Risk as a Value Proposition: Evaluating Workforce and Human Risk Factors
Pam Sornson, JD
Risk is rampant these days, especially after the pandemic and its subsequent economic upheaval upended the global homeostasis. Many conventional practices and norms have been eliminated, and, in some cases, their replacements have yet to emerge. As a result, there are now yawning gaps and voids currently roiling the systems society relies on for service and support.
Other realities have also become starkly evident as the health threat recedes, especially when it comes to valuing labor. Some jobs were discovered to be obsolete, so they disappeared. Other formerly ‘menial’ occupations were revealed to be ‘essential’ to society’s functioning. In both cases, communities were dismayed to learn that their fundamental beliefs about work and its value were so incongruous with reality and, therefore, also unsustainable.
As the world approaches the post-COVID future, the workers who lost their jobs are clamoring for new, as yet undeveloped positions, while those who stoically performed the difficult ‘essential’ services are now demanding to be recognized – and compensated – for assuming those risks. The question is: how will the industrial community respond to these new demands and expectations?
Risk as a Spot Light
The COVID-19 pandemic revealed elemental yet hidden risks that are often inherent in virtually every industry.
In many cases, the risk grew from simply maintaining a product or service that suddenly presented a threat to life and health. When the government declared the spreading virus a national emergency, all kinds of ordinary, everyday activities ended abruptly, which also terminated the jobs they generated. Movie theaters went dark, restaurants closed in the thousands, and any form of public gathering quickly disappeared.
In other instances, the risk involved relying on (what eventually proved to be) unreliable sources for critical supplies and materials. Throughout the global supply chain network, most producers experienced at least some delivery delays of materials due to a lack of supplies, workforce, or both. Many reported a related escalation in costs as they paid ’emergency’ rates for any available substitutions.
In still other cases, the risk involved maintaining a fully staffed workforce to keep up with production quotas and orders. Any occupation that required a physical, human presence often also presented the risk of infection, which then prevented millions of employees from working lest they spread the disease throughout their organization. Many businesses closed for this reason. Further, as the pandemic wanes, many of those workers who became unemployed then are finding themselves in high demand for their skillsets and experience now. Accordingly, they are expecting higher wages than they received in the past, which presents an emerging risk to potential employers that they won’t be able to pay sufficient salaries to rebuild their labor force back to pre-pandemic levels.
These pre-pandemic risks are primarily related to the organization’s operational and financial activities, and many boards of directors focus their discussions on mitigating these risks to the corporation.
What they’re missing, however, is that these hazards are even more significant for their impact on the human workforce, which often bears the brunt of their effect. These leaders haven’t yet built into their management philosophy strategies to mitigate the risks to their human capital assets (such as infection by a potentially lethal virus), which means they also fail to protect the enterprise when those assets become unavailable. Managing the human risks within their enterprise is just as critical to their company’s success as managing the risks to their operational activities.
Embracing New Workforce Fundamentals
Shifting the corporate mindset to accommodate these emerging ‘human workforce risk factors’ is perhaps the best way for the industrial community to respond to new and evolving labor force demands and expectations. Not only would any such changes positively impact the workforce in general, but they might also enhance the agility and resilience of the organization as a whole.
The new management style goes beyond ‘workforce safety’ as the sole ‘labor-focused’ standard. It adds accountability for both internal and external factors that impact how, where, and why work is performed.
At the very least, the C-Suite should consider the physical, mental, and psychological risks their workers face each day and design compensation and benefits packages that reflect those heightened concerns.
In addition, an overarching review of corporate culture can embed ‘risk assessment and management’ at all employee and occupational levels to ensure that each worker is clearly informed of existing and potential risks and given the opportunity to choose to assume those challenges.
It also encompasses the well-being of the communities in which that labor is produced so that the company is assured of a strong workforce well into the future. Well-paying work builds well-supported communities.
Not least, the full implementation of this new style of human workforce management requires input and attention at all levels of leadership. Boards of directors, in particular, are responsible for considering the welfare of the workers who are building the value of the enterprise. A strong workforce emerges from more than just a robust HR office.
Many corporate directors may consider these evolutions too expensive or disruptive to be considered seriously. However, the dangers of maintaining the status quo most likely far outweigh the cost of improving the occupational situation of their workforce. These days, workers themselves are demanding improvements in their occupational environments to not only reduce risk to themselves but also to add value to them as people, employees, and community members. In addition, the consuming public is more aware these days of the values provided by all workers, not just those in the public eye for their high compensation levels. And since many of them “shop with their feet,” it is imperative for the leadership of every organization to be aware of and respond to their customer’s preferences, especially where social concerns are involved.
Risk is everywhere and is unavoidable. The very real threats posed to human workers throughout the COVID-19 pandemic are becoming far less tolerable to a society that has seen firsthand how damaging unmitigated risks can be. Organizations that intend to thrive through the pandemic and into a stronger, more resilient future will work now to mitigate and avoid future threats to the health and welfare of their human labor force. By doing so, they will build a stronger, more resilient workforce, as well as a stronger, more vital organization.