How to reduce HR risk and protect your organisation

Understanding the landscape of modern HR risk

When we talk about HR risk, it is easy to focus solely on the legal side of things. While staying compliant with local regulations is vital, the true scope of risk is much broader. It includes everything from high employee turnover and poor cultural fit to the loss of institutional knowledge when a key leader departs unexpectedly.

In today's workplace, risk is often quiet. It lives in the gaps between your policies and your actual daily operations. For mid-market leaders, these gaps can quickly become chasms if they aren't addressed early. We have seen that the most successful teams don't just react to problems – they build systems specifically designed to prevent them from surfacing in the first place.

Reducing HR risk starts with a shift in mindset. Instead of viewing risk management as a box-ticking exercise for the legal department, we should see it as a fundamental part of people intelligence. When you understand the natural work preferences and behaviours of your staff, you can predict where friction might occur and intervene before it leads to a costly exit or a dip in productivity.

Hire for fit to prevent future friction

One of the most significant risks any organisation faces is a bad hire. The costs are well-documented – ranging from lost salary and recruitment fees to the intangible damage done to team morale. To truly reduce HR risk, your recruitment process must go beyond checking boxes on a CV. You need to understand if a person's work personality aligns with the role and the existing team dynamic.

At Compono, we believe that high-performing teams are built on a foundation of eight key work activities: Evaluating, Coordinating, Campaigning, Pioneering, Advising, Helping, and Doing. If you hire a 'Pioneer' – someone imaginative and future-focused – for a role that requires the methodical precision of an 'Auditor', you are inadvertently creating risk. That individual is likely to feel frustrated, leading to poor performance or early resignation.

By using data-driven insights during the recruitment phase, you can rank candidates based on how well their natural tendencies match the requirements of the position. This is where Compono Hire shines, allowing you to select the specific work personality you need and automatically score candidates in real time. This objective approach removes much of the guesswork and bias that often leads to risky hiring decisions.

Building a culture of engagement and transparency

Disengaged employees are a significant source of risk. They are less productive, more likely to make mistakes, and can negatively influence the people around them. Conversely, an engaged workforce acts as a natural buffer against HR risk. When people feel heard and valued, they are more likely to raise concerns early, allowing you to address issues before they escalate.

To foster this environment, you need a clear framework for understanding your team's health. We often refer to The Compono Culture, Engagement & Performance Model as a guide for how these elements interact. It is not just about having a 'good' culture; it is about having a functional one where expectations are clear and feedback is continuous.

Transparency is your best defence against internal risk. This means being open about organisational goals, but also being honest about team challenges. When leaders model this behaviour, it trickles down. You create a 'psychologically safe' environment where staff feel comfortable admitting to a mistake or flagging a process that isn't working – both of which are critical for reducing operational risk.

Developing your people to bridge the skills gap

A lack of development is a hidden risk that often manifests as stagnation. If your team members feel they have hit a ceiling, they will start looking elsewhere. This leads to the risk of talent flight, where your best people take their skills and experience to a competitor. Furthermore, a team that isn't regularly upskilling is a team that may struggle to adapt to new technologies or market shifts.

To reduce HR risk in this area, you must prioritise continuous learning. This doesn't always mean expensive external courses. It can be as simple as identifying the 'work personality' of your current leaders and helping them adapt their style to better support their direct reports. For instance, an 'Evaluator' leader might need to learn how to soften their directness when managing a 'Helper' to maintain team harmony.

By investing in the growth of your staff, you aren't just improving their individual performance; you are future-proofing your organisation. Understanding the unique strengths of your people – whether they are a 'Doer' who ensures precision or a 'Campaigner' who motivates the group – allows you to tailor development plans that actually resonate. You can explore these different profiles at Compono Me to see how varied work personalities contribute to a balanced team.

Implementing robust feedback loops

Risk thrives in silence. If you only hear about problems during annual performance reviews, you are already behind the curve. Reducing HR risk requires real-time insights into how your people are feeling and performing. This is why consistent, two-way feedback loops are non-negotiable for modern HR leaders.

Consider the 'Evaluator' personality type. They are logical and analytical risk evaluators by nature. If you have an Evaluator on your team, their insights are gold for identifying potential drawbacks in a new strategy. However, if your culture doesn't encourage them to speak up – or if their bluntness is dismissed as being 'negative' – you lose that vital perspective. Effective risk management means knowing who your 'risk-spotters' are and giving them the floor.

Regular check-ins and pulse surveys can help you stay ahead of the game. These tools provide the data you need to make informed decisions about team design and resource allocation. When you have a clear view of the 'shades of blue' on your team's personality wheel, you can see where you might be over-leveraged in one area and lacking in another, allowing you to balance the team before the imbalance causes a crisis.

Key takeaways for reducing HR risk

• Focus on fit: Use objective data to ensure new hires align with the role's required work activities.
• Prioritise engagement: An engaged team is your first line of defence against cultural and operational risks.
• Invest in development: Upskilling prevents talent flight and ensures your team remains competitive.
• Encourage transparency: Build a culture where risks can be flagged and addressed without fear of retribution.
• Leverage personality insights: Understand the natural tendencies of your team to predict and prevent friction.

Where to from here?

• Explore: Compono Platform
• Talk to an expert: Book in a 15-minute chat to get a walkthrough of Compono.

Frequently asked questions

What is the most common HR risk for mid-sized companies?

The most common risk is often high employee turnover caused by poor cultural fit or lack of engagement. When hiring processes don't account for work personality, organisations often end up with a 'revolving door' of talent, which is incredibly costly and disruptive.

How does data help reduce HR risk?

Data provides an objective lens through which you can view your workforce. Instead of relying on gut feel, you can use behavioural assessments and engagement metrics to identify potential points of failure, such as skills gaps or high-stress teams, before they become critical issues.

Can personality assessments really prevent workplace conflict?

While they can't eliminate conflict entirely, they provide a roadmap for navigating it. By understanding that an 'Auditor' and a 'Campaigner' communicate differently, leaders can facilitate better dialogues and help team members adapt their styles to work more harmoniously.

What role does leadership play in mitigating HR risk?

Leaders are the primary drivers of culture. A leader who is transparent, provides regular feedback, and supports employee development significantly reduces the risk of disengagement and legal compliance issues within their team.

Is HR risk management only about staying legal?

No, legal compliance is just the baseline. True HR risk management involves protecting the organisation's productivity, reputation, and talent pool by building a supportive and well-structured work environment.