Written by: Emily Young // Nov 26, 2019
Last updated: Aug 21, 2020
All organizations, no matter how different they seem, have one thing in common: risk. And if you’re a human resources professional, risk management is part of your job. Whether you work at Dunder Mifflin Paper Co. or Jurassic Park, you’ve got to tackle potential pitfalls – before Michael Scott opens his mouth or the T. rex eats the customers. Where do you start? Keep reading to learn how to evaluate and diminish HR risks for your organization.
Human Resources Risk Management: A Definition
Think of risk management as defensive driving, suggests Elizabeth Hennig, the principal strategist for Uptrend Custom Solutions and an instructor for USF’s corporate training and professional development program.
Just like on the road, you need to anticipate what could happen next, so when a risk careens your way, you can steer safely clear.
Here’s the official definition from SHRM: Risk management is “the identification, assessment, and prioritization of risks, followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of unfortunate events or to maximize the realization of opportunities.”
That’s a mouthful, so Hennig simplifies it for us: “We're really just looking to make sure we have a sound way to identify the biggest risks an organization may face.” These risks will vary depending on your environment. If you’re working for a zoo, as Hennig did for 19 years, you have to consider the safety risks of employees and animals. If you’re working for Dunder Mifflin, you have to worry about Michael Scott.
How HR Professionals Evaluate and Diminish Risks
Your goal is to be proactive, not reactive, “in identifying risks and making sure you've got good systems in place to manage ... those risks,” says Hennig. These tips can help you do that.
Engage in a Visualization Exercise
Visualize an average day at your organization and write down all potential risks. Had Jurassic Park’s HR personnel taken this step, they might have anticipated what would happen if a tropical storm hit their electrical system. (Zap! Loose dinos.) Or maybe they would have anticipated the potential damage a disgruntled employee with access to security systems could cause. In any case, a visualization exercise would have resulted in far fewer T. rex chases.
Use Your Resources
Hennig recommends you make sure you understand the laws and regulations governing your organization. That includes the Fair Labor Standards Act (FLSA), the Occupational Safety and Health (OSH) Act, the Americans with Disabilities Act (ADA), the Genetic Information Nondiscrimination Act (GINA), and the Drug-free Workplace Act. You should also understand the policies of regulatory agencies, such as the Equal Employment Opportunity Commission (E.E.O.C.). Other useful resources include industry publications, your organization’s accrediting or governing association, and SHRM, the Society for Human Resource Management.
If you’re confronting a particular challenge, reach out to a peer organization for advice. Hennig gives the example of natural disasters: A Florida zoo facing a hurricane can ask a California zoo how it prepares for damage from wildfires. These conversations can lead to new and enlightening perspectives.
(Had Jurassic Park reached out to Westworld, maybe it would’ve settled for a less risky theme park.)
Create a Risk Control Matrix
A risk control matrix catalogues “risks that could impact the business from a regulatory or guideline standpoint,” Hennig says, adding that “items listed here usually have a deadline ... set by an agency or some other entity.”
In a spreadsheet, record the risk; the appropriate agency or governing authority; the associated regulation or policy; the person responsible for complying with the regulation or policy; and any deadlines. Ask yourself how likely it is that the risk will impact your organization.
You can use this strategy on projects at home — like making sure your AC unit is in good shape before summer — or to assess companywide risks. “A really strong risk control matrix would be something that captures what's going on throughout the entire organization,” says Hennig.
Let’s look at an example from our favorite theme park:
- The risk (people could be eaten if dinosaur fences lose electricity during a power outage)
- The likelihood of the risk (very likely; you’re in a Spielberg movie)
- The regulations governing the risk (OSHA might have something to say about your theme park’s safety protocols)
- What you need to do to minimize the risk (uh, don’t rely solely on electric fences for security?)
- Who is responsible for it (the park manager)
- Any deadlines (fix before the opening of the theme park and do at least an annual check that systems are working)
Make a Risk Map
You’ve got a never-ending list of projects — but with limited resources, how do you know which to prioritize? Risk mapping helps you “zero in on what you should turn to first,” Hennig explains.
If you’re part of Jurassic Park’s HR team, you know that you must write a safety protocol for dinosaur behavior training. But you also need to create an improved employee screening process, now that you’ve realized you’re “hiring employees with nefarious intentions.” To decide which project takes priority, Hennig suggests you ask:
- How frequently are the dinosaurs trained? How bad would it be if safety protocols were not in place or followed?
- How often do we bring on new employees? How bad would it be if we don’t take our time to identify (as best we can) the employee’s intention for working here?
You can visualize this with a graph:
- Draw an X-Y axis.
- Plot the frequency of the risk on the X axis.
- Plot the severity of the consequences on the Y axis.
- Identify the project that is highest and to the farthest right.
(Severity of consequences: a T. rex chomping your car like it’s a Hot Wheels toy.)
Unique Human Resources Challenges for 2019 and 2020
Though it’s true that scientists have extracted dino DNA, we won’t be facing the challenges of a real Jurassic Park this year. (OK, probably never.) There are, however, some unique risks for 2019 and 2020. Here are four challenges that every HR professional should know about.
The War for Talent
Low unemployment rates have led to a smaller pool of candidates, and employees are also more likely to job hop, explains Hennig. That means employers are locked in a war to recruit and retain talent.
This problem isn’t limited to the U.S. As of 2030, the world will experience a workforce crisis, according to human resources expert Rainer Strack. So how do you attract, and keep, a talented team? Strack’s survey of more than 200,000 job seekers reveals their top four priorities:
4. Good relationship with superior
3. Good work-life balance
2. Good relationships with colleagues
1. Appreciation for their work
In other words, you need to create a positive workplace culture if you want to win the war for talent. Linda Bailey, the owner of Bailey Consulting Group and an instructor in USF’s human resources certificate and certification programs, lists the three things she believes are necessary for a positive culture:
- Hiring emotionally-intelligent leadership
- Making the work as meaningful as possible for employees
- Providing timely, specific appreciation
Since both Strack and Bailey mention “appreciation” as key to employee motivation, let’s dive into this a bit deeper.
- If you’re recognizing an employee’s work, make sure they know what you’re acknowledging, and do it in a way that fits their personality. “People like to be appreciated, but in different ways,” Bailey says. Depending on what you’re recognizing, and whether your employee prefers public or private praise, a gesture of appreciation could be as simple as a thank-you card or as formal as an award.
- Along with recognizing accomplishments, show ongoing appreciation for your employees as individuals. This Harvard Business Review article suggests you actively listen to your team, tell employees what you value about them, and check in regularly to see how they’re doing.
The Misuse of Employee Background Checks
Recently, high-profile companies such as Target and Walmart have come under fire for their use of background checks. In 2018, Target revised its hiring policies after “complaints that the retailer discriminates against black and Hispanic applicants with criminal records,” according to this New York Times article, which says that similar complaints have been filed against Macy’s Inc. and Amazon. This past April, Walmart allegedly “disproportionately rescinded job offers to African American employees based on criminal history,” according to an NPR article.
If you choose to conduct a background check on candidates, follow the EEOC’s guidelines. And before you use someone’s criminal history to make a hiring decision, give them a chance to share their side of the story. There are “a lot of mistakes people made years ago that they shouldn't still be paying for,” says Bailey.
The Rights of Employees Who Are Pregnant
“The number of pregnancy discrimination claims filed annually with the Equal Employment Opportunity Commission has been steadily rising for two decades and is hovering near an all-time high,” according to a 2018 New York Times article.
As Bailey puts it, managers need to understand that “it's not your choice whether a person who is pregnant works. It’s their choice.” The best way to address this? Train leadership on how to comply with regulations that protect pregnant employees.
Beyond this, it’s essential to create “a culture of openness, of caring,” says Hennig. “It’s in our best interest to be known as an employer who is thoughtful.”
With the Me Too movement, sexual harassment continues to be at the forefront of HR conversations. As an HR professional, it’s essential to be “very proactive” in addressing this risk, says Bailey.
A New York Times article lists the most effective ways to prevent sexual harassment.
- Provide bystander training, which empowers onlookers to act
- Provide civility training, which cultivates a culture of respect.
- Tailor training to your workplace.
- Promote women to leadership roles.
- Encourage employees to report sexual harassment.
How a Human Resources Professional Builds Trust
One of the best ways you can practice risk management? Build a strong rapport with your team. You want them to know how to report any issues and to feel comfortable coming to you with concerns. That means stepping out of your office and spending time with team members. “I'm going to learn a lot more working side by side with somebody … than I ever am sitting at my desk,” says Bailey.
If you’d like to advance your HR skills, consider enrolling in USF’s Human Resources Management courses. You can take individual courses on topics such as risk management, complete a comprehensive program, or prepare for your SHRM-CP or SHRM-SCP exam. Questions? Contact us through our website or give us a call at 813-974-0950.