The Value of Human Resource Risk Management

HR departments have a lot on their plates, from concentrating on employee retention to attracting top talent. However, HR risk management can be the most difficult of all of their priorities.

Companies were forced to change their HR risk management techniques after COVID-19 struck and workers began working remotely. As we move closer to 2022, HR departments will need to be ready to address any fresh difficulties that present themselves.

So why is risk management crucial to HR, and how can your future plan be made more effective?

Let's look at it.

What exactly is HR risk management?

The concept of compliance is broad in the field of human resources. Maintaining compliance entails correctly categorizing personnel, paying them on time, and giving them the appropriate in-house training. But managing and minimizing concerns that affect personnel is a crucial component of remaining compliant. HR risk management can help with that.

The goal of HR risk management is to foresee possible hazards involving human resources and employees. HR risk management enables HR teams to proactively consider prospective events and their results, whether they relate to employee behavior or inefficient management techniques. By doing this, they are able to steer clear of some problems in the future and deal with any concerns that may arise. The use of HR compliance software, training managers on how to handle particular scenarios, and developing and disseminating clear business rules are just a few examples of HR risk management techniques.

Relationship between risk management and human resource management

Risk management and HR management work together seamlessly. You must be able to anticipate employee-related human resources risks and effectively address any issues that arise in order to manage HR across your firm. Because happier employees are less likely to have problems, HR management directly affects HR risk management as well.

Of course, HR specialists need to be effective communicators, trainers, and leaders, but they also need to be proactive, strategic, and conflict-resolution experts. Combining these HR management and risk management abilities helps teams to foresee possible difficulties, put measures in place to help prevent them, and develop protocol in case any do arise so that they can be de-escalated.

Areas of Risk Management

Human resources risks can affect employees at every level of a company and at any stage of the employment lifecycle, from new recruits to executive leaders.

Your HR risk management plan should address the following topics:

Hiring Process
The recruiting process is the first area you should focus on if you want to approach HR risk management from scratch. Discrimination in the employment process is a significant HR risk since it is prohibited and immoral. Candidates may face discrimination on the basis of their handicap, age, gender, color, ethnicity, or religion. If a recruiter has an unconscious bias, they might not even be aware that they are discriminating against a candidate. As part of your HR risk management strategy, properly educating your recruiters and hiring managers will assist avoid any kind of prejudice throughout the employment process. The consequences for anyone who disregards your anti-discrimination policy should also be specified in your strategy.

Employee Management
Issues with employees are frequently brought on by ineffective management practices. Difficulties brought on by managers can result in conflicts between them and their staff, a hostile work environment, and eventually, turnover. These issues might arise from unreasonable deadlines, unclear communication, or inadequate support for direct reports.

Your business should regularly train managers on management best practices and follow up with their direct subordinates to reduce this HR risk. To avoid issues, all of this should be thoroughly recorded in your HR risk management strategy, along with the procedure to follow in the event that a dispute between a manager and their direct report does arise.

Employee Behaviors
It's essential to prepare for both employee and manager behaviour in addition to any possible dangers to human resources. What should your HR team and management do, for instance, if staff members are having trouble working in a team environment, disputing in a confrontational manner, or being subjected to harassment?

You can prevent this HR risk from the outset by clearly stating behavior standards, core values, and business rules, such as anti-harassment and anti-discrimination, in your employee handbook and onboarding sessions. By checking in with staff, you can also learn about any workplace conflicts you were unaware of. Your HR risk management strategy should include these processes as well as how your HR team and managers should respond to hypothetical circumstances.

Strategy for HR Risk Management

Analyzing your present procedures and identifying potential areas for improvement is important when updating your HR risk management approach. To make sure you're covering all potential risks, using an HR Risk Mitigation Checklist might be beneficial.

Your HR risk management approach has to make use of the appropriate technology, resources, and training in order to be effective. You should inform new recruits about your company's expectations and rules as soon as they begin their onboarding process. The best method to lower risk at work is to start doing this immediately away and to keep training them as long as they are employees.

In the future, HR teams should and will continue to place a high focus on HR risk management. Learn how IceHrm can assist you with your HR-related tasks.