Mitigating Organizational Risks of Remote Working: An HR Perspective

Mitigating Organizational Risks of Remote Working: An HR Perspective

The effects of the Covid’19 pandemic has resulted in most companies reorganizing their working processes and patterns. Due to the need for controlling the virus through social distancing, most organizations suddenly resorted to remote working arrangements.

Remote working is a way of ensuring business continuity, while at the same time protecting the employees and the public from the ravaging effects of the Covid’19 pandemic. While this working arrangement is a very noble survival strategy under the current circumstances, allowing employees to work away from an organizational set-up, in the comfort of their homes, comes with a wide range of organizational risks.

Risk by its definition, refers to uncertain future events, which if left unchecked, could adversely affect the organisation’s business goals and objectives. Organizational risks associated with remote working include, but not limited to information security risk, reputational risk, psycho-social risk, financial risk, compliance risk and operational risk. The influence of employees to the causes of these risks should be a cause for concern to business owners and HR Practitioners.

Mitigating each organizational risk associated with remote working, should not be the prerogative of the Board of Director and their Risk Committees alone, but HR Practitioners should also play a proactive role. This article will highlight ways of mitigating each organizational risk from an HR point of view.

Information Security Risk

This risk occurs when an organisation’s information is exposed to undeserving people due to vulnerabilities associated with the ICT systems and the environment in which those systems operate from. Working from home, obviously poses greater information security risk as compared to working at the company premises. The organisation can lose valuable information as a result of computer hacking, theft of laptops or failure by employees to safeguard confidential information.

Organisations should, therefore, carry out information security risk assessment before allowing employees to work at home. This will enable the organisation to put in place adequate measures that will guarantee the security of company information during the period of remote working. Information backup devices should always be at the main company premises and should constantly be updated to safeguard the company information in the event of hacking or theft of computing devices. The major contributor to information security risk, are employees themselves. According to the Harvard Business Review of 2016, it was observed that 60% of cybersecurity attacks emanate from inside the organisation. Yes, by employees and as a result of malicious intent and inadvertent actions.

Employees may get too excited with having important company information at their homes. The behavior of such employees should always be kept on check. They may end up sharing such information with relatives, friends or competitors. Other employees may leak the passwords for crucial company information, and such a mistake may be catastrophic to the organisation.

To mitigate this type of risk, there is need for HR Practitioners to ensure that the organisation trains or educate employees about the dangers of failing to safeguard company information and secrets. The organisation can also put in place and strictly enforce cybersecurity policies for employees. For example, a secrecy policy can be put in place where employees are made to sign secrecy oath forms, pledging to keep company information confidential at all times.

It is the role of HR Practitioners to ensure that employees are aware and implement such policies. Equipping employees with such knowledge will ensure that they will maintain confidentiality of company information and
secrets. Breach of secrecy oaths should attract deterrent measures such as disciplinary action and dismissal in serious cases.

Reputational Risk

Reputational risk is the danger or threat to the good name or standing of the business in the eyes of its stakeholders. This type of risk has received more attention from business leaders since it is a key strategic business issue. A Global Survey on Reputational Risk carried out by Deloitte in 2015 revealed that 87% of the executives surveyed, rated reputational risk as more important than other strategic risks in their company. The reason for highly regarding
reputational risk as a key strategic business issue, is due to its effects to the business.

On average, more than 25% of the company’s market value is directly attributable to its reputation (World Economic Forum). Tarnishing the reputation of the organisation has negative consequences in the eyes of the stakeholders. A negative reputation leads to loss of revenue, loss of brand value and regulatory investigations.

While it can be argued that the company, through its own actions, can directly determine its reputation, I contend that actions of employees mostly play a major role in determining the reputation of their organisation. Allow me to focus much on the
influence of remote working employees to the reputation of the organisation. The actions of remote working employees, considering that they will be working without physical supervision, can deliberately or unknowingly tarnish the reputation of their organisation.

For example, if a remote working employee who is supposed to be attending to customer enquiries through the email or phone, is always not responding on time, and when he/she later responds by any chance, uses unprofessional language when asked why they failed to respond on time. This action alone can paint a bad image for the organisation as far as customer care is concerned. The organisation at the end of it all, can lose its customers. Shrugging off such an image is very difficult.

Another example, is when employees carelessly lose customer information. Customers mostly trust the organisation with their personal information. However, when a careless employee, working from home, loses such information, it corrodes the organisation’s reputation if such information finds itself in the wrong hands. Fraud, bribery and corruption are also other acts which remote working employees can engage in. These employees can take advantage of the absence of physical supervision and engage in acts of fraud, bribery or corruption, thereby tarnishing the reputation of the organisation.

Mitigating reputational risk has no start date
and end date; it should always be a continuous process. There is great need for HR Practitioners to ensure that the organisation has put in place a code of ethics. This is a document which outlines a set of principles which helps employees to distinguish right from wrong in the conduct of the organisation’s business.

It provides to employees, a positive stimulus for ethical conduct. It helps employees conduct their business honestly and with integrity. The need to preserve the good reputation of the organisation is the main reason why in most company codes of conduct, it is a chargeable offense to tarnish the name of the organisation.

Lastly, there is need to keep employees happy. HR Practitioners should make sure that remote working employees are well catered for. A disgruntled employee who is always vocal about their dissatisfaction can tarnish the reputation of the organisation as a bad and uncaring employer.

Financial Risk

Remote working comes with a financial burden which the organisation should properly manage. Imagine the financial requirement of a company with more than 500 employees who should be working from home. A lot of money is needed here. While there are four main categories of financial risk that companies must contend with, I will dwell much on the operational category, where risk can emerge from a company’s ordinary business operations.

Firstly, an organisation with remote working employees is heavily exposed to financial fraud or abuse of company funds by its own employees. The organisation if not careful, will find itself devastated with a lot of unbudgeted and unnecessary demands which might choke the organisation. It is advisable for the organisation to monitor such demands as there is the potential of overstating needs by employees.

To mitigate the financial risks caused by such demands, HR Practitioners can emphasize on the allocation of resources based on performance. A Result Based Performance Management can save the day under the circumstances. The system emphasizes value for money from usage of limited resources. It utilizes a result based budgeting system, where budgets are developed based on expected results.

While basic needs that ensures operational efficiency should be provided to remote working employees, distribution of financial resources should be done giving priority to employees with key roles in the survival of the organisation especially in these times of
uncertainty. Unscrupulous employees can also take advantage of working from home and defraud the organisation large sums of monies.

It is also advisable that employees whose jobs deal with finances of the organisation should be closely monitored and supervised to avert financial losses as a result of fraudulent activities.

Psycho-social Risk

Psycho-social risk arises from aspects of work organisation, design and management that have the potential to cause negative psychological, physical and social outcomes which include work related stress, loneliness,
or depression. Remote working employees are heavily exposed to such a risk.

These employees may feel isolated and disconnected from their coworkers and supervisors. A recent report by Australian HR Institute showed that 62% of remote working employees struggle with feelings of disconnection. The isolation and disconnection makes them fell worried about their performance, and such feelings normally lead to stress, anxiety and depression.

Working from home also creates a demand where one should be able to balance between the demands of work, family members and personal life. Such a set-up is very difficult to deal with and most often it leads to bad temper, inability to progress and stress related illnesses.

Lack of employee mental and physical wellbeing leads to loss of productivity, and as
such, organisations should be concerned about the mental and physical well-being of their remote working employees. To mitigate this risk, the organisation, through IT, Human Resources Department, should ensure good mental and physical well-being of employees. Remote working employees should be encouraged to take regular breaks and exercise frequently. This will help them to keep physically fit since working from home restrict one from exercising.

Constant virtual team building meetings with colleagues is also another way of keeping employees connected with their colleagues. Employees will take this time to refresh and share practical experiences on how they are coping with remote working. Words of encouragement are always shared in these meetings and this motivates them to stay mentally and physically fit. HR Practitioners can also constantly share, with employees, information and resources on how to stay physically and mentally healthy. This will help employees adjust their daily routines to cope with mental and physical health issues.

Lastly, employees should also be encouraged to set work time tables so that they can be able to balance between their work, family and personal demands. Work-life balance reduces stress, enables employee concentration, and makes employees feel happy. This ultimately has a positive impact to the organisation.

Compliance Risk

The need to comply with country’s laws and regulations should not be overlooked when employees are working from the comfort of their homes. Regulatory bodies in Zimbabwe, such as ZIMRA, NSSA, and ZIMDEF, just to
mention a few, expect full compliance with all statutory payments and requirements. Considering that some of the employees who are responsible for such statutory payments will be working from home, there is risk that these employees, if not supervised properly, may fail to meet stipulated deadlines resulting in fines being levied against the organisation.

The only way of mitigating this type of risk is to ensure that remote working employees responsible for dealing with statutory payments are constantly reminded to meet the stipulated deadlines to avoid fines from regulatory bodies. Monitoring the payment of statutory deductions should always be the
responsibility of the organisation’s top management.

Alternatively, payment of such important statutory obligations can be done at the company premises by some designated persons. Compliance risk does not only focus on statutory requirements from regulatory bodies. Company rules and regulations also apply and should not be ignored on the basis that one is now working from the comfort of their home.

Employees have a tendency of doing short-cuts to get things done. They can also deliberately ignore organisational policies and standard operating procedures for their sinister motives. This tendency can be worse especially if they are working from home, away from physical supervision. Not following company policies and procedure manuals expose the organisation to many corporate governance issues and risks. To mitigate this risk, employees need to be constantly reminded by HR Practitioners that the same organizational policies and standard operating procedure manuals still apply even if they are working from home.

Monitoring compliance with policies and standard operating procedure manuals, should be intensified during the period remote working. Where employees deliberately fail to comply with organisational policies and standard operating procedures, the organisation should not hesitate to take appropriate remedial measures such as disciplinary actions to avoid recurrence.

Operational Risk

This is a type of risk which occurs as a result of inadequate or failed internal processes, breaches, interruptions or human behavior, change agenda and cultural issues. This is a broad category of risk which encompass the above mentioned organizational risks. For example, the organisation can lose business opportunity as a result of poor network connections, or the organisation can receive a penalty for failing to pay statutory obligations on time.

Your customer database can go missing as a result of stolen computer or laptops. The organisation can also lose huge sums of revenue as a result of the bad reputation of the organisation. All these are operational risks that can be associated with remote working.

Remote working needs careful planning to avoid such operational risk. As an HR Practitioner, much focus should be on the contribution of employees to such a risk. Employees are there to ensure that the organisation achieves its goals and objectives. However, if their behavior, attitude and actions are not kept on check, they can do all sorts of things that can hinder the operational efficiency of the organisation.

Some employees may spend the whole day scrolling on their social media accounts. Others may procrastinate important work issues and focus on their personal issues. Some employees may make decisions that negatively impact the operations of the organisation. For example, one can decide not to pay in invoice for raw materials needed by the production team.

So many are examples of how employees contribute to operational risks. The sure way of mitigating operational risk as highlighted on financial risk above, is to ensure the effective use of a performance management system such as the Result Based Management system.

The performance management system focuses on tangible results to be delivered within stipulated timeframes. The performance of employees working remotely, can be monitored using this type of a performance management system. A 360% feedback system can also be used so that the organisation can promptly attend to operational hiccups on time.

As indicated in this article, organizational risks are caused by a number of factors. While Human Resources Practitioners are supposed to be proactive in managing specific HR risks as a governance agenda, they should not be sidelined when mitigating wide organizational risks at a time employees are working remotely. This is because employees and their behaviors are the major sources of business risks. Any organizational risk has a human influence in it.

Business leaders whose employees are working from the comfort of their homes should put various measures, as proposed in this article, to mitigate all risks associated with remote working. More focus should be on controlling the behaviors, actions and attitudes of employees to ensure an organisation risk free environment especially during this period of uncertainty.

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