Who are the riskiest people in your business?
January 8, 2013
SHL global report finds 1 in 8 people pose high risk for their organizations
Atlanta, GA - SHL, a global leading talent measurement company, today announced the findings of its international behavioral risk study identifying the riskiest roles and sectors worldwide. The research goes beyond policies and procedures and analyzes the human element of risk and their behaviors, to help organizations better understand and balance their appetite and resilience to risk.
Based on a sample size of more than 1.3 million people across 200 countries and territories from executives to frontline staff, SHL’s research finds that on average 1 in 8 people globally pose a high level of behavioral risk to their organization.
“Considering recent events in the financial and media sectors, we are constantly seeing evidence that what people do or fail to do drives organizational risk which can impact share prices, break laws and catalyze industry reform,” said Eugene Burke, chief science and analytics officer at SHL. “Many businesses are blind-sided by not assessing behavioral risk and only focusing on policies and procedures. While risk cannot be eliminated, it has an upside and a downside and organizations need to be aware of their own appetite for risk so it can be managed in a constructive way.”
SHL’s research revealed that 1 in 8 managers and professionals globally are a high risk to their companies. These people are most likely to create risk through lower quality decision- making and poorer communication. Interestingly behavioral risk decreases as seniority increases with only 1 in 15 executives posing a high risk. Further down the organization, team leaders and individual contributors are the riskiest employees pose more than double the risk of executives (1 in 7).
“What we’re seeing is an execution gap at the middle-manager level. They have a critical role to play as they are the interface between strategy and operational execution. On the one hand they have to manage compliance and commitment from frontline staff. On the other, they need to communicate decisions from leaders in a relevant way so the frontline workforce feels motivated and empowered,” said Burke.
“Organizations must ask themselves whether they have the right talent in place at the middle management level to manage risk appropriately and deliver the board’s vision to the frontline.”
SHL’s research also revealed that 1 in 8 frontline staff pose a high risk to their organization by demonstrating counterproductive behaviors in the workplace: lower compliance and attention to detail, (which could translate in to increased error rates and accidents), and lower commitment and teamwork (which could impact customer service as well as incurring higher costs associated with absenteeism and performance management).
While the global average rate for behavioral risk on the production line is similar to managers and professionals (12.5% and 12.2% respectively) the rankings by sector show marked differences. Several sectors buck the trend having a greater risk at the top of their organizations including oil and gas and travel and leisure.
“There have been significant cases in recent years where frontline staff have been criticized for company crises or accidents,” said Burke. “Yet SHL’s risk research finds that in certain sectors it is actually senior management who lack crucial decision making and communication skills and create risk for their organizations. By ignoring whistle-blowers or not taking into account viewpoints from across the business, leaders can be missing vital clues to manage risk which can have devastating consequences as we’ve seen from recent news developments.”
“There are two factors which senior managers could incorporate into their approach to reduce significant behavioral risks – firstly a commitment to appropriately enforcing ethical standards and second an effective channel by which employees feel comfortable communicating infractions,” said Ronnie Kann, managing director at CEB, SHL’s parent company. “Both rely on senior managers to work closely with frontline managers to help develop a culture of risk awareness and encourage ethical behavior.”
The riskiest sectors for all job levels are telecoms and consumer goods (heavy goods), while the public sector and retail were ranked the most risk averse. Sectors which follow the global trend of risk decreasing down the organization include banking, food, beverage and tobacco sectors. It should be noted, however, that organizations’ risk profiles vary considerably within an industry as illustrated by the diversity of performance in the banking sector.
“Similar studies have looked into legislative, social, economic, political and financial factors associated with risk, but the missing factor until now has been predicting people’s behavior in the workplace which drives risk,” said Burke. “Recent events, particularly in the banking sector, have focused on the negative consequences of not managing risk effectively however risk has an upside too – it’s about striking the right balance between creating risk to seize on new markets and opportunities while being resilient to risk so that organizations can achieve a competitive advantage and avert any crises.”
SHL’s risk study can be used by business leaders and HR and risk managers to inform talent management programs and become a significant contributor to risk management strategies. The report can also be used by middle managers to understand the risk profiles of their direct reports and ensure that people risk is minimized and addressed.
To find out more about SHL’s global behavioral risk study and download your free copy of the SHL Talent Report visit: http://ceb.shl.com/us/forms/content/the-shl-talent-report
SHL’s Definition of Behavioral Risk
SHL has used eight behavioral risk components that are attributed to resilience and appetite for risk.
Appetite for risk is measured by qualities such as taking initiative, having the confidence to make tough decisions and the perseverance to achieve a goal.
Resilience to risk includes components such as decision quality (are decisions more or less likely to be effective), communication quality (are those decisions more or less likely to be communicated effectively), following through with those decisions and setting the tone for the standard of behavior a company can expect employees to adopt. At the frontline level, additional components include compliance and quality and commitment and teamwork.
Source: SHL – Behavioral risk components
Source: SHL – Aggregated data showing overall behavioral risk for all job levels by industry sector globally
About SHL - People intelligence. Business results.
SHL is the leader in talent measurement solutions, driving better business results for clients through superior people intelligence and decisions - from hiring and recruiting, to employee development and succession planning. With a presence in over 50 countries, SHL delivers more than 35 million assessments annually in over 30 languages - allowing over 10,000 business customers to benefit from both global expertise and local insight. Along with its world-class consulting practices and 24-hour support center, SHL clients can access over 1,000 assessments through an easy-to-use technology platform. SHL was acquired in 2012 by CEB, the leading member-based advisory company. By combining the best practices of thousands of member companies with advanced research methodologies and human capital analytics, CEB equips senior leaders and their teams with insight and actionable solutions to transform operations. Headquartered in London, UK, SHL has offices in North and South America, Europe, the Middle East, Africa, Asia and Australia/New Zealand. For more information, visit www.shl.com.
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