It’s ironic that it has taken an ongoing global financial crisis (GFC) for the largely empty rhetoric behind ‘People are our greatest asset’ to be finally fleshed out with an admission that ‘People are also our greatest risk’.
“Fred the Shred”. Bernard Madoff. Kweku Adoboli. Deepwater Horizon. Enron. AOL/Time Warner. Lehman Brothers. Bain Capital. Ponzi schemes. Credit swaps. These individuals, brands and mathematical chicanery have become part of our language, reference points for everything wrong with greed-is-good, ethics-lite capitalism.
In fact, capitalism itself is now portrayed as a risk. UK Deputy Prime Minister Nick Clegg’s latest challenge to make the business world John Lewis is just one more sign that, as JC Spender calls it, we need to ‘humanise the firm’.
Of course, this call to humanise the firm, to make it more diversely populated, ethically run and socially ended, smacks of irony too. In the last ‘decade from hell’ as Time calls it, the only lone voice repeatedly calling for business to take all this ‘soft people stuff’ seriously is now the one whose expertise is being called upon to save the day. It’s a good job that in the wilderness top-table-lite HR was busy dealing with more than just payroll.
In fact, for the past decade, HR have been very busy:
- Taking on board the power of analytics and quantitative analysis
- Smartening up their approach to talent management and succession planning
- Putting a strategic competitive value on workplace culture
- Instilling meaning and big picture engagement into an increasingly diverse Gen XYZ mixed workforce
- Shifting wellbeing strategies out of the doctor’s office and into the casino
- Flattening hierarchies, opening doors, connecting networks and empowering leaders to cope with disruption and change as the norm
Busy creating a forward-looking and data-rich people picture of an organisation not lost on the next generation of brands – Google, Tesco, IBM, Starbucks – who not only want to create the best workplaces to think in, but invest in too. And post GFC, the appetite for the ‘S’ in ESG integrated reporting is growing.
So what do we mean by Human Capital Risk, whose new insights are furnishing businesses – and increasingly investors – with so much awareness about its ability to compete?
Human Capital Risk (HCR) looks at two interlinked dimensions:
- People Risks – Examining behavioural risks like fraud, conflict, and stress In individual employees and executives
- Organisational Risks – Examining the sophistication of attempts to identify, measure, and manage those behaviours using the latest best practices
Offering a vital and new approach to risk, this helps bring together HR and Risk Professionals to get a total risk picture for the business, one that can be closely monitored by the board in the form of HR Governance.
Stuart Shaw is Head of Research at UK-based HCM consultancy, Human Potential Accounting, and Chief Evangelist for HCM library, HubCap.
