage. The pressure has been directed at the HR office to find the right people to place in the right roles at the right cost. These workers must then be adequately trained and integrated into the workplace to become productive members.
Succession Planning
HR plays a crucial role in developing leadership within an organisation, and it shouldn’t be left too late to get involved in senior-role succession planning. However, for many organisations, the grind of daily operations pushes the need for succession planning down the priority list. Even at established multinationals succession planning can be difficult, as some either don’t put enough thought into it or appoint the wrong person.
Ethics and Employee Behaviour
Frequent are the cases where companies hit the headlines for the wrong reasons, be it impropriety or downright unethical behaviour by staff. Ethical breaches can inflict serious damage to a brand and can be the hardest for an organisation to recover from. HR’s role in encouraging ethical behaviour includes writing and communicating a code of conduct and establishing an ethics committee to deal with any incidents.
Compliance and Regulation
HR is responsible for making sure employees are aware of the potential risks of not complying with internal and external policies and procedures. Non-compliance can be costly, so HR can mitigate any potential infractions by ensuring training programmes dedicate enough attention to compliance issues. Additionally, HR should make it easier for employees to raise potential conflicts of interest or get legal help where necessary.
Insurance
HR is responsible for putting together benefits packages, which include insurance benefits. Having accurate and updated employee data is necessary, as inaccuracies put the company at risk.