The Government’s focus on efficiency and cutting bureaucracy and red tape has to be welcomed. Of course it does. Business performance and productivity has been crippled in recent years with a plethora of rules and regulation that few of us understand or have an inclination to follow. The cost to business – especially small businesses – has been considerable. And I’m afraid to say that we in HR must take some share of the blame here. As new legislation or ‘flavours of the month’ emerge, we have tended to look at how this should be introduced procedurally and enforced. If you take performance appraisal as an example, it is verging on criminal that many people see this as a complete waste of time and adding no value whatsoever. This view was expressed resoundingly at a meeting last week by a successful and growing business that has grown in spite of its performance management system; his view is that its something they’re whipped through by HR.
Employment law reform
If you follow this line of argument, the Government’s employment law reform must be welcome. A longer qualifying period for access to employment tribunals and the ability to have private ‘protected conversations’ will help businesses hire more people because they can fire more easily. Removing the burden of health and safety regulation will remove unnecessary cost and bureaucracy? Well, on reflection, I’m not so sure. I well recall the horrendous injuries sustained by blue collar workers prior to the introduction of the health and safety legislation in the 70’s. Do we really want to go back there?
Engagement is key
Listening to an inspirational MD at a business networking event last week, I was impressed by her open, transparent and optimistic approach. She leads a team of 350 people and she is quite clear about the need to provide her team with honest and ongoing feedback about their roles and performance. She doesn’t need ‘protected conversations’ to do this. ‘People need to know where they stand’ she says. And she’s right. Her passion for her business and for her customers was infectious. You want to be part of her team and you would want to help her realise her vision for her business. Engagement is therefore crucial and protected conversations could damage this. We do need to be cautious about massive swings from over-regulation to under-regulation.
Risk management approach
So, how much red tape is enough? In this respect, we have much to learn from colleagues in audit who believe that a pragmatic approach to risk management is the key here. Over the past 15 years there has been a movement in auditing which argues that control and regulation should be aligned to risk exposure.
The culture of an organisation is based on their risk management philosophy, risk appetite and attitudes towards integrity and ethical values. There is therefore no simple answer on what is the right amount of risk - this has to be a judgment call for the business but it should be continually reviewed and the underlying assumptions and the impact continually assessed. Of course there will always be risk, but is it within acceptable boundaries? What are the consequences? Are these tolerable? What will their impact be?
Getting the balance right
We should be very careful about how much red tape we cut out and how we go about doing it. Let’s not revert back to the 1970s. There are no easy answers or simple formula to follow. HR, working with business customers, needs to strike the right balance between governance and risk. The consequences of not doing so could be considerable.
02 December 2011