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Risk management framework
For an effective sustainable risk management system and risk due diligence
procedure you need to take into consideration human rights issues, whether
internally, such as health and safety issues and recruitment and human
resources procedures, or externally, reviewed in the next chapters, including
community and customer-related concerns and risks.
Part C “ Overview of the Social Aspects of Business Risks

Following the process of identifying corporate vision, key issues, objec-
tives and targets there is the establishment of systems to achieve these as well
as the monitoring and reviewing of performance. The first stage is to conduct a
due diligence review of the human rights element of the risk management sys-
tem. This will aim to:

Identify the extent of your human rights responsibilities;
The systems and processes in place to manage these issues; and
A gap analysis to see where improvements could be made.

The review should include:

An analysis of the extent and scale of the organisation™s activities, including
indirect operations of business and joint venture partners, suppliers and sub-
The organisation™s human rights impacts to date and the issues that may arise
in the future. Internally this could involve looking at the issues of direct rel-
evance to employees like:
The activities of the organisation, its business partners, its supply chain
and issues like bribery and corruption (Chapters 7, 9 and 10);
Collective bargaining, freedom of association, equal opportunities and
anti-discrimination measures (this chapter); and
The health and safety concerns in the workplace (Chapter 16).
The workplace human rights issues covered in this chapter such as:
Stakeholder and community and indigenous peoples human rights issues
(Chapters 9, 12 and 15); and
Health and safety concerns for customers, including the positive and neg-
ative impacts of products and services (Chapter 17).
A review of the regulatory requirements, the legislation, codes of practice,
standards or voluntary agreements that apply to the organisation™s activities
and any stakeholder expectations that may exist;
An assessment of the current systems and procedures that can assist in the
facilitation of human rights risk management, with a focus on both internal
and external considerations;
The establishment of strengthened policies and risk management processes
for a range of human resource-related human rights issues that will assist
your organisation become more ˜sustainable™, as shown in the diagram below.
Businesses should put in place internal rules of operation in compliance
with human rights principles; and
The review should ensure that the organisation™s framework is actually
assisting with the implementation of a sustainable human rights risk manage-
ment system by:
Putting in place internal rules of operation in compliance with the principles;
Incorporating the relevant human rights principles into their contracts and
dealings with business partners, suppliers, contractors, subcontractors as
well as their own operations;
Chapter 14 “ Human resources risk (human rights inside the workplace) 319

Undertaking periodic monitoring to ensure compliance with the stated
rules of operation and this could include suppliers, etc., and their applica-
tion of the principles; and
There should be risk impact assessments and reparation made to those
adversely affected by failures to comply with the risk management system
or chosen human rights principles.


Economic, Social
and Environmental

Sustainable Human Resources

Efficiency and Effectiveness
Employee commitment
Increased staff retention
Increased staff attraction rates
Increased skill levels
Knowledge management and
organisational learning

Human Resource
External Pressures Risk Management People and
and Drivers: Practices like: Processes

Economic factors: the Customer and supplier relationships Organisational
labour market, competition Employee skill levels Culture (Chapter 5)
and business cycle; Enhancing Equality Customs,
Job design Employee
Social factors: Codes, Production Processes involvement and
standards, legislation and Training and Development motivation;
employees representatives, Non-discrimination policies Leadership and
i.e. Trade Unions These factors have impacts upon: Management
economic, social and environmental
risk managements capabilities

Organisational Vision and Objectives
i.e. Human resource sustainability

(Diagram after Gollan, P. in Dunphy et al. 2000)
Part C “ Overview of the Social Aspects of Business Risks

The role of human resource risk management is important to the success of all
other elements of corporate sustainability policies and the smooth working of a
sustainable risk management system. It is important that the general HR system
acts as an agent for change and supports the sustainability process in an inte-
grated way by:

Reducing the potential financial costs of getting things ˜wrong™;
Engaging, involving and motivating staff: independent research commis-
sioned by GreenPortfolio, the environmental relations division of Portfolio
Communications, found that being green cited as a key issue for staff, with
60% of respondents citing the importance of environmental credentials to
Facilitating communications and conveying messages from the board and
management to the organisational elements, and operational staff feedback to
the management; and
Developing skills and expertise within the organisation, especially with
regards to: risk management, the recognising and taking of opportunities and
sustainability awareness.

The following are general examples of good risk management by a business:

Human resources functions can be improved with computer-assisted recruit-
ment, employee reward and recognition, skill and career development analy-
sis and improved internal marketing and communications systems;
Selection of technologies and processes that support sustainable personnel
and organisational learning and development;
The provision for formal worker representation in decision making or man-
agement, including corporate governance;
Policies and procedures involving information, consultation and negotiation
with employees over changes;
Training and education programmes to support the continued employability
of employees and to manage career endings. Training for staff and executives
on issues of sustainability can pay dividends for organisations with increased
motivation for efficiencies and innovative capabilities;
The selection of technologies and processes that support sustainable person-
nel and organisational learning and development;
Specific policies and programmes for skills management or for lifelong learn-
ing, like the Investors in People standard;
Equal opportunity policies which can help address workplace harassment
and affirmative action relative to historical patterns of discrimination;
Policies and procedures that seek to prevent all forms of discrimination in an
Contributions by the organisation in excess of the minimum requirement in
areas like healthcare, disability, maternity, education and retirement;
Diversity within organisations can have financial benefits: a research exam-
ple from a 1998 study of S&P 500 companies by academics Amy J. Hillman,
Ira C. Harris, Albert A. Cannella Jr., and Larry Bellinger found that ethnic and
Chapter 14 “ Human resources risk (human rights inside the workplace) 321

gender diversity on corporate boards (one possible indicator of accountabil-
ity) ˜is associated with superior stock performance™;
Organisations should not engage in child or forced labour, nor should
employees have to leave deposits or identity papers with the company;
A safe and healthy working environment shall be provided and as far as rea-
sonable practicable the causes of hazards inherent in the working environ-
ment shall be minimised;
Organisations shall not engage in or support discrimination in the advertis-
ing of vacancies, or the hiring, compensation, training, promotion, or retire-
ment of employees based on:
National origin
Political affiliation
Sexual orientation
Union membership
Organisations shall not engage in: sexually coercive, threatening, abusive or
exploitative behaviour towards staff.

Even bad news can be approached in a responsible manner, and if an organisa-
tion has to make redundancies these can be made in a supportive manner, pro-
viding additional support like job search facilities and retraining prior to the
event. Too often we read about staff who receive notification of the termination
of their employment from a circulated email.
Company specific examples of best practice include the following:

In terms of a positive corporate culture, Southwest Airlines in the US makes
a priority of valuing both customers and employees equally.

You have to treat your employees like your customers. When you treat them right, then
they treat your customers right. (Fortune, 28 May 2001)

Numerous companies now undertake a regular employee satisfaction survey
and note the results in their corporate social responsibility report on the per-
centage of employees that are happy working with the organisation; and
Taylor Woodrow seeks regular feedback from employees. Their findings
42% of employees believed that team morale was good;
68% of employees intend to still be working for Taylor Woodrow in 12
months™ time;
60% of employees would recommend working for Taylor Woodrow to a
friend; and
55% of employees believed that Taylor Woodrow offices provide good
working conditions (Taylor Woodrow CSR Report 2003, p. 17).
Part C “ Overview of the Social Aspects of Business Risks

Employees care about organisations that care
A survey on employee recognition of corporate responsibility issues
by US-based community network Care2 polling nearly 1600 employees
found that:

* 73% of workers said it was ˜very important™ to work for a company they
believe is ˜socially responsible™;
* 35% report they have left a company because they believe it was not
socially responsible;
* 48% of employees would work for less income if the company was
socially responsible; and
* 40% would work longer hours on the same basis.
The competition for high calibre employees is increasing as the number of
jobs at organisations viewed to be socially responsible is exponentially

Business benefits of diversity
A benefit for organisations is the diversity of the specific talents that individu-
als can bring to their organisations. There is also the need to adjust to a labour
marketplace with a greater diversity of employees and unleashing their poten-
tial to assist the organisation. The flexibility of an organisation to learn and fit
their employees is now more of a competitive advantage than trying to get
employees to fit an organisational stereotype.
There are benefits to encouraging and supporting diversity. Diversity can
Cost reductions and the avoidance of the costs of non-compliance from dis-
crimination, diversity and human resource law breeches and fines:
Texaco settled to pay more than $175 million to 1400 black employees in a
race discrimination class action lawsuit.
Competitive advantage can be gained from diversity as this helps with the
realisation that the consumer market is continuously diversifying as well.
There is no average customer and diversified companies can meet these
needs more effectively. An example is that language diversity within organi-
sations can facilitate sales and export campaigns;
Valuing diversity which recognises the changing demands of the consumer
market and ensures that your organisation and employees are equipped to
meet such demands;
More effective human resource attraction and retention, gaining a reputation
for providing opportunities and therefore an ability to attract the best


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