Activity

MANAGING EMPLOYEE RISK

Introduction

Critical to the success of every organisation is the human capital available for deployment in the value creation process. No matter how grand and noble the vision and mission of the organisation, it will not come into fruition if the employees do not believe in them or are ill equipped for the discharge of their mandate. The employee therefore becomes the greatest risk factor in the attainment of the organisational goals.

The purpose of this write up is to explain employee risk, underscore its importance and suggest ways in managing it. It concludes by emphasizing the role of employees as primary risk managers in whatever endeavor they may be engaged in.

Employee Risk

Employee risk or what is referred to often as people risk is defined as the behavior (act or omission), whether inadvertent, negligent, or malicious, that is detrimental to cause of the an organisation. This includes risks from contractors or third party or agency staff who have access to premises and assets of the organisation.

It is undisputed that employees continue to be a key asset in all organisations. However, in today’s digital age where it is possible to transfer huge amounts of data or money with just a click of a button, employees represent one of the greatest sources of risk. Having appropriate controls to regulate human behavior is a tall order seldom achieved by many organisations. This is compounded by legal and regulatory challenges, privacy concerns and the very culture prevalent at some organisations.

We continue to witness high-profile, reputation damaging cases of adverse, malicious and counter-productive behavior in the workplace. The damage caused by leaked documents from the law firm Fonseca popularly referred to as the Panama papers to the company is beyond repair. Even though interest in such information often comes from constituents outside the company, the leak of such document cannot happen without employee intervention or complicity.

Employee risk is created when employee behaviour from all levels including senior management staff does not support organisational values and its desire culture. This weaken staff morale, motivation and trust among employees and expose the organisation to other risks beyond the radar of its risk management framework. More often than not employees betray the trust placed in them resulting in catastrophic consequences.

In the face of increasing technological complexity and frenzy competition, coupled with increasing cyber-attacks, effective management of employee risk can reduce all other risk across the organisation and strengthen its competitive position.

Managing Employee Risk

Managing employee risk is a key challenge in all organisations regardless of size or sector. Achieving success is a tough test because it requires a delicate balance between treating all employees fairly, equitably and justly; and ensuring compliance with quality standards and information protection protocols.

First and foremost organisations need to clearly define their objectives and communicate their values to all employees in innovative ways that will guarantee appreciation and understanding. Every employee must be able to articulate the vision and mission of the organisation, and their role in fulfilling these. They must see their contribution not in isolation but as strategic part of a functioning value creation machinery.

Treating all employees fairly, equitably and justly is critical in effective employee risk management. Employees are a complex organisational resource whose management requires superior skills over and above what is needed to manage plants and machinery. Disgruntled, demotivated and bitter employees are so dangerous to the successful operation of the organisation. They can sabotage the company through deliberate malicious activity or simply looking on unconcerned.

Fair and ethical treatment of all staff means equitable standards are applied to all. Arbitrary and inconsistent tactics such as inappropriate and inequitable pay structures are not applied in employee management. Rather holistic people management is implemented across the levels of the organisation. This is achieved through operating within boundaries and be transparent. Transparent policies and processes will result in trust and buy-in from employees.

Also ensuring compliance with quality standards and information protection protocols will greatly support efforts at managing employee risk. However, a mere checklist approach will not guarantee success rather an Enterprise Risk Management culture that sees these as an essential intrinsic part of the operations of the organisation. With the right culture employees will be committed to safeguarding both tangible and intangible assets of the organisation.

Employees as risk managers

Effective employee risk management is only achievable when employees are committed to protecting the value creation purpose of the organisation. Risk management must not be the reserve of chosen few but all employees must be active players in the risk management agenda. There must be a risk based approach to the delivery of every ones work. Everyone must know the risk inherent in their activities and be the first line of defense protecting the organisation.

Over concentration on the bottom line must give way to a holistic understanding of the impact of ones activity on the overall purpose over the long haul. We must never forget myopic, self-centered and selfish ambitions led to the Global Financial Crisis of 2008 of which the world is still struggling to recover.

Risk management must be built into the very fabric of the organisation where every action is evaluated through the lens of a suitable risk management framework before and during its implementation. With the right culture employees become a check on themselves effectively limiting the exposures associated with their behavior.

Conclusion

As technologies evolve almost on a daily basis, managing employee risk needs to be an ongoing consideration. This is because new technologies means new vulnerabilities and risks that hitherto where not in existence. However, with appropriate strategies in employee risk management the result will be the consistent delivery of value and greater satisfaction from all employees.