“People are at the heart of the strategic change agenda, it makes sense to put them at the heart of the risk management agenda too” (Innovation in Human Capital Management) Rick Freeman).

As a senior consultant within Employee Transformation I work in the “change business”. We are all aware that the need to rapidly respond to changes in the external environment recently driven by the economic downturn but also the need to focus in preparing for the upturn is an ever present characteristic of today’s business environment. In order to adapt organisations are increasing the volume and scale of these transformational projects or initiatives. However in the race to implement and embed changes quicker, cheaper and more effectively than competitors are organisations  paying enough attention to the impact on their employees, individually and as a collective, and the resulting repercussions back to the organisation?

People risk for Capgemini (documented in our published point of view here) is “the risk to the firm caused by its people and the risk to the firm caused by what the firm does to its people”. This definition can best be considered as a fluid Venn diagram with; 1) the risk the individual poses to the organisation, 2) the influence the organisation has on the employee and 3) circumstantial factors at a given point in time. Given this two-part definition and the three main spheres of influence, is people risk something firms will increasingly need to manage as they march forward with their transformational and increasingly digital agenda’s?

As organisations embark on transformations – digital or traditional the venn diagram flexes. Are we therefore increasing, or at least temporarily intensifying the behaviours and expectations that an organisation places on its employees as well as increasing the circumstantial factors and thus, until now at least, overlooking the increased likelihood of people risks?

This is not to say that organisations do not understand their people or risk management but the definition, consideration and ownership of people risk between HR and risk functions should be (re-)considered, accelerated or intensified during such times of transformation to match the increased influence of the organisation on its employees, the changes in the circumstantial environment and the reactions of the employees whether intentional or not. Granted transformations follow a defined vision and have an associated end-point (time or results driven) but as many organisations or functions deploy seemingly back to back projects or large transformations are organisations stretching their side of the bargain and increasing the likelihood of people risk?

People risk if not identified, measured, monitored and mitigated could lead to several adverse outcomes for the employee but also the organisation as a whole;

  • Dependant on the how any individual employee is “programmed” to react; there could be an increase in undesirable behaviours and game playing as employee’s focus on avoiding the next redundancy round? What then of an organisation’s customer service focus, its market share-price or the likelihood of a high profile media case damaging the organisation’s reputation?
  • Could inadequate change management and communications during the transformation programme lead to a loss of staff commitment and failure of employees to execute their responsibilities correctly? What then for productivity and efficiency, the worth of organisational values or loss of key talent to competitors?

Risk management is crucial for an organisation to sustain success so the organisation needs to understand its employees and the impact it has on them on a daily basis. Especially where the requirements of a typical day for employees are frequently changing, where change is inevitable (see Sam Carr’s blog “changing to survive”), people risk needs to be quickly understand and its importance recognised. Once HR and risk functions become close collaborators, organisations can implement change with increased confidence, since it will have a comprehensive picture of the possible people implications. Want to know more please read “People risk how to get started”