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Minimizing the People Side of Risk

By Charlotte Walker posted 02-10-2014 06:12 AM

  


For every company, hiring employees is a double-edged sword. On the one hand, these are the people whose hard work holds the key to corporate success. On the other hand, there is a risk to their employment. What if employees can't be trusted or simply make too many innocent but detrimental mistakes? At the end of the day, people are fallible. However, there are some steps that companies can take to reduce this risk.

As a general guide, companies should seek to establish a culture of corporate openness. This means that if employees do make mistakes, when problems do occur, that they are encouraged to be honest about them. Issues should not be covered up or ignored. They should rather be handled honestly and effectively. If not, they are a ticking bomb waiting to explode. Especially in companies where sales and profits are rewarded with bonuses, enthusiasm can get the better of employees. How many banks have fallen foul to the over-ambition of staff, plunging the bank itself into serious problems? More effective oversight and openness could have made all the difference.

Having said this, companies must be wary not to put too many controls in place. There needs to be a delicate balance between controlling things tightly and encouraging trust. Invariably, if guidelines and working practices appear too cumbersome for staff to do their job easily or effectively, employees are likely to find a way to circumvent them. Consequently, the controls themselves become useless.

There are of course specific areas in which companies should be especially conscious of the risk at play. Most obviously perhaps is the hiring process itself. This is after all when you make a decision on an individual's compatibility with your company. It is advisable, especially in some industries to conduct a credit check with a licensed agency such as Experian CreditExpert. This will reveal whether there are any financial red flags that could cause concern over a potential employee's reliability.  Work expectations and practices must also be made abundantly clear from the very start of employment. It is always a good idea to issue a carefully constructed employee handbook which sets out expectations and standard procedures. This way, if there are any future problems you can always refer back to a written document as evidence that best practice was made clear from the start.

In particular, companies should be meticulous about salaries and wages. Clear record of payment and hours worked must be kept in accordance with a clear agreement prior to employment. The same sense of clarity should also govern the termination of employment. These practices can help resolve any number of damaging disputes in the future.

Another, increasingly important area which requires attention is IT procedure. Many employees have access to company systems and documents from a variety of smart phone and tablets, some of which are their own personal devices. While this is convenient for companies, it often means losing control of a degree of IT security, which poses a real risk. As a result, having clear and workable IT policies in place is becoming an ever more important aspect to corporate practice.      

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