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Connecting Human Capital and Risk Management Strategies

Risk management and job evaluation

The nature of work relationships are changing as organizations increasingly rely on sub-contract expertise or outsourcing approaches[1]. Internally, these changes affect core job parameters including decision-making, problem solving and information sharing. Along with other leadership challenges, like managing the corporate citizenship brand, these changes require a deeper risk management focus as the nature of job connectivity to external stakeholders becomes more complex and can result in more immediate consequences of action.

To address these fundamental work relationship changes the prism through which jobs are currently assessed also warrants a deeper review of its relevance. Should job evaluation (JE) systems evolve, like in previous times to reflect the gender neutrality of work, to give more weighted consideration to risk management and brand protection in today’s world of work?

Scope of impact

Connecting Human Capital and Risk Management Strategies

Formal JE systems have broad organizational impact. They are typically implemented in medium to large size organizations, across all sectors, and inform many key organization needs (e.g. recruitment, succession planning). They also impact professional (e.g. skills development, career development) and some personal (e.g. benefits choice) employee choices. Finally, through their weighting scheme, they reinforce what the organization values most across its inventory of jobs. For these reasons, it is an ideal place to start a risk assessment of programs which directly and indirectly shape employee behavior and choice of work relationship actions. In this context, JE systems can be used to connect risk management and talent management directives at the job level.

A starting point

Developing a risk management strategy is a key Board governance activity. Executive Limitations thereafter transfer the various risk directives (i.e. financials, treatment of various stakeholders) to the top role– the Executive Director or Chief Executive Officer. But how effectively are these directives subsequently conveyed to other roles and levels within the organization?

The majority of JE systems take a fragmented approach to conveying the importance of managing organization risks at the job level. Very few JE systems have dedicated factors that focus on risk management as a core job component. A more common approach is to indirectly reference risk management needs through other factor descriptors (e.g. accountability, work environment). Times have changed; fundamental changes in work relationships should signal a need for a fundamental review of what JE systems measure and communicate. Current systems have done a good job at operationalizing constructs like “responsibility” or “accountability”, so how difficult would it be to do the same for “risk management”?

Mapping your JE system to your Executive Limitations framework should highlight areas of job hierarchy alignment with the latter’s governance expectation. This risk focus from the top level down aligns with the “universality” of JE systems. Additionally, this exercise should paint a clearer picture of how jobs in aggregate contribute to managing organization risk. You may find that depending on the nature of products/services your organization provides or on the nature of engagement with external stakeholders – like sub-contractors – it may be time to update your JE system to more effectively measure and communicate the need for a job focus on managing organization risks.

While in maintenance mode

Some deep dive areas as part of your JE maintenance work should consider:

  • Which factor(s) in your JE system directly/indirectly touches on risk management?
  • Are these factor(s) sufficiently robust measures of the various dimensions of organization risk?
  • Does your JE system’s weighting construct sufficiently recognize the importance of risk management efforts in today’s business environment?
  • Can you modify any of the grade definitions or other JE tools language to communicate the importance of risk management at the job level?
  • How would you rate the degree of alignment between your firm’s Risk management strategy and your JE system?

As the saying goes…what get’s measured gets done.

[1] Bourdreau, J. W., Jesthasan, R., Creelman, D. (2015). Lead the Work, Hoboken, NJ: Wiley.

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