SHL, a global leading talent measurement company, today launches the findings of its international behavioural risk study identifying the riskiest roles and sectors worldwide. The research goes beyond policies and procedures and analyses the people element of risk and their behaviours, to help organisations 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 behavioural risk to their organisation.
“Considering recent events in the financial and media sectors, we are constantly seeing evidence that what people do or fail to do drives organisational risk which can impact share prices, break laws and catalyse industry reform,” said Eugene Burke, chief science and analytics officer at SHL. “Many businesses are blind-sided by not assessing behavioural risk and only focusing on policies and procedures. Whilst risk cannot be eliminated, it has an upside and a downside and organisations 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 behavioural risk decreases as seniority increases with only 1 in 15 executives posing a high risk. Further down the organisation, 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 frontliners feel motivated and empowered,” said Burke. “Organisations 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 organisation by demonstrating counterproductive behaviours 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).
Whilst the global average rate for behavioural 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 organisations including oil and gas and travel and leisure.
“There have been significant cases in recent years where frontline staff have been criticised 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 organisations. 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 behavioural 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 behaviour.”
The riskiest sectors for all job levels are telecoms and consumer goods (heavy goods), whilst the public sector and retail were ranked the most risk averse. Sectors which follow the global trend of risk decreasing down the organisation include the banking, food, beverage and tobacco sectors. It should be noted, however, that organisations’ 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 behaviour 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 whilst being resilient to risk so that organisations 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 programmes 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 minimised and addressed.