Risk is not confined to people in physically dangerous jobs. Everyone of us takes a significant risk every time we walk out of the door. Of course, risk is not just about physical injuries, but also to the threat of financial loss and the tarnishing of reputations. If we let fear of failure dominate our lives we will be constantly risk-aversive and never able to make decisions. The pity is that often not making a decision is a decision in itself.
It is a misconception that only line personnel are the risk-takers in business. In reality the decisions of all true managers can seriously affect the bottom line. – and no less HR. Every risk can be expressed in terms of a “probability” of success – just like the odds in a horse race. As in a horse race the odds grow the more the risk taker has a history of failure and the more uncertainty is compounded if the conditions have not been experienced before. Carrying forward assumptions to problem-solving in another country where, for instance, the HR professional has been previously operating largely in the USA can narrow the odds of success from “odds on” to maybe 7/1 against – without the decision-maker having any idea of the fact that odds are stacked heavily against them.
The usual way to reduce risks is to take advice or seek a collective decision. How many HR managers have gained respect from colleagues for being democratic when their real motive has been to minimize the risks of failure – or even to blame others when things went wrong? But in the current corporate world there is no hiding place and good decisions are often less likely to be made collectively than they are by a competent individual acting on sound information and independent advice.
In a recent membership survey we were surprised to learn that the second most popular reason for using FedEE was to check on advice given by local law firms and advisers. Feedback over the years also indicates that lawyers and accountants also often get their facts wrong or lack the expertise to put their facts into a practical business context. Moreover, the path to certainty is gained more from thinking the right way about a subject than looking for lines on a legal map or company balance sheet.