Taking the Right Chances

 -  3/26/11

Reducing the risk of inappropriate behaviors at work is an important role for HR to play.

Our profession must certainly reduce risk where it makes sense. Such areas of risk reduction include meeting legal requirements, honoring contractual obligations and ensuring basic processes like payroll and benefits are without mistakes.

Many organizations ask employees to complete an online course to make them more aware of how office actions can be interpreted and how to avoid harmful situations such as sexual harassment. Reducing the risk of inappropriate behaviors at work is an important role for HR to play, but it can go too far. It’s the same problem as putting your money in the mattress. You reduce the risk of losing the cash but give up opportunities to invest for higher returns.

When it comes to financial and other uncertainties, I prefer to think about risk leverage, which means both avoiding and taking the risks that make sense. In HR, outcomes such as less-than-maximum performance, turnover and employee shortages or surpluses are treated as risks to be avoided. Yet some turnover can create benefits, extra employees or even an employee shortage that may optimize risk and return; you don’t always need to guarantee maximum performance.

I’m teaching two MBA classes that deal with performance management, and I tell these future leaders they need to understand performance as risk leverage. I ask them, “Should organizations always avoid the risk of less-than-top performance?”

It’s a case-by-case situation. The same behavior carries very different risks depending on the job. On Jan.? 5, a United Airlines flight had to be diverted when it squawked the code indicating a hijacking. Fortunately, there was no hijacking. The squawk was caused by spilled coffee on the radio controls in the cockpit. Spilling coffee is a mistake for flight attendants and pilots, but airlines tolerate it for flight attendants and invest heavily to prevent it for pilots.

What about taking risks at the high end of performance, in customer service? Look up “preflight safety demonstration” online and you will find links to videos that include Cebu Pacific Air’s flight attendants dancing to Lady Gaga and Air New Zealand’s Bare Escentuals cosmetics demonstration featuring flight attendants wearing body-paint uniforms. The idea is to get passengers to pay attention.

Article Keywords:   measurement   metrics   on-boarding  


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