People Risk

4 Ways To Manage People Risk

In my blog post titled,”Not Managing People Effectively is Risky Business,” I touched on why good leaders make People a priority in their organization.  In this post, I’d like to elaborate further on the concept of People Risk and how to manage it effectively.

It’s easy to read these things and say, “Yup!  We do that,” and simply move on.  What’s harder is to really ask yourself how well you are doing these things, how transparent is your approach, how involved are your employees in the process, and whether you are really taking this as seriously as you could to get the best return on your investment.

  1. Examine Your Culture – How Conducive Is Yours?

Your culture is your lifeblood.  It’s on display every minute of every day, in every new hire, in each executive, in client interactions and marketing materials, in your social media strategy and even in the bathroom!  It can keep your best employee engaged and interested, and it can also cause people to head for the door. It’s dynamic, and needs nurturing to maintain its strength.  It requires consistent and transparent processes. 

A strong culture can improve quality, reduce fraud, drive sales, increase employee retention and strengthen your reputation in the market.  Conversely, a weak culture will do the opposite.

Ask yourself these questions ……

  • What’s your culture like?
  • Do you have a code of ethics, employee handbook and whistle blower hotline?
  • Can your employees tell others, without looking it up, the mission of your company?
  • Are your employee review processes clear and fair?  
  • Do you understand the level of morale at all levels and locations? 
  • Are people proud to be associated with your company?
  • How open are the leaders in your organization to new ideas, employee concerns, and changing your strategy as the market changes?

Now the big questions –

  • Would your employees agree with your answers? 
  • How do you know for sure?

2.   Realize That The  Responsibility Belongs To Management – Not HR

People Risk doesn’t get managed effectively because it’s delegated to Human Resources (HR) with the assumption that HR professionals have the knowledge, experience and/or ability to lead in this complex, yet critical area. 

Delegating this critical leadership component is a very risky endeavor and it doesn’t work.  People Risk needs to be managed by the entire leadership team, in conjunction with HR, the entire workforce, and outside help as needed.  To be effective, it must be understood and managed conscientiously, consistently and with great enthusiasm.

I’ve been inside all kinds of organizations, across a wide variety of industries.  It’s clear after a few days inside a company how well leadership manages its People Risks.  From the moment I walk in the door, certain things jump out straight away:

  • Are people happy?
  • Is the environment positive and welcoming? 
  • Do the employees I’m meeting understand why I’m there? 
  • Do they understand the company’s mission?
  • Do they respect their bosses, or fear them?
  • Do they see a regular investment in their professional development?
  • Do the leaders seem connected to the staff, or are they unapproachable?

The answers to these questions are signs of how well the People Strategy is working and how well People Risk is being managed. 

Leadership teams don’t sit around figuring out how to distance themselves from their people and maintain low morale.  I think they genuinely care about their people, but often don’t understand how to show it.

Most leaders get to where they are because they’re really good at certain things.  Many are not good at the art of recruiting the best people and the people side of their management responsibilities. That’s okay, as long as you recognize that it’s important, and that there are people like me who can help.

3.      Make People Your Priority 

Making positive change around People Risk requires you to learn new things and to change – so you avoid it.  In other cases you don’t see it, because it’s not really in your wheelhouse.  You go on trusting your HR representatives to handle all things People, and live with the risk that it’s not being managed very well, allowing expensive and embarrassing mistakes to be made and repeated constantly. 

The most effective and successful leaders:

  • See People as a critical, and very visible, asset to the company
  • Recognize that every new hire, in every position, is important both professionally and as a human being
  • Treat individuals with mutual respect and promote an environment of openness and fairness
  • Celebrate the inherent diversity of people, and look for ways to use that diversity to their advantage
  • Include the People component prominently in every crucial business decision, from acquisitions, to process and system changes, to new services and products, etc. 

They operate in a way that puts People on every key leadership agenda, and factor People with the same (or higher) level of importance as Quality, Business Development, Sustainability, Customer Service and Profit.  Not to do this ignores the clear involvement of People in each of these other key strategic elements.

Don’t run away from the need and the challenge.  Embrace it, work on it, and watch things change for the better around you.  You’ll be so happy that you did.

4.      Get The Idea That People Are Uncontrollable Out Of Your Head

It’s amazing how many times a leader will roll their eyes when I ask if their people are happy, or when I ask if they truly believe they are hiring the right people for the company.  They roll their eyes in a way not to suggest that I’ve asked a stupid question, but rather in a way that clearly shows that they know the answer – and the answer is NO. 

There is a level of powerlessness over the People aspects of the business.  They say their employees are entitled and complain about everything.  Their hiring managers don’t do their jobs correctly when choosing and developing talent.  They point to a few of the things they do to create a positive environment but clearly their people don’t agree.  They are reluctant to hear or accept that perhaps THEY ARE PART OF THE PROBLEM. 

Not every aspect of People Risk can be controlled all of the time. Companies like Google, Apple, Starbucks and Zappo’s have a unique way of connecting with their people.  They created their companies with People at the center, and they involve and empower people in creative ways.  Not surprisingly, many of their leaders are younger and more able to see the changing landscape around employee satisfaction and productivity.

So open your mind and take an honest step backward.  People Risk is NOT uncontrollable.  In fact, managing it in new ways can be one of the most cost-effective ways to improve your business and provide a consistent return on investment.

Since this is such a huge and important topic, in the future I’ll dive in further with Part II of this post where I’ll discuss some additional risk areas and spend some time identifying some of the symptoms that would indicate that your People Risk Management thinking, processes and procedures might be improved.

If you’re finding that your organization is struggling in this area, I’d be happy to discuss this with you or please leave me a comment below. 

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 Matt Miades is a Career and Executive Coach, and founder of the The Edge, a professional training and development company in Philadelphia that specializes in empowering people to reach their full potential at work. Matt was formerly a partner at PricewaterhouseCoopers (PwC) and made the radical decision to leave PwC at the height of his career to follow his passion for Talent Maximization. He ran a practice of over 100 individuals  for 12 years.  His clients  included Campbell’s Soup, Tasty Baking, Heinz, the University of Pennsylvania, SunGard, IBC, Towers Watson, GlaxoSmithKline and many others. Matt has over 23 years of leadership, operations, coaching, training and recruiting experience, and has spoken to a wide array of audiences on the subject of soft skills.



August 4, 2014 6:44 pm - by Matt Miades

Tags: corporate culture, executive coaching, human resources, leadership, management strategies, managing people, people risk, People Strategy, risk, risk management, soft skills,

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