Focusing on managing risk

This is the fourth in a series of blogs looking at the concept of business management in the people function and this week we’ll be looking at managing risk.  We will look at managing risks within the function, not the wider people risks. If you missed the first couple of blogs we talked about the overall principle, including a look at finance. We’ve also focused on strategy and planning as well as project delivery.

So, what do we mean by managing risk?

The actual process can vary by organisation but there are generally four steps for effectively managing risk:

  1. Identify – which is every employees responsibility!
  2. Assess – this doesn’t require technical expertise but does require the organisation to have an agreed framework.
  3. Control – mitigating the risk through applying appropriate controls.
  4. Review – ensuring a regular review of all risks and the controls to ensure that they are still relevant and appropriate.
Risk Framework

Two additional areas that you should focus on:

  • Communicate – using something like a simple risk matrix helps as they are visual and easy to understand.
  • Training – helping your team identify risks, create good controls and monitor, all require an investment in training time.

Understanding people function risks

We won’t be looking at wider people risks such as employee turnover, well-being, talent attraction etc. These should be determined and largely managed by the business, after all they are managing the people. However, the people function may provide solutions and sometimes the controls (i.e. policies) to mitigate these risks.

The people function is often accountable for managing significant financial spend i.e. payroll, pensions, benefits etc. Sometimes these are delivered in-house or via 3rd party supplier. No matter how these services are delivered the people function has to be aware of, and manage the risks appropriately. Rather than focusing on specific risks we shall talk about how you create an effective risk environment within the function. However, its worth sharing a few examples based on our previous experience, these might be areas you want to check within your team:

  • An outsourced payroll provider with no effective business recovery plan – this led to payroll disruption following an incident near their office.
  • No active management of a supplier contract – this lead to increased business costs as an automatic price increase was not visible or managed.
  • Limited controls on employment visa expiry – this meant the organisation was in breach of their sponsor licence.
  • Employee information sent to an external email account without password protection.
  • Employment policies not aligned to process, therefore impacting end users.

So, how best to manage risk?

Depending on the size of your organisation there are a number of options. For large organisations consider appointing a Business Manager or People COO, making risk management part of their accountability. Within smaller organisations, giving the accountability to someone in the people team can provide focus. This could be rotated as part of objective setting to build capability across the team. So, what are the practical steps you need to take?

  • Identify who will lead managing risk in the function, don’t forget accountability will always sit with the department head.
  • Define a risk management plan, which needs to include:
    • agreeing the risk approach to be taken. This should mirror the organisational approach;
    • briefing the people leadership team on managing risk. Making it clear that their role is to lead by example;
    • training the wider people team to understand that risk is not a bad thing and helping them understand what’s required of them, so:
      • what their role is in managing risk;
      • how to identify risks and what they can do to mitigate them;
      • who to report risk too and how;
      • review any existing controls when making changes;
      • be brave and highlight any concerns.
    • creating a regular risk review process with key people and teams, using a risk matrix;
    • testing the key controls to make sure they are working;
    • ensuring that key people suppliers are managing their risks;
    • using risks to support the people planning process.

Risk is part of doing business, understanding your functional risks means you can mitigate their impact. This protects the organisation in terms of reputation and loss. Having good risk management in place is fundamental for any people team and done well can help your planning and engagement.

Further insight into Business Management

Over the next couple of weeks we will look at the remaining elements of business management, so:

  • Supplier management
  • People & functional analytics.

If you’d like to find out how InFocus HR can help you with your business management approach then click here for more information.

Focusing on people strategy & planning

This is the second in a series of blogs looking at the concept of business management in the people function and this week we’ll be looking at strategy and planning.  If you missed the first blog we talked about the overall principle, and had a look at finance within the people function.

Business savvy HR?

How often have we as a function talked about needing to be business savvy? 

It’s certainly a conversation we’ve heard frequently as we’ve moved to the Ulrich model i.e., Business Partner, Centres of Excellence and Shared Services. The Chartered Institute of Personnel & Development (CIPD) view is that as People/HR professionals we should understand our organisations purpose, future direction, priorities and performance, as well as understanding external influences and trends.  To reflect this the CIPD’s professional map has an entire knowledge area on business acumen, this covers topics such as financial literacy, business planning and supplier management.

At InFocus HR we would fully agree that as a profession, understanding what our organisation is trying to achieve and performance against goals and budgets is critical, as it supports our engagement with stakeholders.   As a profession though the question we need to ask is whether we run our function in the way that we expect our organisational managers to operate theirs?  A Gartner article from May 2020 referenced an emerging trend for HR Chief Operating Officer roles and they specifically call out a need to focus on the operation of the function itself.

So, how do we apply that business acumen and focus to our own function?

Business acumen can cover a wide range of areas and we should be clear this is not necessarily about creating yet another team within the function. Depending on organisational size this can be built into someone’s role, it could be a dedicated Business Management position or for bigger organisations it could be consolidated into a small team.   Typical areas of scope would include:

  • Finance
  • Strategy development & planning
  • People & functional analytics 
  • Risk Management
  • Supplier Management
  • Project Management (including continuous improvement)

Over the next 5 weeks we will publish a series of blogs on each of these specialist areas, going into more detail around what could or should be undertaken to support the functional objectives.

This week, we will start with Finance

Research commissioned in 2015 through Bersin by Deloitte[1] highlighted that 90% of HR leads felt they had a handle on their budgets.  However, our experience would suggest that awareness of finance and more basic budgeting can vary significantly across organisations and certainly within People/HR leadership teams. Often the top line People/HR budget is known, however, how that spend breaks down, when it’s due to occur and how the budgets are tracking can often be missing or not understood. 

So, what should good finance management look like within the function?

Well, the first thing to say is that this shouldn’t be about creating a shadow finance role within the People/HR function – the finance team are unlikely to respond well to that!   In reality the activities undertaken are unlikely to require a full-time role, although there will be peaks and troughs in workload, driven by the budgeting year.  The support should be seen as complimentary to how your organisation’s finance function operates and would generally cover the following activities:

  • Engaging with People/HR leads to determine budget requirements, whether that’s just financial or for wider resources such as headcount.
  • Building the case for securing additional funding to deliver the people strategy or just to reflect increased operational costs.  Focusing on the justifications in advance can often ease the sign off process through an organisations budgetary cycle.
  • Working with finance and the People/HR leads to phase budgets and track spend throughout the year, identify potential over/underspends (including why?) and agreeing options for managing i.e., pulling forward or delaying spend on new initiatives, thereby managing expectations better.
  • Supporting the function with pulling together business cases for new technology or services.  Using insight into impact on the functions BAU budget and understanding how Finance might assess a business case can help with successful sign off.
  • Providing quality assurance to the People/HR lead in terms of budgeting should free up their valuable time.
  • Building the Finance teams awareness and understanding of the People/HR functional plan so that when extra funding is required or when budgets are reduced or cut, they have a better understanding of the potential impact.
  • Coaching the People/HR leadership team around financial management and ensuring that budgets are a regular discussion and review point throughout the year
Business savvy HR

Through these activities the function will become more business savvy, building its financial credibility with Finance and this should hopefully be reflected in any requests for additional budgets having a smoother journey through the organisation.

To find out how InFocus HR can help your function to become more business savvy, whether that’s implementing or reviewing your current business management tools and techniques click here for more information to request an initial obligation free conversation.


[1] Bersin by Deloitte, High-Impact HR