People Risks Lurking in the Dark

By Yusuf Mahomedy (Resident Expert for HR)

A defining moment in your business is when you decide to employ people. Each time that the pen glides across the employment contract, you and another individual are setting off on a rollercoaster ride on the tracks of your business and the employee’s career. Many promising businesses discover abruptly that their tracks have been wrecked beyond repair, not by competitors, but by their own employees.

Your business is vulnerable to a range of risks, and top of the list is very often people. Risk management of people is often ignored out of ignorance, underestimated (as it is largely ‘invisible’) or postponed until you have spare time (which is never!).

When these risks materialise, the business suffers from damage to its assets and earning capacity.

Here are four examples of local relevance to consider:

• You hire a candidate based upon their impressive CV (all the  ‘right’ qualifications, skills and experience) and interview performance. A third of the CV turns out to have been creative writing - the candidate learnt all the ‘answers’ from a How to ace interview questions book! You were unaware of reference checks and assessments, or considered them to be a waste of money at the time. 

• Company stock that was urgently needed to fulfill an international order, is stolen thanks to one of your high-performing employees colluding with a crime syndicate. The employee worked excessive unpaid overtime in the office, but was unhappy about his pay - you thought the pay gripe had been adequately addressed in the performance appraisal, and admired his dedication!

• An employee runs their own business after hours by selling their services to your clients at lower rates. You find out about his business when a customer accidentally mentions it during a meeting. The standard employment contract and company policies are silent on employees engaging in business interests outside work.

• You hire IT graduates (all Employment Equity) and you provide them with mentoring, training and hands-on experience over two years. This involves high upfront costs and personal time. However, you are prepared to invest in them because you expect them to deliver value over the long-term. Headhunters then lure away 40 percent of your IT graduates with higher packages in the third year.

Even though some of the incidents in these examples could be mitigated by traditional internal controls around transactions, the emphasis is on understanding the risks from the people in your business.

Take action this month by educating yourself on risk management of people, do a bit of digging in your workplace for obvious risks, and seek professional assistance before something goes wrong. Your business depends upon it.

I welcome your input, whether it be in the form of topics, observations or comments in the HR forums (click here), or via e-mail at worksuck@worksucks.co.za if it is a confidential matter.

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