Sustainable Organizations and Human Capital Risk Management

Within the framework of Sustainable Organization, I think we can offer a framework for risk and Human Capital. The seeds of this were sown when Lanny Hass of NCSU and I were discussing Human Capital risk management. For a while it seemed we were talking past each other. His concern was with the management of risk related to succession planning and management. My concern was with actual employee behaviors that generate liability; such as failure to update certifications. I also recalled a conversation I had a couple of weeks ago with William Fisher of Lexile about a Lexile client who determined his greatest Human Capital risk was the inability of his hourly employees to understand contracts – in effect, their reading comprehension.

Let me offer the following types of risks SO can address related to Human Capital to shape the discussion:

Organizational Opportunity Risk – The organization misses opportunities to grow and develop because the context for the organization is defined to narrowly or too broadly. This is the risk we associate with leadership and vision. In SO terms, it is the risk inherent in a shortfall in Cascaded Context.
Organizational Adaptability (Response Capacity) Risk – The organization fails to anticipate or have mechanisms for reacting to changes in the environment or market – particularly the labor pool. In practice, they have no succession process. In SO terms, it is the risk that results from a shortfall in Adaptive Alignment.
Employee Capability (Absence of Capability) Risk – The organization fails to select, hire, train, or certify competence of employees in knowledge, skills, or abilities required for performance. In SO terms, it is the risk that results from a shortfall in Requisite Competency.
Employee Action/Behavior Risk – For Jaques, this would be the T factor, but it is the management of the intersection between Requisite Competency reflected by the behavior of the employee and Adaptive Alignment reflected by the organizational management systems for detecting and correcting gaps in capacity or performance.
Employee Accountability Risk – If an organization silos accountability or disperses accountability incorrectly, adaptive responses can occur too late. Often this is because the Cascaded Context and concomitant role clarity is unclear. Sometimes trust and commitment among members of the organization is the source of the problem, and reciprocal sabotage or failure to take ownership of emerging or less than definite accountability chains results from a gap in Vested Engagement.