Who are the riskiest people in your business?
SHL global report finds one in 8 people pose a high risk for their organisations
SHL global report finds one in 8 people pose a high risk for their organisations
SHL, a leading global talent measurement company, announced on 8 January the findings of its international behavioural risk study identifying the riskiest roles and sectors worldwide. The research goes beyond policies and procedures and analyzes the human element of risk and their behaviours, to help organisations better understand and balance their appetite and resilience to risk.
Based on a sample size of more than 1.3 million people across 200 countries and territories from executives to frontline staff, SHL's research finds that on average one in eight people pose a high level of behavioural risk to their organisation.
"Considering recent events in the financial and media sectors, we are constantly seeing evidence that what people do or fail to do drives organisational risk which can impact share prices, break laws and catalyse industry reform," said Eugene Burke, chief science and analytics officer at SHL. "Many businesses are blind-sided by not assessing behavioural risk and only focusing on policies and procedures. While risk cannot be eliminated, it has an upside and a downside and organisations need to be aware of their own appetite for risk so it can be managed in a constructive way."
SHL's research revealed that one in eight managers and professionals globally are a high risk to their companies. These people are most likely to create risk through lower quality decision- making and poor communication. Interestingly behavioural risk decreases as seniority increases with only one in 15 executives posing a high risk. Lower down in the organisation, team leaders and individual contributors are the riskiest employees posing more than double the risk of executives (one in seven).
"What we're seeing is an execution gap at the middle-manager level. They have a critical role to play as they are the channel between strategy and operational execution. On the one hand, they have to manage compliance and commitment from the frontline staff. On the other, they need to communicate decisions from leaders in a relevant way so the frontline workforce feels motivated and empowered," said Burke.
"Organisations must ask themselves if they have the right talent in place at the middle management level to manage risk appropriately and deliver the board's vision to the frontline."
SHL's research also revealed that one in eight frontline staff pose a high risk to their organisation by demonstrating counter-productive behaviours in the workplace: lower compliance and attention to detail, (which could translate to increased errors and accidents), and lower commitment and teamwork (which could impact customer service as well as incurring higher costs associated with absenteeism and performance management).
While the global average rate for behavioural risk on the production line is similar to managers and professionals (12.5% and 12.2%), the rankings by sector show marked differences. Several sectors buck the trend having a greater risk for employees at the top of their organisations, including oil, gas, travel and leisure.
"There have been significant cases in recent years where frontline staff have been criticised for company crises or accidents," said Burke. "Yet SHL's risk research finds that in certain sectors it is actually senior management who lack crucial decision-making and communication skills and create risk for their organisations. By ignoring whistle-blowers or not taking viewpoints from across the business into account, leaders can be missing vital clues to manage risk which can have devastating consequences as we've seen from recent news developments."
"There are two factors which senior managers could incorporate into their approach to reduce significant behavioural risks – firstly a commitment to enforcing ethical standards and secondly, an effective channel by which employees feel comfortable communicating infractions," said Ronnie Kann, managing director at CEB, SHL's parent company. "Both rely on senior managers to work closely with frontline managers to help develop a culture of risk awareness and encourage ethical behavior."
The riskiest sectors for all job levels are telecoms and consumer goods (heavy goods), while the public sector and retail were ranked the most risk averse. Sectors which follow the global trend of risk decreasing down the organisation include banking, food, beverage and tobacco. It should be noted, however, that organisations' risk profiles vary considerably within an industry as illustrated by the diversity of performance in the banking sector.
"Similar studies have looked into legislative, social, economic, political and financial factors associated with risk, but the missing factor until now has been predicting people's behaviour in the workplace, which drives risk," said Burke. "Recent events, particularly in the banking sector, have focused on the negative consequences of not managing risk effectively however risk has an upside too - it's about striking the right balance between creating risk to seize on new markets and opportunities while being resilient to risk so that organisations can achieve a competitive advantage and avert any crises."
SHL's risk study may be used by business leaders and HR and risk managers to inform talent management programs and become a significant contributor to risk management strategies. It may also be used by middle managers to understand the risk profiles of their direct reports and ensure that people risk is minimised and addressed.
To find out more about SHL's global behavioral risk study and download your free copy of the SHL talent report visit: http://www.ceb.shl.com/us/forms/content/the-shl-talent-report
SHL's definition of behavioral risk
SHL has used eight behavioural risk components that are attributed to resilience and appetite for risk.
Appetite for risk is measured by qualities such as taking initiative, having the confidence to make tough decisions and the perseverance to achieve a goal.
Resilience to risk includes components such as decision quality (are decisions more or less likely to be effective), communication quality (are those decisions more or less likely to be communicated effectively), following through with those decisions and setting the tone for the standard of behaviour a company can expect from employees. At the frontline level, additional components include compliance, quality, commitment and teamwork.
