People Risk = 30% x Reputational Risk

Not so long ago, people thought Reputation and any risk associated with it is was readily managed and easily addressed by some fancy footwork from the PR team.

Now, it is entirely tangible and measurable (ask Gerald Ratner, it cost him circa £500M).

It’s worse today. Organisations hit by reputational damage can expect an instant lashing on their share price and a “long tail” on the overall impact. Social Media provides instant global awareness and a memory and audit trail that will last an eternity…again, ask Gerald Ratner. Heads can and do roll…and it’s the CXO that takes the hit, along with the shareholders too.

Organisations aren’t complacent. Far from it. On the whole organisations invest heavily in risk and compliance processes, systems and procedures. They also invest continually in learning and development to ensure everyone who is entrusted to work and act in accordance with expectations are trained.

So what’s going wrong and what’s this 30% thing all about?

There are two fundamental issues at play. The first is the “Insight Gap”

Organisations tend to treat and manage data about processes, policies and procedures differently and in different systems to that which it holds about the people intended to follow, abide by or operate them.

There’s a fundamental chasm, between the data and even the departments involved. It’s taken some time but now even the established Governance Risk and Compliance vendors are recognising it. Here’s what Chartis the Risk Tech Analysts had to say on the subject:

And what about that 30%?

Well that’s the people. On average 30% of any workforce misunderstands at least one part of their role or function deemed critical to the success/compliance of any organisation.

Based on ‘000s of assessments by Cognisco over 20 years.

Of course the people represented by this 30% are not all out malicious. The majority have just been working in the same way for so long that their “operational work-arounds” have become the dominant culture. Now when new joiners come in they are introduced to the “way we do things”. That’s fine if the “way we do things” is in line with expectation and guidance. When it’s not, it’s a substantial and often unrecognised risk.

So how do you identify this and how can you address it?

The key is to change the way you assess the competency and capability of employees both pre and post any learning. Many organisations have been happy to accept a record of having attended training as a measure of understanding. Others will consider a multiple choice post course test to be sufficient. Of course multiple choice questionnaires don’t really cut the mustard if want to test anything other than memory recall. It’s easy to guess and get at least a 30%+ pass rate in most tests and it doesn’t take a degree in Occupational Psychology to work out that the answer with the most text is usually the right answer. Mutiple Choice tests don’t measure judgement. They don’t tell you how well someone would apply what they’ve learned or indeed how consistently they will do it.

The key is to look at the application of knowledge, to measure the confidence of people to apply what they know to be right, regardless of how the situation around them changes.

That requires a different assessment model, it means you need to ask different questions and test for both competence and confidence.

You can learn more by watching this presentation at Learning Tech 2017

https://youtu.be/dZPByLdysRc

By Dominic Hodges

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