Three overlooked areas of Human Capital Risk Management

Three overlooked areas of ...

While industry leaders argue that prioritizing human capital risk management is crucial for sustainable success, some may question its long-term efficacy. Shortsighted businesses may perceive it as a mere trend, a temporary fixation, and adopt it in pieces without truly integrating it into their core strategies. That’s when the wheels fall off.

There’s more to employee verification than simply hiring good employees.

The unseen: 3 overlooked areas of Human Capital Risk:

Complacency & Quiet Quitting
Employee Turnover & Retention
Frauds & Reputation

Complacency & Quiet Quitting

Merriam-Webster defines complacency as self-satisfaction accompanied by unawareness of actual dangers or deficiencies. In brief, when it comes to workplace safety, complacency is the silent killer.

An employee with unverified intentions may be tempted not to go above and beyond for their organisation and lose the sense of accountability, influencing other employees to do the bare minimum, asserting autonomy, and inciting rebellion.

“I used to enjoy coming to work, putting in long hours, competing and helping the organisation succeed. Now, coming into work is increasingly frustrating. It’s hard to trust anyone’s intentions. Very little loyalty is left,” says a Fortune 500 executive. (Source: Forbes).

In its global CEO survey, PwC reported that 55% of CEOs think that their employees’ “I don’t care” attitude is the biggest threat to their organisation’s growth. As a leader aiming to build great teams, be mindful of creating a culture of trust and responsibility. Anticipate any signs that your employees might be adopting a “them versus you” mindset. Stay attuned to the subtle shifts indicative of a quiet revolution. Catch the signs that your employees may have grown complacent. Prioritise risk management.

Employee Turnover

Companies typically pay between 25% and 250% of an employee’s annual salary in rehiring efforts. On average, losing an employee can cost a company two to five times the employee’s salary. (Source: Built In)

Direct costs incurred due to employee turnover:

Separation costs
Temporary staffing
Replacement costs
Training costs

Indirect costs:

Lost productivity
Coping with vacancy
Learning curve of new employee
Reduced morale
Lost clients
Lost knowledge

Smart are the leaders who are prepared. Reduce employee turnover:

Pre-employment screening
Establish proper benefits and compensation
Review compensation & benefits annually
Foresee employees’ needs
Create a culture of trust .

Frauds & Reputation

A report from The Association of Certified Fraud Examiners unveiled that 21% of defrauded organisations overlooked red flags in candidate background checks due to recruitment pressure, resulting in fraud incidents. Additionally, 33% of companies faced business losses as clients steered clear of associations with firms whose employees had a bad reputation of being involved in compliance issues, moonlighting, false IDs, and the like. (Source: Economic Times)

A company is defined by its people, and people are often defined by their resumes, 40% of which could contain false information (Source: Harvard Business Review). That’s why risk management. We shall leave you to introspect.