Senior leadership buy-in lacking when it comes to risks

A lack of senior leadership buy in has been cited as a key factor in the low prioritisation of people risks within New Zealand organisations, according to a recent survey by Mercer Marsh Benefits and the Human Resources Institute of New Zealand (HRINZ).

The People Risk Survey Report, being launched today at the NZ HR Expo, asked NZ HR leaders how much of a priority they thought people risks were within the organisations they worked for. 58% said that they did not believe that people risks were a priority - with 28% pointing a lack of leadership buy in as being one of the key reasons.

“This result is obviously quite disappointing”, says Alison Bamford, Mercer Marsh Benefits Leader for New Zealand. “As a senior leader myself, I know how important it is for executives to champion initiatives that help support and mitigate people risks. Many organisations talk about how they put their people first, but the question based on these results is are they really?”

Part of the deficiency around leadership buy-in could be down to the lack of data and analytics available to HR leaders to support ROI / investment in people risk – with 19% saying this is an issue. Clearly more work needs to be done to help support the profile of people risk in NZ.

The top five people risks currently being faced by organisations, as identified in the survey, were talent attraction, key person risk, talent scarcity, talent retention and succession planning.

Talent attraction and retention has been highlighted as an issue facing entities for some time and, given that it was also seen to be the largest emerging risk in the survey, it will not be going away any time soon.

“We‘ve heard a number of economic commentators say that the supply of labour is a key constraint in terms of future business growth for New Zealand businesses” says Nick McKissack, Chief Executive for HRINZ. “So the issue of talent acquisition and retention is certainly top of mind for our members”.

Key person risk, which is perhaps not talked about as frequently, poses a problem for organisations of all sizes but particularly SMEs where the owner may be taken out due to sickness or disability.

Research from ACC has shown that more than 70% of self-employed businesses which close down do, at least in part, because of serious injury.

56% of those surveyed did not have a plan to deal with key person risk nor did 50% have plans in place to deal with succession planning, which also has a roll on effect with this risk.

Employee benefits, which is an important part of any people risk strategy, is another area that entities need to focus on.

Only 54% of the survey respondents review their employee benefits programme each year while 27% didn’t even know when it was reviewed. The survey also found that some of NZ’s benefits fall quite short – especially when compared to other countries. For example, 46% of those surveyed offered life and total & permanent disablement style benefits – compared to Australian organisations at 81% and the UK at 92%.

“Organisation’s benefit programmes must keep up with current medical and lifestyle related illness such as cancer and mental illness”, says Bamford. “Older style benefit programmes no longer support these changes so need to be reviewed on a regular basis. They must also take into account the differing needs of the generations.”

The inaugural People Risk Survey, which was designed to gauge HR leaders views on a wide range of people risks, was completed by 229 members of HRINZ across NZ.

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