One Minute HR Consultant

If one thing that both our current events and socioconomic conditions has taught us is that for all our contingency planning, we are normally only prepared for high probability, high impact scenarios.  Who could have predicted the economic downturn and the severe loss of jobs that we began to experience as early as 2007? 

But the bigger question is how prepared were you and your organization for the conditions we now find ourselves faced?  Many reacted fairly quickly through various tactics that included hiring “freezes”, carefully orchestrated down-sizing, furloughs, etc.   Perhaps the biggest lesson we learned as HR business professionals is that we are not immune to ensuring we have an effective, proactive risk management plan in place to decrease the impact of the unknown, while also ensuring we are prepared for events that have a high probability of occurring.  I am not going to get into probability or statistics, but the point is this: We must ensure that our HR risk management planning and implementation processes are vibrant and continuously adjusted minimizing the impact of unforeseen, high-risk, high-impact events.  Furthermore our HR risk management planning must effectively integrate with the overarching organizational risk management plan – a key component therein.

Yet risk management is not just for unforeseen ”disasters”, your risk management plan should also incorporate the optimistic – it is often the optimistic, macro events that leave your organization exposed – causing lost opportunities, decreased market share, or customer turnover.  Furthermore, we as HR business professionals must ensure that our risk management plan compliments our organizational threats and opportunities and not the reverse.  Here are some examples for you to consider – remember our task is to think (and act on) of the human capital-human resource impact from an organizational strategic perspective. 

1.  Impact of increased demand: Is your organization poised for an increase in demand or are all your plans considering a flat-line/zero-growth scenario forecast for the next few years?  How will your organization respond to additional manpower required to respond to increased demand?  Is the workforce trained and equipped to handle additional demand?   

2.  Impact of emergent competitor cutting into market share:  A hidden competitor emerges quickly with a product that has increased functionality or a well-rounded, responsive service offering.  You and your organization must respond.  From a human capital-workforce planning perspective what plan do you have in place?

3.  Business organization decides to divest or invest business unit/line of business:  Senior leadership is continuously asking (whether you are in the room or not): “Is this the business we should be in?” Or, “Is this a business we should consider?”  What is your plan for both scenarios?  What are the costs, change management, risk of failure for a proposed merger?  What is the downside and upside of executing a divestment/exit plan?   

4.  Brand Introduction/New Product Development (Early Green light):  There are times when acceleration of a product or a service offering/introduction may be required (See Point #2).   What contingencies does your strategic human capital-human resource risk management plan have in place for such a scenario?  We all know the reasons for accelerated introduction, but how many of us are really prepared?  Some questions to ask in formulating your HR risk management plan: Do we have the required skills on-hand (skill-set inventory)?  What changes/updates must be made within our recruiting efforts?  Is the workforce training and development plans sufficiently developed to ensure that the workforce within the line functions can support early introduction of the product/service offering?

5.  Increased/Decreased footprint in overseas/global market.  The joint venture migration is ahead of schedule, or on a not so optimistic note, there is a need to exit a market sooner than expected.  Have you engaged and developed an exit strategy that meets the organization’s accelerated growth plan or exit strategy?  Every time I think of this detail, I think back to Mr. T in Rocky 3 when he was asked what his back-up plan for beating Rocky was.  Mr. T famously replied, “Don’t need one.”  However, you do.  Ensure that you have considered and developed a plan for an increased or decreased presence in overseas/global markets.

These are just some of the business scenarios you should be thinking about when developing your HR risk management plan.  See, it’s easy to develop for contingencies when your contingencies fit in a neat box during a planned meeting that looks for highly probable-high impact scenarios.  But one thing our current business environment has taught us is that the only predictable event is the one for which we did not plan. 

Finally be strategic about your risk planning.  Ensure that your risk management plan has a top-down perspective and is not developed with what you hope happens or can best plan for from a functional perspective.  In other words, ensure that it aligns, but takes into consideration, that which is unseen/not forecast, or detours your organization for better or worse.  Your risk management plan should be proactive, supplement the organization’s risk management plan (supplementing line risk management planning where appropriate), and rigorously consider impact (both positive and negative).