Ultimate Performance: Measuring Human Resources at Work

Quantifying Return

Even without going into a significant level of detail, an organization can come to understand the trade-offs in expected costs and returns arising from different interventions and programs aimed at altering an organization’s risk profile. Rather than attempting to evaluate the absolute cost of any particular scenario, it is only necessary to consider incremental change, such as what will the increase/decrease in costs be if a particular approach is taken.

With the preceding as background, the focus now shifts to an examination of how employees impact, directly and indirectly, the risk profile and associated costs. As mentioned earlier, most of the risk attributable to employees falls into two categories: strategic risk and operational risk. A number of subcomponents relevant to strategic risk hinge upon an organization’s ability to attract and retain qualified employees in order to fulfill its strategic objectives. While the employee impact on strategic risk is critical, the focus here will be on operational risk, in particular two subcategories: worker safety risk and service provision related liability risk. A third area of employee related risk not covered in this discussion is product shrinkage or loss.

Worker Safety Related Risk. In virtually any operation involving employees, there are accidents. The consequence of these accidents is manifested in a variety of ways. An employee who is injured on the job causes the organization to incur costs ranging from ...