For human resources professionals, risk readiness means more than just planning for management departures, says Queen's IRC facilitator Yvonne Latta. Yvonne is a consultant and former senior executive with 31 years in the federal public service, including directorships of HR at Transport Canada and Strategic Business Planning at Agriculture and Agri-Food Canada. In this article, she talks about succession planning, creating next-generation managers, and the importance of identifying your knowledge experts.
What are the main issues for human resources leaders around risk management?
If you don't consider employee-related concerns around risk readiness and make a strategic plan, you reduce your own organization's competitiveness.
For example, with succession planning, what do you do when there's a shortage, as today with accountants or in the medical technical field? Without a strategic plan for recruitment and retention, the organization is going to lose people who have essential skills. This is the big one – and there's a direct link to profit, or excellence if you're in government.
The other issue is that as the boomers retire, organizations have an opportunity they haven't had in 25 years to shape their leaders in a more deliberate way, to create the next generation of managers.
I'll give you an example. Right now in government, many departments are using an executive pool rather than hiring a director for a particular job. They're using a cross-government or cross-department, entry-level executive selection pool. So there's an opportunity for the people at the top to really define what it is they want those new executives to be competent at, beyond just knowledge.
If you are not being strategic, you're missing an opportunity for the future of the organization in terms of quality of management. And the quality of management is linked to the quality of results.
Is creating an human resources risk readiness plan complex?
You can do this without spending a lot of time and money. It's a matter of focus. And you can measure results in this area. Many managers, as soon as you say "succession planning," think that it's going to be very expensive. A lot of this is cost neutral, or of low cost.
But rather than doing it by branch or by group, managers need to plan corporately, sharing the costs across the organization. I'll give you an example. When I was at Transport Canada, over five years we identified 58 potential high-risk departures. So if we break that down, it's about 15 a year. If four of those happened to be in the Atlantic Region, and significant funding was required, the region wouldn't be able to afford to put a big plan in place.
But corporately, at the Deputy Minister or President level, there's access to reserve funds, and these people know when money's not being spent in one part of the organization that they can then access. Some manager sitting out in Moncton can't do that.
Managers can do risk planning – it's not as big a deal as they think it is. And the risks to organizations from not doing it are high, especially in specific shortage areas.
So the biggest risk of all is not having a strategy?
Yes – take the importance of knowledge experts. At Transport Canada we had a chap who was an airline pilot, but he was also a biologist, which is a pretty unusual combination. Over the course of 25 years in his career he became an international expert on the management of wildlife in airports; you know, birds flying into planes, deer running out on runways. There aren't very many people that study this.
When it became clear he would be retiring, it was a really big issue because there aren't a lot of these people out there who do this. If you must look for a replacement, are you looking for a biologist or a pilot?
The organization found a really sharp young biology student and brought her in to work under a co-op program. The organization was able to direct her. "What are you taking next year? We'd like you to take this kind of course." In return, she had a guaranteed job offer as his successor when she was through school.
So the cost was minimal but the payback was huge. A lot of knowledge experts develop over time – and it's often the quiet and unnoticed person at the back that becomes an expert in something, and everyone relies on him or her.
What can you do to mitigate this kind of risk?
Organizations pay a lot of attention to their management departures but not to their subject matter experts. Not that they shouldn't deal with management too. But there aren't a lot of these subject matter experts in organizations. If you start really searching for them, it's manageable to plan and to find fairly cheap and easy ways to ensure knowledge gets transferred.
Sometimes it's just a matter of asking someone to document information, in cases where it's only one person who knows how to do something. If you don't think about this and he drops dead, you're in serious difficulty. So you need to be mindful of your risks in the "one of a kind" jobs.
How should risk management within human resources be integrated into the overall management of organizations?
Why not make it part of the annual business planning process? Most senior management teams talk a lot about how to spend their capital money and not as much on how they're going to spend their human resource money.
So as part of business planning, you determine trends, attrition rates, and high risk departures, and do a risk assessment. Then you target efforts to where a lack of competent staff will hurt you the most.
Make it an executive-level HR committee that manages this – again, most organizations have capital committees. And then link the performance pay to achieving those results. And as I discussed earlier, manage it corporately.
You need an ongoing feedback process at your management level, with tangible results. For example, let's look at recruitment. Where you have difficult recruitment challenges, part of that process is having feedback to the senior management committee. Is our recruitment strategy working? Having recruited people, what's our retention? And what's our annual attrition rate?
Again, it should be like finance. All executive committees get financial information routinely: the quarterly update, the bi-annual update, where are we at with this, how much money have we got flexibility on.
Very few organizations apply the same discipline to the management of people. I don't know why: if I were president of a bank, I think I'd want to know if part of the organization that had a 30 percent attrition rate.
It's really quite simple. If you've got a structure called "financial", why don't you have one called "people"? You can't do terribly well financially if you have incompetent people, or you don't have enough people.
Why don't organizations typically plan this way?
I think our models don't put a lot of emphasis on people. For a long time in the 1980s and 90s, people were not in short supply. In fact, they were desperate for jobs. Look at the GenXers, who were all hired on contracts: there was always a pool of feeders that the organizations needed.
A lot of organizations still haven't clued in to the fact that it's not the case any more; and that what the workforce wants has changed. You hear managers complaining that the younger generation is not loyal. I don't think it's got anything to do with loyalty. I think this group is extremely loyal to a good boss, but they have options. So if you're a lousy organization to work for they won't stay.
It goes back to competitive advantage, and profitability, or excellence. A lot of places are doing things like interviewing employees three months after they've joined to see whether the conditions they were told they would be working under are in fact what they're experiencing, or they are already looking for another job. Rather than waiting for the exit survey, they conduct an entry survey. This is the kind of thing organizations need to wake up to.