Reconsidering risk


According to Wayne F. Cascio LFAHRI, HR practitioners should focus on the risk of not investing in the future. AHRI chairman, Peter Wilson AM, chats with the University of Colorado Denver professor and 2014 AHRI National Convention keynote speaker.

Peter Wilson: What are the key HR issues and changes you’ve seen during the past two years?

Wayne F. Cascio: I’ve been focusing recently on investing in training – in human resource development – in uncertain times and talking about the risk associated with firms that don’t take the time to invest in the future, like in leadership development.

Also there are some exciting, new approaches to delivering training, like using social media, which I’ve been writing about, along with risk management in HR.

I think the interdependence between HR and business strategy, and the need for visionary leadership by HR practitioners, is a big change. That means asking questions like ‘what are the HR implications of our company’s business strategy?’

PW: In a journal article recently you suggested human capital practitioners may be overly drawn into risk mitigation rather than risk optimisation. What did you mean by this?

WC: When you talk about risk you’re really talking about trying to anticipate bad outcomes and what will be the consequences of those.

There’s great concern about making sure that we’re in compliance; that we reduce risk in every area of our business. But there is also story after story about companies taking prudent risks and then being successful.

From a HR perspective, it’s important to ensure that bad things don’t happen. A good example of this would be that people in HR often think any kind of employee turnover is bad and that’s not the case.

There might be some areas where you want to encourage higher turnover and other areas, as in mission-critical jobs, where you want to take whatever actions you can to ensure that it’s as low as possible.

That’s the approach to optimising risks and not just assuming that all turnover is bad.

PW: What are the consequences and costs for an overly defensive focus on risk mitigation by HR practitioners in the areas of work analysis and role design?

WC: It’s important to ask the question, ‘do you need top performers in every position in your company?’ The answer is probably no. There are probably a lot of places where, as long as they do their jobs, you’re happy. But there are other places, particularly customer-facing positions, where you need people who can really be attentive all day and serve customers very effectively.

PW: In the areas of succession planning and management?

WC: A big risk in leadership development is assuming the future will be like the past. It’s more important than ever for executives to travel and get a good sense of what’s happening in the world.

If you’re going to train leaders to be on the frontline five years from now, you need to anticipate what the big challenges are going to be then. It’s a huge mistake to just continue what you’ve been doing and assume that the future is going to be like the past. In my view, that’s a bigger risk than trying to invest in the future.

PW: In the area of performance assessment?

WC: One of the things we’ve seen is that downsizing hasn’t subsided at all. It doesn’t matter if the economy is doing well or poorly, downsizing is a huge risk. Lots of companies seem to fall in to this myth of assuming that if we spread the pain equally that’s the best way to execute a downsizing.

It’s a huge mistake to assume all departments and functional areas are equally critical to the organisation and making equal contributions.

PW: Bill Evans from Westpac recently stated that most organisations are now investing primarily in job-saving projects and not expansion opportunities. What challenges does that direction have?

WC: The failure to invest in opportunities for expansion and growth is just a prescription for disaster. Standing in place is just not an option; marching in place is not an option.

It’s a little discouraging to hear his comments because what this does is it reinforces the mindset towards placing major emphasis on mitigating risk and that is just not a prescription for long-term success, at least not in my view.

If you fail to take risks you can’t grow and it’s just not a prescription for long-term prosperity.

About Wayne F. Cascio

Wayne F. Cascio LFAHRI is a distinguished university professor, specialising in management. He holds the Robert H. Reynolds chair in global leadership at the University of Colorado Denver.

He has written exclusively about restructuring and downsizing, having authored or edited 27 books on HRM. His work in regularly features in The Wall Street Journal and Time magazine.

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Reconsidering risk


According to Wayne F. Cascio LFAHRI, HR practitioners should focus on the risk of not investing in the future. AHRI chairman, Peter Wilson AM, chats with the University of Colorado Denver professor and 2014 AHRI National Convention keynote speaker.

Peter Wilson: What are the key HR issues and changes you’ve seen during the past two years?

Wayne F. Cascio: I’ve been focusing recently on investing in training – in human resource development – in uncertain times and talking about the risk associated with firms that don’t take the time to invest in the future, like in leadership development.

Also there are some exciting, new approaches to delivering training, like using social media, which I’ve been writing about, along with risk management in HR.

I think the interdependence between HR and business strategy, and the need for visionary leadership by HR practitioners, is a big change. That means asking questions like ‘what are the HR implications of our company’s business strategy?’

PW: In a journal article recently you suggested human capital practitioners may be overly drawn into risk mitigation rather than risk optimisation. What did you mean by this?

WC: When you talk about risk you’re really talking about trying to anticipate bad outcomes and what will be the consequences of those.

There’s great concern about making sure that we’re in compliance; that we reduce risk in every area of our business. But there is also story after story about companies taking prudent risks and then being successful.

From a HR perspective, it’s important to ensure that bad things don’t happen. A good example of this would be that people in HR often think any kind of employee turnover is bad and that’s not the case.

There might be some areas where you want to encourage higher turnover and other areas, as in mission-critical jobs, where you want to take whatever actions you can to ensure that it’s as low as possible.

That’s the approach to optimising risks and not just assuming that all turnover is bad.

PW: What are the consequences and costs for an overly defensive focus on risk mitigation by HR practitioners in the areas of work analysis and role design?

WC: It’s important to ask the question, ‘do you need top performers in every position in your company?’ The answer is probably no. There are probably a lot of places where, as long as they do their jobs, you’re happy. But there are other places, particularly customer-facing positions, where you need people who can really be attentive all day and serve customers very effectively.

PW: In the areas of succession planning and management?

WC: A big risk in leadership development is assuming the future will be like the past. It’s more important than ever for executives to travel and get a good sense of what’s happening in the world.

If you’re going to train leaders to be on the frontline five years from now, you need to anticipate what the big challenges are going to be then. It’s a huge mistake to just continue what you’ve been doing and assume that the future is going to be like the past. In my view, that’s a bigger risk than trying to invest in the future.

PW: In the area of performance assessment?

WC: One of the things we’ve seen is that downsizing hasn’t subsided at all. It doesn’t matter if the economy is doing well or poorly, downsizing is a huge risk. Lots of companies seem to fall in to this myth of assuming that if we spread the pain equally that’s the best way to execute a downsizing.

It’s a huge mistake to assume all departments and functional areas are equally critical to the organisation and making equal contributions.

PW: Bill Evans from Westpac recently stated that most organisations are now investing primarily in job-saving projects and not expansion opportunities. What challenges does that direction have?

WC: The failure to invest in opportunities for expansion and growth is just a prescription for disaster. Standing in place is just not an option; marching in place is not an option.

It’s a little discouraging to hear his comments because what this does is it reinforces the mindset towards placing major emphasis on mitigating risk and that is just not a prescription for long-term success, at least not in my view.

If you fail to take risks you can’t grow and it’s just not a prescription for long-term prosperity.

About Wayne F. Cascio

Wayne F. Cascio LFAHRI is a distinguished university professor, specialising in management. He holds the Robert H. Reynolds chair in global leadership at the University of Colorado Denver.

He has written exclusively about restructuring and downsizing, having authored or edited 27 books on HRM. His work in regularly features in The Wall Street Journal and Time magazine.

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