We are all drinking from a firehose of news and information — all day, every day. With this deluge of information, it can be difficult to determine what’s truly important to know. But being reactive is not acceptable. You need to know what’s coming, what affects you, and how it affects you.
Take, for example, legislative changes — 80 percent don’t require your attention, but the 20 percent you need to act on can easily get lost in the noise. It’s the 20 percent that expose your business to risk, but how do you know which 80 percent of information you can safely ignore?
Paying attention to the right information at the right time and setting the rest aside – knowing what you need to know – is essential to anticipating and understanding risk.
Where People Risk Management Comes In
People risk management starts with anticipating and understanding what presents risks to your business. It’s the idea you can look at something, understand it, digest it, and know if and how you need to act on this information. It’s a complicated sequence that no one has time to do, which is why you need a trusted and knowledgeable partner who:
- Knows what’s in the pipeline, such as newly-introduced bills that have the potential to become law.
- Keeps an eye on at what’s actually happening that may affect employers, such as when bills pass, agencies issue directives, or courts rule on cases.
- Determines what presents any type of risk to employers – such as litigation, noncompliance, or reduced employee engagement – and what doesn’t require action.
- Communicates promptly, consistently, and effectively, so you can use this knowledge to update your policies, stay on top of compliance requirements, and incorporate best practices in a way that reduces risk for your unique business.
Understanding People Risks: An Example
Often, when we think about risks to employers, we focus on insurable risks because they are well understood and easily quantifiable. It’s important to address these risks with solid prevention plans and insurance products, but it’s the uninsurable categories of risks, particularly people risks, that can catch us off guard and unprepared.
People risks can result not just in financial loss, but damage to employee engagement and company culture. They tend to be more subject to interpretation and can be very abstract.
Take, for example, the consequences of hiring the wrong employee or losing a valued employee. When this happens, you bear the cost of lost productivity and the time and money invested in recruiting, hiring, and onboarding. You also risk litigation if policies are not adequately documented, communicated, and followed should the employee claim discrimination, harassment, or disability accommodation is to blame for their separation from the company.
Hiring the wrong employee or losing a valued employee also carries the risk of negatively affecting employee engagement, which is a well-documented predictor of business outcomes. If it happens regularly, or there is even one instance handled poorly, your employment brand can be tarnished. For example, it could result in bad reviews on recruiting sites, chipping away at your recognition as an employer of choice.
Be in the Know
Whether it’s knowing how legislative changes affect your business or what risks are inherent in day-to-day employee management issues, people risk management starts with a solid knowledge base that evolves continuously to keep up with the latest employment trends, news, regulation, and information.
by Larry Dunivan, CEO of ThinkHR
Originally posted on ThinkHR.com