Talent is a double edged sword. Just as people are a company’s greatest asset, employees and people strategy can prove to be an organisation’s downfall. With this in mind, HR is on the front line of managing reputational – and wider organisational – risk. But how can this best be managed?
According to a study by the World Economic Forum, on average more than 25 percent of a company’s market value is directly attributable to its reputation. This probably explains why a recent survey from Deloitte found that 87 per cent of executives rate reputational risk as more important than other strategic risks. A fall in confidence typically results in lost revenue, increased operating capital or regulatory costs or destruction of shareholder value – certainly food for thought.
The recent high-profile case of the Byron Hamburgers’ immigration swoop – and subsequent admissions of customers boycotting the brand for the supposedly sneaky and unethical nature of the sting- is a prime example of the wider reverberations that HR malpractice can create. Against this backdrop, it is perhaps apt that the theme of APSCo’s 2016/17 Yearbook is managing risk in the recruitment supply chain. The volume is packed with guidance from various experts on how HR can effectively regulate risk across every facet of the function.
As buyers of recruitment solutions, it is essential that HR has an in-depth understanding of not only the different supply models, but also the risk profile of those models and how to choose the right recruitment partners in order to mitigate those risks.
In the guide, Phillippa Canavan, Senior Associate, Labour & Employment and Tanya Theobald, Director, Commercial & IP from international commercial law firm, Squire Patton Boggs, offer practical tips on choosing recruitment partners to minimise breaches in compliance.
It may sound obvious, but Canavan and Theobald advise that HR should ensure that there are clear and robust contractual terms in the Service Level Agreement (SLA). These include making sure the agency has clear obligations to verify the status and requirements of any agency worker; seeking references, DBS checks, any relevant and necessary qualifications as well as the right to work in the UK or relevant territory. They also advise that end users have the right to audit a recruitment agency’s processes to ensure that it is fulfilling the requirements of the SLA.
In a similar vein, Trudy Salandiak from the Chartered Institute of Procurement & Supply (CIPS), offers advice around the UK Modern Slavery Act, which was introduced in 2015. Slavery, as defined by the act, includes all forms of ‘unfair’ labour and the rules apply to businesses with a turnover of £36 million or more who are supplying goods and services in the UK. Salandiak reports that, despite the well-publicised development in legislation, research by CIPS this year found that one in five businesses which are bound by the new rules are still unaware of what they need to do and are not compliant. Only 41 per cent of those surveyed were taking action to ensure that UK workers in their supply chains were paid at least the minimum wage and that robust immigration checks were in place. Salandiak advises that businesses implement three ‘Ps’ to manage compliance; policies to prevent and detect slavery, processes to identify vulnerabilities in supply chains, and planning for corrective actions.
It is worth noting that agencies which are members of reputable bodies, such as APSCo, are more likely to be well informed about regulation and will be generally be expected to comply with a minimum set of standards to retain membership.
Finally, while managing risk from a HR perspective is often perceived to be reactive or preventative in nature, long-term business success and profitability relies on a proactive approach to risk management. Writing in the APSCo Yearbook, Petra Wilton, director of strategy at the Chartered management Institute (CMI) points out that poor management is costing the UK an estimated £19 billion in lost productivity and advises that businesses invest in upskilling to help reduce this risk. Wilton suggests that decision makers consider leadership and management apprenticeships in particular as a means to pipeline future talent.
Organisations face a myriad of challenges on an ongoing basis, whether they be strategic, external, financial or legal. While many of these risks are well beyond the remit of HR, by managing SWP in an ethical, compliant and logical fashion, professionals can help safeguard their businesses against the threats of non-compliance and sub-standard competency – and any wider ramifications that these could potentially bring.