Human Resources Risk Management

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Human Resources Risk Management

• Robert A. Milligan
• Cornell University

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People Determine the Attitude of the Business
Toward Risk

• Risk is bad and must be minimized
• OR
• The business must be managed to thrive in a time
  of increasing change
• The decision to view risk as threat or
  opportunity is a choice the people in the
  business must make

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Dimensions of Human Resources in the Farm Business

• Family and nonfamily
• Management and labor
• Full-time and part-time
• Seasonal and year around

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The Human Dimension is Increasingly Crucial

• Increasingly technical production processes
• Increasing competitiveness
• Increasing role of interpersonal skills and
  employees
• Increasing importance of environmental
  responsibility and food safety

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Dual role

• Source of risk
• Resource to mitigate, manage and prosper from
  risk.

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Sources of Human Resource Risk
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Human Resource Calamities

• Tragedies -- accidental death, illness, injury to
  owners
• Can undo even the most carefully planned risk
  management decisions

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Management Succession

• Every business eventually has different managers
• A significant source of risk
• Family member career decisions have huge impacts
• Human resource considerations should drive
  succession

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Owner/Managers Management Capability

• Increasingly broad job description of a manager
• Competitiveness makes each decision more crucial

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Labor markets

• Image of agricultural employment
• Special labor legislation
• Local labor markets conditions

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Sources of Human Resource Risk

• Human Resource Calamities
• Management Succession
• Owner/Managers Management Capability
• Labor markets

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Resource to Mitigate, Manage and Prosper from Risk
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View Risk as an Opportunity to be Managed

• Manage to thrive in a period of increasing change
• Look for opportunities presented by risk and
  change
• Involves seeking, analyzing and implementing
  risk-reducing strategies
• Crucial to have an attitude of optimism and hope

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Managers Must Understand Risk

• Identify those risks that can severely damage or
  ruin the business
• Must insure against or have a plan for these
  risks
• Insure against or manage risk that put the
  business at risk -- Do not bet the farm

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Source J. Edward Russon, Johnson Graduate
School of Management, Cornell University.
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Managers must Understand Decision-Making

• Not all good decisions result in the most
  favorable outcome
• A bad outcome does not does not mean the decision
  was wrong
• Must analyze and learn from ALL decisions
• Must learn from unfavorable outcomes rather than
  get discouraged

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Everyone Is Committed to the Business

• Everyone is passionate about the business
• Great job satisfaction is integral to high
  productivity
• Structures and systems are in alignment with the
  business purpose
• Use modern management practices
• People are valued by the business leadership and
  the business culture.

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Training

• Establish a continuous improvement culture
• Never allow an untrained person to do any
  task!!!!!!
• Major source of risk reduction
• Understanding of risk, risk management, change
  and change management is necessary

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Recruit and Select the Best Qualified People

• A challenge because agriculture does not have a
  favorable image as an employer
• Must compensate highly skilled and motivated
  employees
• Takes time to recruit hire, train and develop
  excellent people.

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Resource to Mitigate, Manage and Prosper from Risk

• View Risk as an Opportunity
• Managers Must Understand Risk
• Understand Decision-Making
• Everyone Is Committed to the Business
• Training
• Recruit and Select the Best Qualified People

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Conclusion

• People must be viewed as the resource to manage,
  mitigate and prosper form risk including human
  resource risk
• The decision to view risk as threat or
  opportunity is a choice the people in the
  business must make
• The business must be managed to thrive in a time
  of increasing risk and change

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