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    How Can Human Resource Risk Be Managed?

    Posted by Protiviti KnowledgeLeader on Thu, Apr 05, 2018 @ 10:01 AM

    ""“All of the blame and none of the praise”

    This was how one Human Resource professional described their job in a forum on tech recruiting recently. Human Resources (HR) can be a bit of a mine field full of potential hazards and risks while searching for that perfect candidate to fill a company’s needs. 

    When things go well, it’s typically the candidate that is praised as being a great addition to the team and when things go badly, it can be the HR team who gets the blame. Worse, the risks involved in hiring can be extremely damaging, not just for the recruiter or HR team, but for the company as a whole.

    HR can feel a bit like a tough sell to the shareholders and company executives as it doesn’t directly generate income for the company and can seem like a bit of a “necessary evil” or a sidebar to normal function. Because of this, the HR function is often given high expectations and relatively low resources. Luckily, the internet provides an easy way for companies of all sizes to exist on a level playing field and achieve their individual goals.

    Today’s qualified and desirable applicants are using the internet to research job opportunities and with a properly designed and executed plan, a company can turn its website into a promising source for generating applicant leads. Further, companies no longer have to blindly sort through unsolicited and unqualified submissions and instead use online software and submission forms to collect resumes targeted to specific job listings. Candidates can be further screened with targeted job-related questions to focus on the most desirable candidates.

    The opportunity is great and, of course, so are the risks. Therefore, even while stepping back from the physical world of telephone inquiries, career fairs, and handshakes and moving to virtual connections on email, chat and teleconferencing, a company will never truly abandon one for the other. While internet resources can increase speed, efficiency and reach, the value of physical contact, observation, and conversation can be greater than ever.

    A thorough and considered business plan must be developed with potential risks in mind to avoid the pitfalls of modern recruiting using the internet.

    One risk is casting too wide of a net. With the internet, you can broadcast your recruiting message across the entire world and waste a substantial amount of money and resources with a message that is too generalized. It’s easy to become overwhelmed with resumes and cover letters that don’t really fit company requirements.

    A second risk involves relying on screening tools to narrow the field. Often, hiring criteria built into software has been found to disproportionately discriminate against women, minority groups, and people with disabilities, which is not just a legal sinkhole but also can lead to lost opportunities. It’s important to note that using outside or third-party vendors or resources the risk is actually further increased rather than decreased. US courts have increasingly ruled that companies are liable for violations incurred whether they originated in-house or through a vendor.

    Consider laws passed by the United States Federal Government regarding hiring practices of companies. These three regulations below are some of the more prominent examples:

    Americans with Disabilities Act (ADA)
    The ADA, signed into law July 26, 1990, bans discrimination based on disability. It provides individuals with disabilities civil rights protections like those provided on the basis of race, sex, national origin and religion. It guarantees equal opportunity for these individuals in employment, public accommodations, transportation, state and local government services, and telecommunication relay services.

    Civil Rights Act of 1964
    Title VII of this act, as amended, prohibits discrimination in the hiring, promotion, discharge, pay, fringe benefits, job training, classification, referral and all other aspects of employment based on race, color, religion, sex, or national origin.

    Age Discrimination in Employment Act of 1967
    This act, as amended, protects applicants and employees 40 years of age and older from discrimination in the hiring, promotion, discharge, compensation, terms, conditions or privileges of employment.

    Risks related to failing to properly manage online recruiting can result in:

    • Poor customer service and inefficiencies in production due to understaffing
    • Missed opportunities in the competitive marketplace due to delays in product development
    • Management time absorbed by continuous employment process demands
    • Damage to brand and reputation, decreased stock price and the cost of crisis management if “brain drain” continues

    Today’s employees are more transitive and more loyal to their technology or personal interest than they are to a particular company and the days of staying with a particular employer for twenty or thirty years have pretty much disappeared. This means that the battle for talent is not just found on college campuses but also into the offices of every company in the marketplace. Companies need to be just as aggressive with keeping their current staff as they are with trying to recruit additional employees.

    How can human resource risk be managed?

    Look to this document, Human Resources Risk Key Performance Indicators (KPIs), for questions to consider, important management practices and performance measures, and reducing risk in the human resource function.

    Also consider checking the Human Resource topic page for related audit programs, reports, guides, policies and risk & control matrices.


    Topics: Laws & Regulations, Human Resources, Risk Assessment, Strategic Risk, Performance Management/Measurement

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