6 - HR strategy: communication and engagement

Summary

Can you use standard dimensions of risk management to determine and evaluate the pivotal elements of an organization’s talent strategy? Terry Gray and Matt Hankes, two human resource and organization effectiveness leaders at Cargill, have done just that. Recall from earlier chapters the dimensions of risk that were described by the Committee of Sponsoring Organizations, shown here as Figure 6.1.

Notice the front face of the cube, and its list of elements for addressing risk: objective setting; event identification; risk assessment; risk response; control activities; information and communication; and monitoring. At Cargill, decisions about human resource management strategy, programs, and policies are framed in terms of their impact on strategic risk factors, particularly when it comes to internal controls. Cargill already used the COSO framework for its risk management, so the framework provided a natural way to connect human capital strategy and decisions to the larger organizational risk objectives. Cargill HR leaders used several elements of the COSO framework to help their non-HR leaders better understand the impact of HR.

For example, regarding the “control environment,” the Cargill HR audit process notes that it depends on integrity and ethical values, commitment to competence, management philosophy and operating style, organization structure, and authority and responsibility assignments. Leaders consider that these things are directly affected by factors such as unrealistic performance targets, the bonus structure, poor segregation of duties, excessive decentralization, and insignii cant or unpublicized penalties for improper behavior. The process asks a simple question: “Is HR involved in any of the above?” The answer is “Of course,” and this sets the tone for a deeper dialogue about how investments in people can create organization and talent outcomes that are pivotal to Cargill’s most vital risk issues.